Controversial market share numbers for soft tissue robotic surgery?

So during the SRS 2024 meeting I opened with a keynote talk on the current and future landscape of the soft tissue robotic surgery market. Download it here

My final graph is my personal projection of where all the companies end up with market share in the next 10 years. So by 2034. This was my prediction here.

10 year market share prediction soft tissue surgical robotics

Now this upset many people - not least some folks at Johnson & Johnson and Medtronic.

Actually even other companies were saying they think they would do way more than my meagre predictions. But before you all hang me, you need to understand that there is a lot of logic behind these numbers. And I do encourage all marketing teams, managers and C-suite to take a step back and understand how I got to these numbers. Here's how you get to the market value and then the market share with the reality behind the numbers.

Let me start with the market value - as this ultimately drives the market shares and the logic behind it. You need to go and READ THIS ARTICLE to get an in depth understanding of how big the soft tissue robotics market is, and how big it will become. This is the starting point for the market share calculations:

You end up with this summary slide:

soft tissue surgical robotics market size

Let's discuss today's market share in robotic surgery

So the bottom line - 2.3 Million robotic procedures were done in 2023, from a current market ability to serve (SAM) of 7 million.

So we are 33% penetarted into the SAM. (Serviceable Addressable Market).

But who own that SAM today?

Well of the circa - 2.3 Million procedures the market share is like this from what I can see / calculate:

Intuitive 2.2 Million = 96% market share of procedures today

CMR (number 2) - did about 10K procedures

Medtronic - 7K

Asensus - 5K

Toumai - 3K

SSi -3K

Medicaroid - 3K

DistalMotion - 1K

Others (Revo-I, Edge, MIRA etc etc) a very generous 50K

*Johnson & Johnson - 0K

(all estimates)

So all the others combined help towards that rounded up 100K procedures. (yes it's less I'm rounding) - but everyone together is about 4%

So as the clock starts running in 2024 we are going from a base of global market share of 96% for Intuitive.

But if we sub divide to USA that jumps to more like 99% (only Asensus and MIRA having any procedures in USA) - CMR, Medtronic, JNJ = 0%

So this is the starting point for the market share race. And as you can see it means that Intuitive has a massive installed base - and a massive lead as the race starts.

Let's talk about that installed base as that is the driving number that determines procedures and hence overall value.

Today 2024 there are circa 10K active systems for Intuitive across the world.

CMR has 168 Systems (according to the CEO on Device talks west)

Asensus has bout 100 systems

Medtronic has circa 70 systems

SSI has about 50 systems

Toumai about 50 Systems

Others maybe 200 systems all together worldwide - deployed and active

(all estimates from presentations and calculations)

So from installed base - you see that Intuitive has about 10K vs the others at 700 (total)

That then gives an installed base market share of 93% of the global installed base.

But we can see from publications and "productivity of systems" numbers that Intuitive is way better at getting the all important usage per system.

Intuitive averages 220 procedures per active system per year (even with ramp up numbers)

To help with some comparators:

CMR has 168 active systems - and are doing estimated 10K procedures per year (still growing) but that means the second most productive system is estimated at 60 procedures per system per year... or less than 30% of the productivity of Intuitive.

Medtronic has 70 active systems (debatable as inetl says over 25% have idled or come back) - but I'll be generous and say 70. Doing 7K procedures = productivity of 100 procedures per active system.. *you need to know that sites have reportedly been incentivised with clinical payments for any procedures contributing to the registry for US FDA submission.

Anyhow - if you put it procedures, installed base or productivity - then Intuitive has a gargantuan lead in this starting point globally - but even more so in the lucrative and biggest market the USA.

Clearances mean everything

If you are not cleared - then you can't sell - period.

If you get cleared but with limited procedures - you can't sell widely.

My bullish numbers for Intuitive in the USA is primarily based on the fact that 2024 / 2025 are the year of FDA clearance. Intuitive has da Vinci 5, Medtronic Hugo, CMR Versius, others coming along (but not JNJ). But not all clearances are equal - and this is critical.

DV5 has every procedure an Xi can do - staplers, ICG, advanced energy. That means it can drop in (and is fast - my estimates are we are at circa 100 systems installed USA YTD). That is critical in the race to market share. Speed of deployment from day 1 - more later. Plus they have the machine that builds the machine (12K employees) - training - clinical supoort etc all as turnkey. The others need to build that infrastructure.

