Are Medtronic and J&J the biggest competition for TransEnterix?
When thinking about the competition for TransEnterix, the first company that comes to mind is Intuitive Surgical, the 800 pound gorilla in the robotic surgery market. Currently, TransEnterix sales reps are calling on the same surgeons and hospitals who already have Intuitive Surgical's da Vinci systems as they are already sold on robotic surgery.
However, as the robotic surgery market is vastly untapped, there are a group of surgeons and hospitals out there who haven't converted their surgical cases to robotic surgery.
This is the market that TransEnterix (and others) are also targeting.
In the J.P. Morgan presentation given by TransEnterix CEO, Todd Pope, he reviews the historical growth drivers for robotic surgery, which have been taken by Intuitive Surgical to grow the market into what it is today.
The primary goal was to convert open surgery to robotic surgery.
As you can see in the slide below, the future opportunity for growth will be to convert laparoscopic surgeries to robotics.
What's important to understand is TransEnterix is not the only company with the same idea. During Intuitive Surgical's most recent earnings call, Intuitive Surgical CEO, Gary Guthart, was asked about the company's future competition. While TransEnterix was not directly mentioned, you can clearly see that both Medtronic and J&J will be targeting similar patients with their systems.
Okay, I appreciate that. And then one for Gary. Just a question on competition, frame it just a little bit differently. J&J and Medtronic both continue to suggest that sometime late in 2020, they'll bring some sort of technology to the market in robotic form. That both suggest that they're going to have lower cost systems, they haven't given as much details. But in my view, both sort of implied that their systems will be geared towards converting lap focus surgeons to robotic platform. So my question to you is, I realize you don't comment much on your pipeline. But I was just curious if you could comment, do you see potential value in advancing lap through robotics? And is this a priority for Intuitive today?
I do believe that some advanced MIS surgeons are becoming increasingly open to the use of robotic surgery and intelligent surgery. And we see it today in the market. We see bariatric surgeons interested in our technologies, and that's a domain that is high laparoscopic penetration. So I believe there's an opportunity there. I would separate the idea of capital being the only thing to think about as an opportunity to pursue that that growing idea in advanced laparoscopy. And what I say is that I think physicians are going to balance multiple criteria.
They’re going to look at total cost to treat. So the capital, the cost to service that capital, instruments and accessories, the outcomes that they get from it, efficiencies and human capital time or human labor time in the OR and they're going to balance that. And I think all of those are up for discussion when you think about trade-offs between advanced laparoscopy and intelligent surgery. We think there's an opportunity there. We will pursue that opportunity.
When I hear folks kind of over rotate to just capital cost on systems, I kind of think about how excited are people to jump aboard, just good enough commercial airliner. For sure, if you're flying commercial airline, you want the lowest total cost per passenger mile, but you can get that a lot of different ways and cheapening the capital, maybe not the best way. We evaluate all of those elements, we have thought about them deeply and we've made investments to pursue what we think is the right leadership position there.
The Window is Slowly Closing
While both Medtronic and J&J do not expect their platforms to hit the market until late 2020 at the earliest, TransEnterix does have enough time to build up their business. However, the deep pockets of both J&J and Medtronic will be hard to compete with once they hit the market.
Additionally, Intuitive Surgical will be focused on this market and continue to develop new products that address the constantly changing landscape of digital surgery.
The end of 2020 is still a ways off but TransEnterix needs to capitalize on their window with Senhance being the only other true player on the market except Intuitive Surgical.