Why am I so tough on Johnson & Johnson and Medtronic and their surgical robotic programs?

Steve Bell on being tough on robotics companies

I have been asked this by both sides of that divide. And a lot of people think I’m being exceptionally unfair in my assessments of the state of HUGO RAS and OTTAVA.

So I thought we needed a small blog to just put the record straight and help to explain my position - and well it might surprise you…

I expect more

If I were to summarise in one small phrase… that would be it. And it starts with the premise that I think that historically Johnson & Johnson and Medtronic were two of the most amazing companies in MedTech. (Note I’m using the past tense here. They lost a bit of shine for me.)

I still think as companies / corporations both are staggeringly good. You need to remember I lived and breathed JNJ for 16 years and was immensely happy there. Started happy - did the whole explosion of Ethicon Endosurgery / Cardiovations / Gynecare there and loved every single day. Left Happy.

In fact it’s the only strategic company I hold any shares in (Historic options.) I have no shares in Intuitive - just to be clear.

I think JNJ is still the greatest university for people starting out in MedTech and do (daily) suggest that people go spend part of their career in JNJ or Medtronic. Both are great corporations and learning institutions for business.

Medtronic is still the best cardiovascular company on the planet planet IMHO - that is the heritage they have. But they also have the deep core of what was once Leon Hirsch’s USSC. Maybe one of the greatest success stories in surgery - and without doubt a leader and pioneer company in MAS (Minimal Access Surgery.)

My admiration and respect for these two companies and what they did for the revolution in minimally invasive surgery will remain high forever. In laparoscopy these are the gold standards of innovation, quality, training, knowledge… well… once upon a time.

I can only speak here with authority on JNJ as I saw it from inside. But my suspicion is that also at Medtronic something similar happened.

The death of a culture of excellence

The minute I understood that senior leadership above JNJ’s medtech division was coming in from their consumer division, their pharma division and making calls on their medtech divisions - I knew it was over for me and JNJ. Again - to be very very clear - a lot of good people are in both consumer and pharma. But I will say this until I die… they have nothing to do with MedTech… nothing. And the way you run a pharma or consumer division cannot work (and did not work) for medtech.

I’m an expert in medtech and I would utterly suck at consumer or pharmaceutical. I would be lost. I would bring in my practices that have little meaning in those worlds. I would cause train wreck after trainwreck.

I saw practices brought in by senior leaders that were nothing but uninformed and destructive.

I saw the people - yes the people - that knew how to run medtech leave in droves, or be pushed out by managers that wanted their “consumer” or “pharma” people in.

If you trace back the decline of JNJs prowess in medetch - you can point it right back to that period. (Well that is just what I think.)

Speaking with less authority and as an outside observer - the death of USSC was the terrible take over by TYCO and all the shit show we saw that happened there. It gutted the heart out of an amazing company. A company that had to convert to Covidien - and was eventually bought by Medtronic.

Now… I think USSC got a better deal as at least they had a medtech management structure. So a deeper understanding of surgery. But in my mind they had a cardiovascular bias of leadership. Again - we are sectorial - and anyone that knows a cardiologist and CRT does not know general surgeons and LAR. (As one example.)

You can absolutely have some of the team cross pollinate - and that is healthy - but there is a critical mass of knowledge - connections - and relationships that if you dip below you kill the heart of the business. I firmly believe both JNJ and Medtronic lost most of their critical people that absolutely understood the business.

At that point there seemed to be a total shift in culture in both companies from the excellence and leadership in surgery - to “How do we commoditise and maximise profits?”

In the early 90s there was an utter leadership of education - training - innovation - and an arms race for which company would deliver the next big thing. A succession of CEOs / senior leaders / board decisions ripped the heart out of that. They allowed the market to commoditise and soon Chinese staplers and cheap competitors were flooding the market. I believe their desire for profit squeezing and “milking the cash cows” is what ultimately ripped the guts out of the laparoscopic surgery sector and turned into a race to the commodity bottom.

