Surgical robotics and the demise of manual laparoscopic surgery?
- Steve Bell
- Jul 15, 2024
- 9 min read
Updated: Jul 30
So let me preface that I’m not writing a Scientific paper here - so don’t hold me to the references and all that stuff. This is a blog post to stimulate some mental debate in our community.
If an academic wants to re-write this with deep citations etc - go for it.
Instead I’m going to talk about macro trends - because for me that is how the world works and becomes the best guesstimates of what happens in the real world. Individual data points (no matter how strong they are) can lead to a false viewpoint.
Firstly I’m going to show a series of graphs on the impact of RAS on both open and laparoscopic surgery:
You can go google these with the complete references - they are from a bunch of specialties - mainly USA some are quite old - some are a bit newer. But they all show the same trend.
When robots come into a hospital... both open surgery and laparoscopic surgery convert to robotic. Pay attention to manual laparoscopy...
Again don’t get too hung up on the exact numbers - and the exact percentages - because there will always be bias and errors. But look at the overall shapes of the graphs and the trend of what happens when a robot enters service in a hospital. Look at what happens at a gross level.
The past logic when looking at urology was that open cases went to Minimal access on the robot (let’s call it robotic surgery.) And that was true - because most urologists were doing open cases - and they jumped over lap and went straight to robotic.
But what is the reality in modern times - especially in general and gyn surgery where a large % of cases are already done MAS (laparoscopic). What we see is that those MAS cases (because they were well suited to MAS) are the first natural cases that go across to robotic cases. Then as the users gain confidence they start to bring across their open cases (the mental justification they bought the robot in the first place for many.)
But what is clear on those open cases is that there is no “skip to lap and then a later transition to robotic.” You get an almost instantaneous move to robotic from open almost at the same time as many of the historical lap procedures come across.
So what does RAS mean for laparoscopic surgery
Well lap surgery will continue to increase with estimates of 4% per year growth with aging population, uptake etc.
But what we have seen is a 20% plus growth in robotic cases - and some big blips of 22% - that are estimated to settle back down at 18% YoY growth - way outpacing the natural lap growth.
2023 Intuitive did 2.2 million procedures - if (big if for the maths) they continued at a 20% YoY growth rate (plus Medtronic and others accelerating that growth) we could see 4 million procedures being done robotic in 5 years.
A big chunk of that 2 million delta vs today will come out of current lap surgery. And that should be terrifying for JNJ and MDT unless they can gain significant market share in lap.
Numbers are always hard to come by - but one estimate is that in a time when Intuitive grew procedure by 20% - Ethicon moved from 4.87 Billion to 4.9 billion -a fraction of a % increase over that time. I’m going to assume that there was significant procedure loss of cases that went form a JNJ or MDT lap case to an ISRG case… a lot.
I can’t guarantee it, but I think that staplers, advanced energy and hernia tackers will have been major casualties (for Ethicon and Medtronic) during that time period.
I think that 2024 exiting numbers will give us the future trend of how much the lap leakage to robotic will really start to hurt these companies. We need to look at the ISRG procedure growth YoY and the impact of flatlining - or going backwards for JNJ and MDT. If they are not beating the 4% natural growth - then that means they have shrinking businesses.
Rumour - and it is just rumour - on the streets is that they are already losing some significant endo - mechanical business in some of the most important markets.
Let me do some very horrible and bad maths here - which you can shred if you want - but again I’m trying to get to the thought experiment - not super detailed facts.
On a base of 2.2 million procedures - if Intuitive grow at 18% this year - that is about 400K new Intuitive procedures - and you can throw into that pot about 100K procedures all other robots combined take on - so nicely I will round it to 500 K NEW procedures will be done on the robot.
I estimate with a wet finger in the air - that about 70% of those will be lap to robotic as growth is in gen surg and gyn - VATS to RATS etc.
So we could see 350K or more procedures leak from current lap to robotic.
The issue is that much of that will be good trocar business, stapler business, energy business for Ethicon and Medtronic. Let’s say half of those procedures hit one of those three categories.So, 175K of procedures lose some form of value from Ethicon / Medtronic to the coffers of Intuitive (who gains way more value than the other companies lose by the way.). That’s because if they gain the trocars, the staplers, the advanced energy that the competition loses - Intuitive also gains, Drapes, accessories and the instruments (that MDT and JNJ really don’t have a business in today.)
Let’s say that we lost some staplers ($600 a pop - $900 a case) - or some advanced energy $400 per case - and we lose an average of $1200 of value from 175K cases.
That my friends starts to be $200 Million of value leached out of JNJ and Medtronic in one year.
And that leaching compounds year on year. And this is a best case scenario.
In the most dire scenario apply that $1200 loss to every single case that Intuitive gets (as the legacy companies lose open products as well) - 500K procedures at $1200 value loss per case = $600 Million of risk! - per annum between Medtronic and JNJ.
And for each case that Intuitive gets (if we are looking at leasing, servicing, instruments, advanced instruments etc etc) could be gaining $2300 to $3800 per case.
Now yes there is the pool of overall procedures filling up at 4% - but that is not offsetting the loss in the endo mechanical space the two big companies are feeling.
So if this trend gets more and more of a grip, we could see a faster and faster demise of the lucrative segments of the laparoscopic market - and that means a lot of pain for lap surgery companies such as Ethicon and Medtronic. (And in hernia it could also hit companies like BD and their Bard franchise.)
