Over the next three to five years we are going to see a major shake up in soft tissue surgical robotics. We will see Intuitive solidify their already formidable lead. We will see Johnson & Johnson launch their belated Ottava. We will see Medtronic regroup and relaunch Hugo with staplers and Ligasure. (We may at the end of five years see HUGO 2.)
The Chinese robots will all find their level. Hinotori from Japan with be on a very slow and selected roll out, outside of Japan. Many of the smaller companies will either die and wither on the vine. Or like Asensus, a bigger company, like Storz will buy a few of them.
We will see a continuing reduction in manual laparoscopy cases (In the markets companies genuinely care about), and we will see (as I predict) the collateral damage that the Da Vinci 5 tower will wreak havoc with. That will hit Olympus and Stryker equally hard in their respective leadership markets.
It’s going to be a time of consolidation - and Storz buying up Asensus is the start of this next wave of consolidation.
Many investors in Asensus are outraged by the “low valuation” Asensus gained through Storz.
Many people don’t get why Storz would even do this. They are not a robot company.
So let me try and unpack all of this for you below - from my humble perspective.
Who are Storz?
Just in case you’ve been living under a rock for the last few decades, let me get to who Storz is. But let me put it into some perspective of the world of Soft tissue robotics.
Okay I got bored of the usual history of a German company - as it wasn’t so exciting so I asked Co-pilot to rephrase their history with some drama: “Once upon a time in Tuttlingen, Germany Dr. Karl Storz wielded his visionary scalpel and carved out a legacy. Armed with innovation, he founded Karl Storz SE & Co. KG in 1945.
But this wasn’t your ordinary medical equipment company. Oh no! Karl Storz was the trailblazer—the one who introduced endoscopes that danced with light, courtesy of fiber optics. Imagine tiny explorers navigating the human body, illuminating secrets hidden in its nooks and crannies!
And that wasn’t all! They even licensed the patent for the Hopkins relay lens, turning ordinary endoscopes into magical lenses that revealed the inner workings of our flesh and bones.
Fast-forward to 2012: 5,800 brilliant minds across the globe donned their lab coats, fueled by a mission to improve lives. With annual sales soaring to a whopping 1 billion euros, they were like wizards conjuring miracles in operating rooms.
But wait, there’s drama! In 2017, lawsuits swirled around Karl Storz like a tempest. Their morcellators, once hailed as life-savers, faced scrutiny. The FDA raised its eyebrow, whispering, “Withdraw them!” Ethicon, the market leader, obeyed, but Karl Storz stood defiant.
And then, a metamorphosis! From GmbH to Societas Europaea, Karl Storz transformed its corporate form. Like a phoenix rising, it spread its wings across continents.
In the land of maple syrup and hockey, KARL STORZ Endoscopy Canada Ltd. emerged, offering Canucks direct support. Meanwhile, across the ocean, Karl Storz Endoscopy-America, Inc. thrived, a beacon of innovation since 1971.
But the saga didn’t end there! Karl-Christian Storz, the heir to this medical dynasty, took the reins. His mother, Sybill Storz, donned her crown as the head of the supervisory board. Awards rained down upon her—entrepreneurial accolades, social commitment medals.
And so, dear reader, the tale of Karl Storz continues—a symphony of light, lenses, and unwavering resolve.”
Okay, a bit weird. But hey it sort of works.
Let me add some context to how a leading tower, scope, imaging system and smart operating room manufacturer fits in to the whole world of surgical robotics.
In some parts of the world if you want imaging, you bought a Karl Storz tower. Today they have some of the best imaging systems for laparoscopy on the planet - of particular prowess is their range of general surgery towers and scopes. Rubina is a name that should be familiar to many.
It’s a gorgeous 4K imaging system with a world class white light ICG technology. It’s a combination of camera, tower and scope technology that gives crystal clear imaging technology.
They also (and keep your eyes on the prize here) have a phenomenal 4K 3D chip on tip version. White light ICG (NIR - Florescence). It is in many ways a class leading system.
Now Stryker will say their 1788 system equals or betters it. But it’s really small difference between the two in my book. User preference.
So for nearly 30 years - Storz has been a major provider of towers, imaging and scopes to the world of laparoscopy. Throw into that a lot of nice reusable instruments and you can see how they got to be a company that has reached over a billion in sales.
The issue is that laparoscopy has slowly become under threat with the rise of the surgical robots. Surely but steadily Intuitive over the past 25 years has been gaining share. And every time you buy a da Vinci the small heart of lap tower beats more slowly. (I’m in a poetic mood today.)
