Intuitive’s poor sales cast a pall over the robotic surgery sector

The age of the robot butler has, to many people’s disappointment, not yet arrived. The age of the robot surgeon, by contrast, might already have come and gone. Shares in Intuitive Surgical, the largest maker of surgical robots, fell 16% yesterday to $419.30, their biggest drop in years, after it announced that sales of its devices were lower than expected.

The revenue decline is partly due to economic factors – Intuitive Surgical’s robots do not come cheap – but suggestions that the systems permit results no better than those routinely achieved by flesh-and-blood doctors will also have taken a toll. And, worryingly, the panic seems to be spreading, with shares in fellow robotic surgery firms Mako Surgical and Accuray both dropping 5%, and Hansen Medical down 7%.

US falls furthest

Intuitive’s preliminary results reveal that it sold 143 of its da Vinci surgical systems in the second quarter of 2013, raking in $215m. In the same period a year ago, however, it sold 150 da Vincis for a total of $229m, equating to a 6% decline in revenue.

Management at the Sunnyvale, California company will be particularly concerned that the greatest decline came from the biggest market. In the second quarter of 2013 just 90 da Vincis were bought in the US, a 27% fall from 124 a year earlier. In other areas, at least, things are on the up: last quarter saw 21 da Vinci sales in Europe, 20 in Japan and 12 in the rest of the world, compared with 13, seven and six, respectively, a year earlier.

Certainly US hospitals are under pressure to cut costs, as Intuitive took pains to point out, and increased penetration of the market might also be a factor. But research that emerged earlier this year casting doubt on outcomes with the devices, followed by an FDA investigation into complication rates, might have tipped the scales in some hospitals’ decisions (FDA wonders whether robotic surgery is intuitive after all, March 4, 2013).

Overall the company’s revenue was still sunny; at $575m second-quarter sales were 7% up year over year, thanks to the fact that da Vinci owners are locked in to paying for disposable add-on devices and service. But this is much slower growth than Intuitive has previously displayed – the company’s total medtech sales growth was 24% in 2012, according to EvaluateMedTech.

And unfortunately for the surgical robotics field, where Intuitive goes, so go others. If surgery conducted with the da Vinci devices – the most advanced, and most expensive, on the market – is no better than that performed by hand, there is less justification for spending on the less significant players.

The tightening of hospital budgets could affect Intuitive to a greater degree than its smaller competitors as their machines are cheaper, but it will affect them nonetheless.

Intuitive is a bellwether for this industry, and the path it is describing is heading downward.

To contact the writer of this story email Elizabeth Cairns in London at [email protected] or follow @LizEPVantage on Twitter

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