The problems felt amplified by a “Pharma” and “Consumer” approach to GPO, contracting, thinking that the battle happened in the contracts not in the operating rooms. I saw a gradual dilution and death of the one thing that surgeons and hospitals actually appreciated. The OR support and skill in general surgery. That combined with innovation.

The minute I saw that JNJ combined Ethicon Sutures and Ethicon EndoSurgery as one entity - that was when I understood that management understood nothing about how it works on the ground. Nothing about the difference in culture between suture reps and endomechanical reps. Nothing about the role in the operating room. Nothing about innovation. I also assumed they would now use the suture profitability as a measuring stick for all projects.

It was so so clear that it would become a race to the bottom on their products.

But more concerning was how clear it was they had not understood where the market actually was going. Defunding at a time when they should have been ramping up funding.

As far back as 2000 it was clear the future was robotic… but uniformed  senior management seemed to almost dismiss this threat; and I heard many laugh at it. Who’s laughing now.

Exodus to Intuitive

Companies are built on great people. Great people make great products. Great products come with great support and investment. Great support leads to customer loyalty.

If you force out the people that made you great… then expect the house of cards to come down and  to fail sooner or later.

It was not just the amazing insight of Fred Moll and Yulan Wang that made companies like Computer Motion and Intuitive the ultimate destroyer of worlds.

It was the fact that they managed to attract the best from JNJ and US Surgical. The people that consumer and pharma people thought were “old school” and “didn’t understand” were driven out and straight into the arms of Intuitive.

Not saying everyone at Intuitive that is great came from JNJ or US Surgical (Medtronic) but many did. And they took with them that culture of building the future - innovation - knowledge and investment. And they also took with them one hugely critical thing - the deep relationships in the market.

This for me is one of the biggest transfers of Industry “Wealth” that has ever been allowed to happen by JNJ and MDT -  and it is this that they will regret forever - directly or indirectly.

In my dim and distant memory - I think this was the turning point of the industry. The brain drain (and experience drain) from JNJ and MDT to Intuitive and their ever increasing march on the industry. In 2024 I feel both JNJ and Medtronic are now paying for that short sightedness.

If I was Joaquin Duato or Geoff Martha - I would be as fast as possible doing everything to get that old school know how, connections, skills, and experience back into their companies.

Here’s my linkedin advert I’d run.

“We let you go and we regret it deeply.

If you are an alumni of Ethicon Endo surgery or US Surgical - then we want you back. No matter where you are in your career we are in desperate need of you. We need your deep knowledge of the minimally invasive market, your grit and knowledge how to build an industry. We need your connections and customer loyalty. We need you.

We are so sorry we did not understand that much of the foundation our minimal access surgery was built by YOU not US. We have now understood. We need you back to take on one of our greatest challenges. We need you to take our robots and build the next big thing in surgery. We need you to help us to take on the might of Intuitive. We need you to rescue our dwindling endo mechanical business. We need your experience in surgery.

You know how to do this as you’ve done it before. You know what team you would assemble because you’ve been here before. You know what this fight involved because you’ve fought this battle before.

We are sorry we didn’t keep you here - but now we want you back. We need you.

Drop us a line and tell us where and how you can help us!”

Part of the reason I’m so tough on both JN J and Medtronic was their seeming lack of understanding at letting these teams go - and then seemingly being very slow to react when surgical robotics started to have an impact on their business. They didn’t understand - it’s the people.

Too little too late

It’s not for me to sit here and tell you that the reaction of both Medtronic and JNJ was slow. It is evident that we are sitting in 2024 and neither of these companies is having a significant impact on the soft tissue surgical robotics space. HUGO is a third or fourth place runner by installs. JNJ is still waiting to get the IDE going with no other clearances anywhere in the world.

