Medtronic and Mazor Robotics Need Each Other
Posted on October 31, 2017 by Medtech[y] Staff
Let's just get this out of the way: Mazor wants to grow and Medtronic needs to infuse growth into their Spine business.
In other words, an acquisition does not need to happen in order for this relationship to work.
How do they help each other?
Last quarter, Medtronic's Spine revenue grew at a 1% clip, not exactly earth shattering.
The investment in Mazor is meant to help infuse growth into what has become a struggling business for Medtronic.
Now they are Mazor's exclusive worldwide distributor for its newest robotic surgical guidance systems for spine surgery.
"Mazor Robotics' technology and Medtronic's [surgical] navigation capabilities and implant systems provide spine surgeons with complete procedural solutions that advance the standard of care and will help surgeons maximize predictability and efficiency," Medtronic spinal division President Doug King said in a news release.
How Does Mazor Benefit?
Existing Mazor Systems in the U.S.
The $72 million invested by Medtronic (as of Sept 2017) has allowed Mazor to scale at a much faster rate then they ever would have without the capital.
Medtronic also has warrants allowing them to buy another 1.2 million shares, which could bring their total investment to $125 million, or 14% ownership of the company.
In mid-October Mazor announced that they expect 19 Mazor X systems ordered in their current quarter, 11 of which were ordered by Medtronic.
Additionally, 30 members of Mazor's sales team will become Medtronic employees and help push forward Mazor's sales in the U.S. for Medtronic's Spine surgery unit, part of their RTG business unit.
"This quarter we transferred to Medtronic members of our talented capital sales team along with a solid sales pipeline. This transition was performed in a smooth and effective manner and we maintained robust sales activity during the transition period,” commented Ori Hadomi, Chief Executive Officer. "The continued strong performance in the third quarter of 2017 reflects the increased demand and interest in Mazor’s robotic platforms.”
It's Not Just About the Money
It's not just the capital though, Mazor could get funding from anyone. What they received with Medtronic's money is an instant world-class sales organization that provides contacts and validation in the U.S.
Trust me, getting a product launched in the U.S. without a sales team, marketing and validation is virtually impossible.
This partnership is a win-win for both companies.
They are two companies that need each other. Mazor doesn't have the sales infrastructure in place and Medtornic's Spine division is a mess.
Regardless what the agreement between these two companies states, both are in position to benefit from the relationship in a big way.