Intuitive finally gets some US competition
A number of companies market surgical robots in the US, but only one has had its machines classified by the FDA as true surgical systems – until now. Market clearance of the Senhance system means Transenterix has become the first direct US competitor to Intuitive Surgical, the only player in this particular segment for the past 20 years.
Transenterix’s share price climbed 74% in early trading today. But this is a much smaller company than Intuitive, and could have a hard time luring customers away from the established leader.
The group’s shareholders will be relieved that it has reached the US at all; a simpler device called SurgiBot was rejected by the FDA last year, hitting the stock hard (Transenterix knockback could mean a Titan advantage, April 22, 2016). Having a robot rubber-stamped as substantially equivalent to one of Intuitive’s da Vinci systems is quite a coup.
Sofar so good
Senhance, formerly known as ALF-X and acquired by Transenterix when it bought the surgical robotics division of the Italian company Sofar in 2015, has been awarded 510(k) clearance under the FDA classification System, Surgical, Computer Controlled Instrument. Hitherto, the only devices in this category were made by Intuitive. Senhance’s predicate was the da Vinci Si, one of Intuitive’s cheaper, simpler models (X marks the spot for Intuitive, May 31, 2017).
Transenterix's Senhance system
At least half a dozen other companies, including Stryker and Zimmer Biomet as well as smaller players like Auris Surgical Robotics and Mazor Robotics, have robotic surgical devices cleared for sale in the US. But these fall under different FDA classifications: System, Catheter Control, Steerable or Orthopedic Stereotaxic Instrument, for example.
And naturally they are used for different minimally invasive procedures: placing spinal implants or partial knee replacements, for example. Intuitive’s da Vinci Si machine can be used during a far greater range of surgeries, including transoral otolaryngology, hysterectomy, prostatectomy and thoracoscopically-assisted cardiotomy among many others.
Senhance has been cleared for use in colorectal and gynaecological surgery, but these are likely just the beginning. According to Stifel analysts, the initial approval ought to mean “a steady cadence of additional indication and technology approvals over the next several years” for Transenterix. They add that European surgeons are already actively using Senhance for procedures beyond gynaecology and colorectal.
But placing these systems in hospitals is going to be an uphill fight against the might of Intuitive. Transenterix has increased its US sales force by 60% this year – but only from five to eight. At the end of last year Intuitive’s global workforce in marketing, sales, and administrative activities numbered 1,760.
Doubtless Transenterix intends to compete on price. When it comes to the actual machines there is little difference – Wells Fargo analysts say that outside the US Senhance is priced at roughly the same level as the da Vinci Xi, Intuitive’s high-end robot. The Xi goes for around €1.9m ($2m) in Europe, with a service fee that runs to around €130,000 per year. This chimes with Transenterix’s first-quarter revenue of $1.9m, which it said “primarily related to the sale of one Senhance”.
There ought to be a per-procedure advantage with Senhance, however. The instruments employed with Senhance can be reused thousands of times, whereas many of Intuitive’s instruments can only be used a maximum of 10 times. Transenterix believes that the cost of a cholecystectomy procedure with da Vinci robots is about $600-700 versus $300 with Senhance.
Even so it will take time and effort to prise fragments of the US market out of Intuitive’s grip. Transenterix’s sales are forecast to grow at 113% to reach $141m in 2022, according to EvaluateMedTech’s sellside consensus. Intuitive’s 2022 sales, meanwhile, are forecast to reach $2.8bn.