Now unlike most of the tower and imaging companies - Storz had some vision (you see what I did there…) They understood this trend and decided to offer their imaging chains to several of the emerging robots. Note well: Not Rubina. No they have kept that jewel for themselves (you see what I did again there…)
They let companies like Medtronic have their older HD 3D versions of their system, but with no ICG, to use on their robot.
Correction Note - Medicaroid Hionotori does have Rubina on board
“Why?” I hear you scream at the screen. Well because they wanted systems to have good imaging - but not just the best that they have - so that a hospital - if they wanted to also use the tower for lap - would choose a Rubina - so effectively they get a double dip. Quite a nice plan.
But wait - there’s more. For me it has always been clear that they have been reserving their best system for if ever they decided to wade into the surgical robotics pool. Rumours came and went that they had their boffins in Tuttlingen looking at their own robot. I mean they do have a lot of capability in that company.
But I guess they (like everyone else) decided that the lift from zero, navigating the vast patent landscape, the cost and the time were too much.
But as laparoscopy was under constant attack - they had the sense to think “We do need to do something or we will get left behind.”
Let me take a small side trip here - as I want to mention another critical part of their business. OR1. For those that don’t know what OR1 is… it is a super smart - modular - workflow enhancing OR integration system (the OR build). See here for some details https://www.karlstorz.com/it/en/or-integration.htm
I want to mention this as it has significance for both he Da Vinci 5, and the Asensus deal.
Basically as a surgeon you can control - through touch screens (yes they have sterile films on them) every aspect of the OR as well as record video, bring in pre operative scans, images etc, add notes, change where vision chains get shown, broadcast etc.
It is hyper focused on improving surgical efficiency through work flow - but so much more. Later I want you to focus on Asensus ISU (intelligent surgery unit) as the two are a great integration match.
Who are Asensus
In effect they are the second wave pioneer of soft tissue surgical robotics. Most people would know more the name Senhance and the older school will remember the system called ALF-X under Sofar - the Italian Pharma company.
Let’s delve into the history of Asensus Surgical (formerly known as TransEnterix) and its journey from the ALF-X robotic-assisted surgical device to the present day:
In 2015, TransEnterix acquired the ALF-X robotic-assisted surgical device from Sofar SpA in Italy for $100 million. The ALF-X was rebranded as the Senhance.
U.S. approval for the Senhance was granted in October 2017, leading investors to bet on its commercialization. Where the Senhance was positioned as a competitor to Intuitive Surgical’s Da Vinci system, which had so far (you see what I did there) dominated the surgical robot market for two decades.
However, the commercialization of Senhance didn’t really meet expectations.
Revenues peaked at $24 million in 2018 but fell drastically to $3 million by 2020.
A lot of industry insiders openly questioned how the company was still in business given the disappointing results.
Prior to Senhance, TransEnterix itself faced some challenges:
The SurgiBot robot was rejected by the FDA in 2016.
The SPIDER System, a manual surgical system, generated minimal sales and was phased out by the end of 2014.
The company’s financials reflected losses, with an average annual loss of $100 million since 2016.
Despite a recent name change to Asensus Surgical, the company continues to struggle.
A lot of people feel Asensus Surgical’s journey has been marked by setbacks, failed commercialization efforts, and fierce competition. Revenues have dwindled, and a turnaround seemed unlikely. The company’s vision of integrating computer vision, machine learning, and surgical robotics remains a challenging endeavor - but they do have some interesting elements.
The issue with Senhance.
People buy surgical robots for stable 3D vision, wristed instruments and natural hand movements. ALF-X and Sofar bet the farm that what surgeons really wanted was to mimic current laparoscopy but sat down at a console. They missed the mark. The reverse paradigm of hand movements (inverted movements), straight instruments and (frankly) massive oversized modular bedside units just made the Senhance undesirable by most surgeons and hospitals. It really was not seen as a competitor to da Vinci in any real terms.
They did have a few “unique” features such as a range of 3mm instruments for paediatrics - which got some interest.
But generally - sorry to say - Senhance was a flop. However in the background some really nice work was going on, as they understood early on that digital surgery would become a mainstay of surgical robotics. Visual scene recognition, recording to the cloud, analysis and insights. So the team spent a lot of time and effort on their Intelligent Surgery Unit. An add on box that does a lot of real time analysis of the surgery scene. Note I say surgery and not just robotics! That’s important because when Storz see the world - they do not see it through a robotic lens. They see it through an imaging lens (I just keep doing it, don’t I.)