I can only talk with market knowledge about HUGO RAS, as it is on the market and full spec, details and capabilities have been available publicly. On OTTAVA I can only imply my knowledge from design patents and images released and the promises JNJ have made… then walked back on. (6 arms to 4 arms) etc.

Neither company is on the market in the USA - the single most important market for surgical robotics. The taste maker market. Neither has shown stapling and advanced energy in clinical use on the robot (attached to the robot.).

Performance of HUGO has been plagued by issues with instruments and hardware. (Come on Medtronic !!)

Both - from what I can understand -  are really 1st generation robot capabilities. And all the while Intuitive is storming it with a 5th generation device that is garnering rave reviews. Fully capable - fully loaded. The puck has moved again.

And this is where my disappointment with both JNJ and Medtronic will be explained.

Highest of standards

Let me reiterate again - I hold both JNJ and Medtronic to the highest of the highest of standards in the field of medical devices. Their legacy and heritage makes them legends of the industry.

So to see them both flail in this industry is what irks me. They have ploughed billions into this. They have brand power that is unrivalled. Yet what I see are lack lustre spec pale imitation competitors to Intuitive.

Feature poor. HUGO has a limited range of instruments, not even a hook. It has old generation imaging - and not even ICG. They have no stapler and no Ligasure on their robot - three years after launch. It is big and bulky with old generation Z-rail designs.

This is not what I expect from Medtronic. I was excepting an amazing - compact modular system with slim and small Z-rails - staplers on board and Ligasure at launch. And a full range of instruments that work all the time - first time. I expected a smart connected system (not reliant on Touch surgery - which is great by the way). I expected rave reviews and massive immediate market share reach through a world class launch. I expected wow.

I expected so much from Medtronic - and they let me down. They let themselves down. That is why I’m upset. And I’ll explain why in more details.

For JNJ - this is even more upsetting - as I love this company. I helped to make this company - and gave my all to build their minimally invasive business and create what Endo Surgery became.

I was encouraged by how they went all in at VERB. Then disillusioned to see them dismantle it. I was buoyant at their bold move to bring in Fred Moll and Auris. And we can all read what happened there. Tragically sad.

Billions in and they had the chance to make 6 arm rendezvous robots with hyper smart software and next gen imaging to leapfrog Intuitive in some functionality - wow!

And to see this back pedal to a VERB like system with 4 arms. What does that bring to the party except… a bed? I do hope there is so much more hidden in there for when it eventually comes.

This is where my frustration boils over. Not because I dislike JNJ or Medtronic. It’s because I look and say “That’s it?”

I see both systems and think -  these two amazing giants of the industry where hopes were high to genuinely make this a three way race - and “That’s it?”

I hold you both in the highest regard - and both of you continue to disappoint me.

But why should I care? What on earth does your failings have to do with me?

Well because if the two big companies fail (and they are in my mind) then the industry fails, and patients will not get the options they need. And I spent the last decade of my life building up competition - and I think you are putting all that at risk.

In my opinion - If they fail… the industry fails

One of the single most important things in our industry is fair and open competition. It drives innovation - excellence - and drives down costs (in most cases.) It provides options for hospitals and care givers, and ultimately patients. And when you have a big and capable competitor breathing down your neck - it makes you sharpen your pencil. Even if you are Intuitive.

I am giving both of these companies a hard time because they have to succeed - or this industry will lapse back into a one horse race. And that is no good for anyone - even Intuitive. I believe Gary Guthart knows this as much as anyone else. Competition is very healthy. My enemy makes me stronger.

If the two giants of JNJ and Medtronic fail in soft tissue surgical robotics, then I fear the worst.

Firstly, it is over for all other surgical robotics companies - why?

Investors seeing that multibillion $$ efforts by the biggest medtech companies with the biggest reach results in crashed businesses - then why on God’s earth would they continue to invest in robotic startups. It will kill the funding of robotics in soft tissue for a generation.