Let's take Medtronic. They will have by end of 2024 (maybe) cleared Urology for a launch in say April 2025. They may, with good wind, get gynaecology and hernia by end of 2025 (launch 2026). But they won't launch with a stapler, ICG or advanced energy. In fact with the Asensus - Storz deal I can see no route to ICG for Medtronic in the short term - and that is a killer as it becomes a standard of care in some procedures.

So why would hospital systems in the USA buy a HUGO - excpet for friends, academic centres etc.

The same will be true for CMR, JNJ as they are "novel systems." Toumai may get in with wider clearances as it's an Xi clone and could get broader clearances? Or just need rapid 510K.

Anyway - you see what I'm saying: in the USA at least ,for the first 3 or 4 years of sales - many systems will be a long way away from the clearances of a da Vinci 5 - so will struggle to sell broadly. While DV5 can do eveything and be attractive to any hopsital.

Outside USA

The same is true of MDR outside of the USA. That has become even harder to get clearance and that changed from MDD and has now gone super specific for procedure areas. It just delays uptake of systems as they are not broadly cleared. And the same applies for EU tenders. All tenders (80% of EU business) will state - ICG, TORS, Thoracic, Gen, Gyn, Colorectal, staplers, adv energy etc etc. Why - because Intuitive can shape the tenders. That is a big barrier for new systems.

Now there will be some national support and national pride in home grown systems. China for the Chinese robots. UK for CMR, Spain for RobSurgical, Korea for Revo-I, Japan for Medicaroid, India SSi etc etc.

But as someone that has lived that. It helps but... not a lot. In fact if you look at deployments of systems, Intuitive still outsells everyone in China - and Japan, and UK, India, Spain, and Korea.

Ultimately health systems choose on features and functionality not just national flags. But some national pride will help the "Others category" in my graph to have a higher market share OUS. (I won't go into pricing and cost per procedure now but Intuitive will not only retain the higher numbers but the higher value by procedure.)

The next ten years

So now let me get into the nub of it. We will see an estimated increase from 7 Million SAM to a 21 Million SAM.

In that time as well, we can also look at some other important becnhmark numberts to set the future market share landscape. If Intuitive just keeps it's current march of circa 1000 new systems per year - you can take that base of 10,000 systems and add 1000 per year so by 2024 there will be 20,000 systems just for Intuitive.

But of course other robotic systems will be out - HUGO, Ottava, Versius Toumai etc etc.

So let's just for the sake of simple maths say that between them all move from 700 systems to (I'm saying 168 systems by CMR was in 5 years - so they crack on at about 50 to 100 systems per year, Medtronic 100 to 150 systems per year, JNJ 50 to 150 etc etc not taking market share as such) we could see all the others doing, let's say, 1000 systems per year - so that's an agressive 10K new systems.

So by 2024 we could see 20K systems by Intutive (with highest productivty and value per case) and 10K systems from all others. So let's imagine 30K systems, circa 20 million procedures by 2034.

(This is just one imaginary example to give a thought experiment. It also implies that Intutive has no acceleration of growth on installs - not likely. But go with me.)

What do companies have to do in the real world to make that happen?

So far we are just doing some mathematical projections and seeing if we can make some rough estimates. But based on my rough estimates there was some outrage that JNJ and Medtronic could not get to 50% market share- especially by some of their employees.

So it's time for a reality check by a me - a person that went from zero to 160 systems globally in 5 years (half the time window we are talking about.)

Let me use the JNJ example just to illustrate the madness that's coming.

10% for JNJ sounds tiny - pathetic. Right?

But if we use the 30,000 systems (let's start with systems) worldwide. That means that by 2034 JNJ will need to have deployed 3000 systems. Sounds reasonable right?

Okay - so they do an IDE starting end 2024 / 2025. And about 18 months recruitment if they go with a flawless IDE submission... review.. af few turns and they could have the initial clearance for say "Bariatric" by end of 2027. So a limited US launch in 2028 with a good wind. Lots of 510Ks for thoracic, gen surg, urology etc. Lots of 510Ks for stapling, advanced enegy and ICG (unless it has those on the initial system). But the key is they will have 1 or 2 procedures cleared by 2028 in USA.

Let's say some parallel path work and 2029 they get something similar in MDR for Europe. They will have Korea and Japan by say 2029 as well.

So from 2028 they can make a run at the USA and 2029 more of the world. Between 2028 and 2034 (the ten year deadline) they have a compressed time of 7 years of commercial activity because they start later. So in 7 years they will go from zero systems installed to 3000 (10% market share).