So when they are looking at the value of Asensus - they are looking at the broader picture.
Last year Asensus revealed that they had “learned their lessons” from Senhance and were working on a new second generation robot called Luna (see my full review HERE).
In this system they have decided that natural movements are needed - and that wristed instruments is what anyone actually cares about. They’ve taken the good of Senhance - modular, open screen, virtual pivot points and smaller 5mm instruments. And added in some of the features that surgeons really care about. Wristed instruments and natural hand movements.
But they were still to be stuck with the older HD 3D imaging system from Storz… ohhhhhhhhh! Hold that thought.
So basically Asensus is a struggling company - but with a really cool ISU (intelligent surgery Unit) and the promise of a second generation robot that can build upon all of their know-how and history.
Let’s not underestimate the know-how and history of actually building robots, servicing robots, shipping robots, getting a clinical program up and running. And Selling robots (or rather selling a robotic program.) Medtronic are understanding how hard that wall is to get over and JNJ have that little surprise to deal with yet.
And in the back pocket of Asensus is a second generation of robot - LUNA - that has some promise.
And on top of all that their share price is low and the price to buy them is sub $100 Million.
BUT you do get debt, and a ton of future costs to unwind Senhance customers, complete LUNA, launch a system and make a success. Maybe $500 million to $1 Billion of future costs. So the price tag may seem cheap on the surface - but it’s the drag along costs that you need to really watch. It’s like when you buy an old boat. The purchase cost may seem good - but wait until you need to scrub the barnacles off.
Da Vinci 5 - the tower of doom
Now not everyone is on the same page as me here about the tower and integration you get with DV5. Some people think I’m being too outlandish in my predications. So be it. Funny a lot of those come from slightly biased tower companies… hmmm.
Let me say my thoughts again. The DV5 tower with its full integrated components including a super capable insufflation system, and an HD, ICG hand held camera to boot; along side the intelligent electrosurgery unit, the super smart robotic imaging unit - and more compute power than a 2015 Mac (sorry I can’t resist on the 10,000X more compute power.)
You put that all together with a super connected ecosystem that any surgeons can drive from right inside the cockpit - and you have basically just created a virtual OR1 - right inside the cockpit of the DV5.
No it doesn’t have all the functionality — but… hang on. There’s also the da Vinci Hub that it comes with that allows case logging, video upload, annotation.
Oh and of course Tile Pro that allows pre operative images and 3D models in to the cockpit.
Oh and it all links both ways to the My Intuitive app - and allows fast presets for workflow (wasn’t that the word for OR1) and data insights to flow back to the user and hospital.
Historically for the primary entry - most people would drag in a secondary lap tower - it would give the primary entry imaging and the insufflation. Oh that’s right with DV5 you don’t need that anymore… at all.
Hang on…. hang on… if the second manual laparoscope on a DV5 tower is “just for manual entry” how comes it has NIR (ICG) on it…. Erm…… ahhhh…. Ohhhhh.
Oh and boy does all that info from that camera go to the Intuitive Hub and cloud…. Hmmmm
Well now. Intuitive are not getting into the tower business - but they are getting into the tower replacement business. Get the difference?
Scenario: A hospital leases 3 DV5 full systems and also ask for 3 Extra towers. So now they have 6 Ors with DV towers in them. The extra 3 are simply to allow the boom and the console to be moved to any OR where there is a tower and that OR becomes a robotic OR. Just two things to move. But wait… when those 3 towers are not hooked up to the robot… (Or in a DV operating room we do a lap case…)
Hospital - “Could I use just the tower for my lap cases?”
Intuitive - “Sure no issues - it’s there right. Just buy the insufflation consumables.”
Hospital - “Cool. And will you charge us in the pay per click usage?”
Intuitive - “Nah - it’s on us. Just got for it. Erm it is plugged into our Hub though right….”
Hopsital - “Sure. But not sure what you’d want with all that laparoscopic data you are hoovering up.”
Intuitive - “Yeah. Don’t worry about that. But if we were to see that your robotic cases have better outcomes than you lap cases, and take about the same time. We just might let you know.”
Hospital - “Wow that’s selfless of you. Thank you.”
Intuitive - “And at that point if you then decided to do more robotic surgery and have more surgeons do robotic surgery… You know the lap surgeons that are on the fence until we give you data back… we just need to modify the contract and wheel more consoles and booms in. Simple.”
Hopsital - “Wow you are so considerate… Oh so I guess those three towers we were just about to upgrade from Stryker or Storz. I guess that We don't need to do that now.”