RAS procedure areas to watch
Most people would think that low acuity procedures such as lap inguinal hernia are not the realm of the robot. But surprising as it may seem 28.8% of all inguinal hernias are already performed with the robot in the USA.
40% of all hernias are done minimally invasive - with robotic now over taking the manual laparoscopic method. So there are about 11% of the lap hernias that are likely to come across to robotic in the next 5 years - and then more of the open are likely to also migrate across. If you are a heavy tack company like Bard - you should be watching this closely. If Medtronic get a grip in hernia with HUGO - then mesh companies like BD and even Ethicon could fall fowl to a surfer of Medtronic meshes being used in lap.
Also note 11% of colorectal are done robotic and 11% of thoracic are done robotic (USA) - so they are both prime to come across to robotic for many good reasons - and they are rich in energy devices and especially staplers.
Now just look of the impact of a robot on Colorectal once it enters the service in a hospital.
Boom that is a lot of rich pickings that are moving from open - lap and the JNJ and Medtronic camp into the robot camp - dominated by intuitive.
Gynaecology is also a high growth area and this can affect energy devices as well as surgical stapling devices.
All in all as the “richer” procedures come across to the robot - in the prime markets where JNJ and MDT make high proportions of their profit in these procedures - then pressure will grow. It is no wonder MDT scrambled to get HUGO on the market and JNJ is pushing as hard as I’ve seen any company to make up for lost time, and get Ottava out there.
I have no clue what BD will do - and there is little “rumour noise” on the street that they are looking to buy a robot. But if they want to stay valid in hernia - they should think about it.
What about that impact on the laparoscopic tower companies?
I’ve covered this in other blog posts - but every DV5 or Medtronic system that goes in today brings with it a highly capable tower system. And each tower placed as part of a robot contract is a threat to the traditional tower companies - Storz, Olympus, Stryker. (See my post on Stryker.)
Some numbers to see the impact on lap centric towers could be:
There are approximately 38,600 operating rooms across US hospitals - with an average of 7.7 Ors per hospital.
Add to that about 16,500 operating rooms across the ASCs
So a very very rough guess would be that across those 55,000 operating rooms there could be roughly 30,000 stacks for laparoscopy (I’m just guessing that number so correct me if I’m wrong.) I have allowed this number as some stacks are shared - some specialties so the OR doesn’t need a lap tower. If there’s a robot there may be no dedicated stack already if that is an OR only used by the robot.
Another number would be that there are roughly 10,000 robots active world wide - and 60% are thought to be in the USA - so 6,000 robots active in the USA - from 55,000 ORs is about let’s say 11% of ORs in the USA already have a robot in them. (Don’t hold me to this - think big picture…)
So let me add in that the upgrade cycle of a modern tower is that you probably upgrade about every 10 years or so (may be faster in the USA - let me know) - but if there are 30,000 stacks in use - and every 10 years there’s an upgrade - that could be an average of 3,000 new stacks every year for turn over and let’s say 500 new towers for a generous growth. ( I really am pulling these numbers out of my A$$) so we could see 3500 new towers for lap surgery in the USA every year.
That may be a good enough number too give its a gross baseline.
Won’t do it here now - But if you look at the past growth of new robots in the USA about 700 plus per year through change over upgrades or new installs is a good number. And I will assume that the majority of new installs in the USA in the next 5 years will be DV5, and a few of those will get additional towers to make use easier across ORs.
(Remember every lap use of the tower today is not charged on the Pay per click models so the hospitals are very incentivised to use the DV5 tower off robot.)
If this is even ball park correct you could see in the worst case scenario 500 new DV5 and towers - that will grow to about 800 per year in 5 years.
If it is just 500 new DV5 / Towers - and the hospitals decide they no longer need to buy a new tower - that is 500 of the 3500 new lap towers that goes away - or 14% of that tower market is set to vanish. That’s towers - and scopes - and all that lovely service contracting. That is utterly painful for tower companies.
In my mind we will see a 10% shrinkage or more of the tower market for laparoscopy in the USA alone. And that is without all the other robots having some effect - like HUGO or Ottava. I’m predicting a tough time for both towers and smart ORs over the next 5 years.
NB- of course imaging towers are used for hysteroscopy - arthroscopy etc etc I have my own thoughts on that…. For another post.
Summary
So what am I trying to say.
Robotic procedures will continue an aggressive growth and will grow by taking procedures firstly from lap surgery and then from open surgery. Lap surgery will drop significantly.
As more robots are needed to keep up with this demand and growth - we will see DV5 and others start to impact the requirement of lap tower companies by about 10% -15% of their market each year.
As the procedures flood from open and lap to robotic - the lucrative procedures with staplers, advanced energy and access will be disproportionately hit in prime markets - with colorectal, thoracic, gyn, gen surge being hit the hardest.
This rapid and growing conversion (and even more robots coming in) could impact many of the big players disproportionately - such as Medtronic and JNJ.
Within 10 years I’m going to be bold and say that in many markets across the world (that we care about from a market share point of view not patient care point of view) soft tissue robotics will be (marginally) the standard of care with he highest % of case loads in any hospital done robotically.
At that point - as new systems, new technology and most importantly a new generation of “Robotic only” surgeons come in. I believe we will see the demise of standard laparoscopic manual surgery and the ecosystem of disposables and towers that support it today.
These are simply views and opinions of the author based on market assumptions. They are for experimental mind thoughts and education only.
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