Secondly If the two biggest strategics fail at this - then what does that say to all other strategics? It says “Don’t step into this graveyard.” And that means no exits for the other startups in robotics, and many of them will then not to get follow in funding - and they will all die away.

Third (and maybe important for them) - I believe strongly that success in surgical robotics is essential to the survival of their general surgery businesses - and their endo mechanical businesses. If they fail - I can only see an ever downward spiral of their general surgery businesses. And that will mean they will be eventually divested. It's existential.

Think they are too big to fail? How’s Cordis doing?

Again - why should I care? I care because behind all of this are hundreds if not thousands of jobs on the line. If these two Goliaths fail - we will see a devastation across our industry as fall out.

My frustration comes from the repeated mistakes (in my opinion) and that they often don’t seem to be listening to a lot of good voices out there that are trying to help them.

Both of them have alienated some of the best people in the industry that could actually help them to win. I have conversations everyday with people that have been in and “Got out.” That would never ever go back in and help them because off arrogance, attitude and ineptitude. And that is so sad.

Even more sad is that all of these people care, all of them know what needs to be done, all of them could help, all of them would help if the companies would just pack up their arrogance and just listen.

I feel both companies are not failing just because it is so damned hard to do… but there feels to be a lack of humility in getting all the help they can to succeed. Especially now they know how hard it is. I honestly believe that they both think that they are doing things right. But the data speaks differently.

(Okay I’m being hard here - I do believe that many of them know it’s not going well but are doing the company line thing.)

My frustration with them both is that I believe they are risking an entire industry and many people’s livelihoods for some weird internal political pride or game. That is where I get upset. It’s honestly okay to ask for help. It's 2024.

But… They can succeed

There is no secret magic formula. But there is a ton of wisdom out there that can help them.

There are people willing to show them the way and give them their own scar tissue to help them avoid the same mistakes.

It will take a gargantuan effort for them to let their guard down - admit “We don’t know what we don’t know…” and then get some help.

I give a tough time to try and get the senior management of the company to listen - to ask the right and tough questions - and to start to think about this in a different way.

There are way too many sycophants out there on the payroll that will doff their cap - say “Oh it’s great” and then take the money or lick the boots. That is not what these companies need today. I think (maybe I’m wrong - you tell me) they need some tough love.

That’s why I don’t pull punches  - I say what I see.

I’m often wrong - more often than I’d like.

I often don’t know what I’m talking about - more often than I think.

But I’m trying to push some internal buttons. Get some people upset. Get some people to say “We’ll show that tosser he’s wrong.” And then do something about it. Actually change.

I don't say these things because I want them to fail - but because I want them to do the best I know they are capable of. And if they do better - and get a genuine system commercialised in the right way - get a worthy competitor on the market and stay on the market… then that will be good for everyone. And I mean everyone.

It is super super super hard to do this and do it right. And here’s my plan on what they need to do.

Oh hang on… I’ve already laid this out in excruciating details.. so I won’t repeat myself here.

I’ll keep being tough

I admire these companies - and I have a lot of respect for many of the people in these companies (even if they think I pick on them.)  I have many friends in these companies.

But I’m not going to stop being tough until both companies succeed and become 10% - 20% market share owners of soft tissue surgical robotics.

There will be no one on this planet happier than me for them to say “Steve you were wrong!”

I’ll be happy to be wrong, because it means that first and foremost patients are getting access to choice.

Second because many colleagues and friends will be in good secure employment in an exciting sector.

Third - all companies will be forced to push the boundaries of innovation because there is a strong  shadow over their shoulder.

Fourth - investors will see a healthy ecosystem to invest into. And other strategics will buy up soft tissue robotic assets.

It’s a win win win win.

If in any way my badgering - highlighting risks - pointing out what I think are mistakes - can help these two companies to at least “question” internally - then I feel I’ve done my part.

Tough yes - mean no.

The opinions by the author in this article are for education reasons only and all trademarks are owned by their respective companies.