Stryker - “What?! But we sell you the towers and service contracts”
Storz - “Hold up. We sell you towers and service contracts - what do you mean you’ll just use the DV5 towers now?”
Intuitive (Whistling in the corner.)
So the tower companies are understanding that there is a “minimal” threat to a piece of their business in the general and visceral surgery business. Minimal….
There is also a very modest threat to their smart ORs - as if the main driver of acquiring a smart OR integration is a general surgeon - the new capabilities of DV5 may well now put that purchase on hold. Modest impact.
And remember - to underline all of this. Intuitive and DV5 will be affecting the markets that Storz, Stryker and Olympus “Care about” - where there is demand and money available. The richer developed markets. The profitable markets. Just saying.
Storz and Asensus tie up
Okay so let’s get to the meat of it. Anyone following the news has seen that Storz is acquiring Asensus and all of its assets. This immediately propels Storz into the world of surgical robotics with Senhance, plus gives them a solid R&D pipeline with LUNA, as well as acquiring the ISU - that can be integrated into their smart ORs and towers - bringing intelligent insights (not only to the robot) but to their entire imaging and OR portfolio. I told you they cared more about things than just robots.
And all for a decent price.
Storz brings to the party what most systems have been crying out for. They immediately have their best in class Rubina 3D 4K ICG white light imaging chain on a robot. That will propel any robot to best in class as soon as it goes on. A lot of surgeons might make the call to get an Asensus robot just because of the superior imaging (well the robot has to work and have wristed instruments) but Luna brings that to the game. And let us not forget - Storz bring very competent and connected tower components to the party with energy chains and insufflation etc etc. Pretty smart and comprehensive robotic tower.
Asensus does not require a lot of “unwinding” of bespoke internal image chains for them to match the two halves of the system up. And they can quickly incorporate all of the Storz goody boxes into the tower.
Plus - you now have the chance to bring the robot deeper within the OR1 framework and capabilities - and lend much of that capability for genuine Smart OR workflow into the Asensus robot cockpit and HUD.
But one other thing that Storz brings is their global footprint and leverage of infrastructure. It gives Asensus a small army of highly competent sales people that have reach and know how to sell into hospitals large capital purchases.
So when you start to go down the tick-list of what each other gets - it’s actually quite a nice match when you move to the integration. Technically and commercially.
Both share technical knowledge back and forth, and both share commercial know how back and forth.
I’ve already seen a lot of people gnashing their teeth at the valuation and ultra low price they feel Asensus sold out to Storz. But if you want my opinion… it’s a good and fair price for Asensus. Because the BATNA (Best Alternative to No Alternative) is chapter 11 and a total fire sale.
Plus you really have to consider that the amount of cash that Storz now needs to throw at this to even get back the $100 Million is going to be fearsome in money - time - focus and effort. This is not a “risk free” deal for Storz.
The question is.. can they do what other strategics are failing to do “Launch a surgical robot the right way?”
Their first challenge will be how they deal with existing Senhance installed base - and making some strategic decisions about how long they will continue to service them. It may be 3 or 4 years until Luna is ready for a first approval - so they may (as I saw today with even more installs) keep that base growing organically and keep the business ticking along. Every install creates a customer - and builds on their ISU data sets. But it also risk (if they have a poor experience with the system) setting a sour tone with some customers.
But - as with all robots - when you win the business you are on the hook for at least five to seven years as a supplier.
The next challenge - which will be much easier - and I think a key focus - will be to incorporate the ISU - build on that and bring that to all their towers and OR1s across the world. This will be an immense value add to their system and start throwing off tons of data, and starting to build that robotic digital ecosystem ahead of LUNA. This is critical for all companies in the future. Having that blend of robotic and hand help lap data.
So to the final and biggest challenge. LUNA. Although the system is some way along, it will still take a massive lift to get that system finished, and get a manufacturing up and running. Get through regulatory submissions and launch it as a commercial product.
The one advantage they have is that they can genuinely launch this as the first “Storz” system. And to get there - the Storz engineers may have a few things they want to throw in on vision chains and instruments.
Plus of course the full branding and launch plan will probably be Storz biased rather than Asensus biased.
The hard part will be “How much autonomy” do you leave with Asensus and their engineers and how much does it become a more integrated product.
Some people think they will abandon both Senhance and Luna - and focus on the ISU. But I do not see that at all.
Lots of decisions for both teams to bash out around the table.