Let me break that down. 3000 in 7 years = 428 systems per year. Or (now it gets real) 8 systems per week (full 52 weeks per year). or 1.6 systems per day (5 days a week installing).

Are you getting this picture yet?

So from day 1 after clearnace they need to drop in almost 2 systems every single work day. Every day - for the next 7 years with out misisng a beat. Never not selling, never any delays in delivery, building them, shipping them, training on them and installing on them. Every single day of every single week for 7 years without missing a beat - just to get to that 3000 systems (10%). And this means regulatory never misses a deadline, the system works perfectly from day one. No Field actions, no macro global events etc etc. No supply chasin issues.

Let me slice that cake another way to get a feeling of the scale of what they are about to do.

So for every system you will need to have two trainers that will take the surgical teams and bedside teams through a full and formal validated training of say 2 to 3 days. (Offsite)

1 team of two trainers can therefore do two teams per week (no days off).

So you need 4 teams doing this week in and week out and never missing a beat. No lab cancelations, no surgeons ever rescheduling, no scheduling conflicts.

You will need to (every week) to train perhaps 16 surgeons, and about 32 nursing staff (JNJ can do training so no big deal). And each course will cost about $20K to $30K so about 250K per week in training - every week for 7 years - or $91 Million of training. (plus headcount)

You then need for every single system (for at least 1 year if not 2... but let's say 1) a clinical specialist that covers every single case (not easy to find - this is no suture rep - I'll say that loud. Most of the suture - endomech salesforce are not qualified to do this.) So if there are 428 systems per year you will need a minimum of 428 clinical support staff. Starting year one. And they need to be in the OR 8:00am to 6:00pm on every case (you don't believe me - you will learn). And that means no days off and no breaks - so you need closer to 600 to get coverage.

They run at about $80K salary so an investment of 50 million USD per year.

Oh and now you need service engineers. And geo coverage means you end up for the first few years 1 service engineer per system (it is not working straight out of the box I guarantee it. And you don't hasve sensiblegographical clustering.) So first few years you'll need about 800 field service engineers globally (good luck finding those specialists). In the first 6 months alone you will need to have trained and deployed about 200 of them to support those 1.6 systems per day.

Oh we forgot about "selling" systems?

As one of the few human beings on the planet that has created a soft tissue robotic commercial system, built a soft tissue surgical robotics commercial team from zero, hired, deployed and created advanced selling systems for this advanced capital. I'm going to say this. It is fucking hard!!!!!!!

Suture and endo-mechanical reps canot do this. Period. Get over that delusion.

And the sales cycle is circa 12 to 18 months for a soft tissue surgical robot. And to go through the process - sell the robot - close the deal - get all the contracting done - to hit 1.6 systems per day from day 1 is just insanity. To be selling every day almost 2 systems per day - without missing a day - from day one for the following seven years is a massive lift.

And it doesn't matter if you are "giving them" in your deal - you still need to go through the process. Oh that's right... tenders. You may want to sell at that rate but you have to go through the tenders (18 months) and actually win the tender against all the other robots - including a fully armed da Vinci (Xi or DV5). Then you need to convert that tender into a contractual sale. And you need to be winning 1 in 10 tenders from day 1. Every week you need to win at least 1 tender from day 1 without a miss for 7 years.

If you do all of the above flawlessly - at those numbers, you will have deployed 3000 systems across the world (1/3 of what it took Intuitive to get to today in 25 years) without a single problem, miss or issue. Day in day out while running your endo-mechanical business on the side.

So what does reality look like?

Above I've painted the perfect world of nothing going wrong. And with that assumption, to get to 10% market share of installed base it feels like insanity. But my story above is a perfect linear growth and well... that is not how the world works.

Medtronic in two years actually have deployed about 70 systems. CMR in just under 5 years 168 systems. So Medtronic in the eraly years is running at about 35 systems a year or less than 1 per week. And to get to the magic 15% they need to start to ramp in the next 10 years to about 10 per week. That's a big gulf.

In the JNJ scenario - the reality of ramp up is that they might (if lucky) do one per week for the first 2 years - so that gets them maybe 170 systems by year 2. That leaves over 2800 for the last 5 years. So let me spell out how that will possibly ramp.

Possible Yearly Sales

Year 1: 70 systems Cumm: 70

Year 2: 100 systems Cumm: 170

Year 3: 200 systems Cumm: 370

Year 4: 300 Systems Cumm: 670

Year 5: 400 systems Cumm: 1070

Year 6: 500 systems Cumm: 1570

Year 7: 700 systems Cumm: 2270

Total systems in 7 years = 2,270 systems installed. And this ramp up curve is based off regulatory clearnaces, geography, tenders, product features, procedure applicability. And it means they need to get to 70% per year of what Intuitive installs today with 12,000 robotic dedicated employees that are not distracted by suture, staplers etc.

So am I being tough?

So when you consider all of the mamoth challenges and a short 10 year window - to get to just 3000 installed base or 10% of the projected 2034 number. Am I really being tough?

You have to remember that Intuitive is starting with 10,000 of those systems installed today. And they just need to double that number to retain those lofty market shares.

Every other company from an almost zero number has to (all together) get to 10,000 - a number it took a monopoly to get to in 25 years.

Now again %s can be deceiving. If JNJ got to just 10% market share that is a big sales number.

In today's money - 10K systems are generating $7.1 bn - so let's have a bit of inflation and a bit of procedure cost compression - and say that is worth $9 billion in 2034. So we can extrapolate that 3K systems for JNJ would be worth roughly (very rough) $2.7 billion.

So JNJ would have built a $2.7 billion business in 7 years.

Medtronic a roughly $4 billion business (they have almost 5 years head start)

So yes, % wise, I'm saying it feels small - but abolsute $ it's a good business. Right?

Well sort of.

The expense to get to that number is clearly fearsome. Intutive will reap the last 25 years of investment by leveraging all the fixed robotic team infrastructure. Plus as the DV5 has only a small in hopsital delta training they won't need all that professional education costs. Plus they already have 1:10 field service as their reliability is so high so they don't have all that costs to add. Plus a lot of users will just add systems and procedures - they won't need as many clinical specialists to get that growth.

So their margins will look awesome - where as JNJ and Medtronic on their respective $2.7 and $4 billion will not be seeing the high suture, and stapler margins they once coveted.

In fact they will be in the very low margins for the first 10 to 15 years. But hey - it's do it or die and a long term play.

The other companies?

I want to be clear about this. A lot of people said that Stryker is not on the chart and "they will come an own a lot of this market!"

Well my graph is based on the declared intent and action of JNJ and Medtronic and the conservative "Wait an see" of Stryker. If they join the fray I doubt it is directly head to head with Intuitive (Kevin Lobo said it.) But if they get a "robot" I'll adjust the graph. Until then this is the reality I'm working with. And even if they come in... they are getting 5% to 8% market share.

So 15% for all the others - is still 4500 systems out in the wild. But over the next ten years the majority of the 30 other contenders will implode, or get firesold, or get marginalised in a few markets. Or perhaps even acquired in to a bigger company. Yet even with that said - all the rules apply above for them to get to 4500 systems. It's a huge mountain to climb and as a group (of others) worth $4 Billion. Nothing to sniff at.

But honestly if the might of big blue (Medtronic) and big red (JNJ) can only crack 15% and 10% respectively - let's get real. Do the others have the billions to plough into commercialisation? The deep pockets?

5 years and 168 systems by CMR Surgical who are the clear number two player. So in another 10 years maybe 500 for that number two contender today. We need to be real about what "others" can actually do in the real world.

Disclaimer

I don't have a real crystal ball. No one does.

I do have certain "experiences" that lead me to my conclusions.

Things can change radically - such as FDA is not obtained, systems don't perform as expected.

Things can change radically - a new disruptor comes to the market

Medtronic or JNJ could buy up other systems and get some of that 15% "other" market share.

What I'm saying is - that this is my best guess today sat in 2024. But my guess is based on some form of logic (agree / disagree). But anyone with their outrage that says "We will get 50% market share - we will be a da Vinci killer!" as I heard after my talk... They are free to come up with their own arguments and logic and prove me wrong. (But run the math.)

Look - I'm like a broken clock. I'm right twice a day just by default. What time is it?

These are just opinions of the author for education purposes only. They are probably wrong so don't rely on them for investment purposes.

Footnote: For those that said "Steve is pumping Intuitive to get his stock price up.". Disclosure - I do not own a single share in Intuitive, I never have. Zero. I have no connection to Intutive - nothing - zero. These are just my 100% independent observations and what i think are the possible outcomes.