In all I see this as a smart and positive buy for Storz in the short term - the reality will be when they lift the hood on this and see what they really need to do, spend and focus on to get the full integration of the parts.
What about Stryker and Olympus (and maybe Aesculap)?
The impact of robotics and the DV5 tower is certainly not just isolated to Storz. There will be impacts on Olympus and Stryker as well. Some people are shrugging off the DV5 tower saying “It’s irrelevant” to Stryker and Olympus. Well time is going to tell us quite quickly. We will see the impact by Dec 2025 in the USA. Is my guess. Once Intuitive have a full year run and shift north of 400 systems (my Guess).
But what it says to me, is that this seismic shift in the laparoscopic landscape will force them to at least review. I have covered extensively HERE the impact I think it has for Stryker. And I think they will take on a Moon Surgical if they are smart.
Caveat: Maybe JNJ are seeing a need for a side bet…. Maybe Stryker are too late - let’s not forget JNJ have a stake in moon. They may have some options of first refusal here…
And I think Olympus may call in their bet on DistalMotion Dexter that they placed some time ago.
What I think we see is a consolidation start to happen where Olympus, Stryker and maybe Aesculap will place some deeper cards into robotics as a way to move to protect their own tower systems and smart ORs. And let us not forget that now with the acquisition of Asensus - Storz have thrown down a direct gauntlet to all the other imaging companies. Boom. If not checked by Stryker then we could see this help to get Storz a stronger foothold in the USA (Senhance is one of the few systems FDA cleared.)
What about Medtronic and others
The benefit of using someone else’s vision chain - like an older Storz system, is speed and allowing their expertise and manufacturing to bring their skills to the table. But the downside is that you are reliant on a vision chain you do not technically own.
And if (I’ve seen examples of this) you have a short supply agreement - say six months - then you better hope that your supplier does not become your direct competitor overnight.
Once Senhance is in the Storz bag… HUGO is a direct competitor to Storz - who happens to be the supplier of their vision chain. Oops.
There is a remote possibility here that Storz closes off (but they still could make money supplying their older systems) the supply to all competing robots. For sure 100% they will never now see Rubina with ICG on a HUGO. For me, that’s a given. The advantage of having THE premium image chain on their own assets is way to big.
Any of the other companies relying on Storz know how, imaging and integration need to get a plan B like yesterday.
Besides that, what it means is that a pretty competent capital sales organisation has just become a direct threat to them from a fairly substantial base of knowledge. And that direct competitor will have a world class imaging system that will leapfrog all of their competitors. And even for a short time that imaging will beat Intuitive (watch this space for Intuitive’s accelerated 4K 3D white light ICG.)
For Intuitive - it is defiantly a strong competitive combination - and in Germany - the home turf of Storz - it should be of some concern to slow down placements of Xi for now and DV5 in the future. In fact a lot of Europe has a very healthy respect for Storz. Great quality supplier, strong service capability and reliable. They also have a pretty strong distribution network across the globe. They just made life a smidge more difficult for Intuitive. A heap more difficult for Medtronic.
For JNJ it may have complicated things in some ways. Why? Well JNJ for the longest time should have bought Storz. It would have massively strengthened their surgical position. It would have given them leadership in some areas of visualisation and would have strapped booster rockets on their Ottava.
But if they buy Storz now - they also buy Asensus - and that complicates things. But who knows - as the dawning realisation that vision and capital know how is way more important than they thought — it could be a purchase they still need to make. And hey they do get some extras robotics know how to boot. (But this time boost commercial real world experience which they are lacking.)
Summary of Storz and Asensus
Despite Senhance (for me) being a bit of a flop over the years - I think Storz has been smart in seeing the direction of travel. I think this purchase has at least put a chip on the table to mitigate a lot of risk for their tower business and OR business whilst giving them a foot into the robotics market and potentially a lever to hit Stryker harder in the USA.
The losers are clearly the companies that are relying on Storz’s imaging chains… and hoping they would get their Rubina platform soon.
The losers are the other tower companies that have just had a major competitor take a lead in robotics.
The winners are clearly Asensus - who, without this acquisition were heading to chapter 11 in my book. And Storz that have gained a robot on the market with multiple geographical clearances (heat including Japan the home of Olympus.) A robot in development that could even leverage off those Senhance clearances. The Intelligent Surgery Unit that will help in robotics and their lap business. And a head start in the understanding of the full commercialisation chains of a surgical robot.
Watch this space on Storz.
These are just opinions of the author for educational purposes only and do not reflect any inside information or insights. Do not rely on these statements for investment purposes.
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