More than 40 years after a Star Wars droid repaired Luke Skywalker's arm in "The Empire Strikes Back," robots performing surgeries are no longer just the stuff of sci-fi movies. Robotic surgery is a fast-growing market where Intuitive Surgical, Medtronic and Johnson & Johnson will battle it out for a piece of what's projected to be an $18 billion opportunity.
The market buzz grew louder in March when the Food and Drug Administration gave the green light for Intuitive Surgical's da Vinci 5 robotic surgery system, which sparked Intuitive Surgical stock. The stock has since more than given back the gains amid questions about the product rollout momentum, and the looming challenge from rivals Medtronic and Johnson & Johnson.
But Intuitive Surgical Chief Executive Gary Guthart speaks of a new era as the debate over robots' role in surgery has faded.
"In a lot of countries, I think the debate over, 'Does this have a role in surgery and does it have a significant role?' I think that debate is largely in the past," he told Investor's Business Daily. "I hesitate to call it an inflection. I do think we're in an era. And the era is much less resistant to technology-enabled systems to make progress."
Rise Of Robotic Surgery
That progress is evident in the operating room, where the technology now plays a critical supporting role.
Dr. Scott Miller, medical director of Wellstar Urology in Roswell, Ga., and the director of Wellstar Robotic Surgical Services, has performed more than 3,000 robotic surgeries. He says the technology makes it easier to perform delicate maneuvers.
"It's taking the things that humans do well but a machine can do a lot better, and freeing up the mind so the surgeon can do what he or she does best, and that's judgment," he told IBD.
Robotic surgery builds upon an approach that took off in the 1990s: laparoscopic surgery. That procedure made it possible to perform surgery by inserting tools through small incisions into body cavities. Surgeons then perform the surgery guided by a tiny camera.
The technology has helped Intuitive Surgical stock. Though shares have pulled back somewhat from their record high at 403.76 on March 27, Intuitive Surgical stock is still up more than 10% year to date, as of the close on May 1. Meanwhile, shares of the 71-company Medical-Systems/Equipment industry group have eked out a 1.2% gain over the same time period.
Because the incisions are smaller and the organs aren't exposed, patients who undergo laparoscopic procedures often have shorter recovery times and better long-term outcomes. Not all surgeries can be performed laparoscopically, however. Some procedures still require open surgery.
Robotic Surgery: Precision Movements
Robotic surgery takes the tools out of the surgeon's hands and puts them in the hands of a robot, which can move at angles that human hands cannot.
The benefits to a human surgeon can be significant. Instead of standing for hours performing often complex tasks, the surgeon uses a console to monitor the robot's movements. With very precise procedures, robots can outperform humans, leading to better outcomes, experts say.
Dr. Ahmad Abbass, a general surgeon at Providence Mission Hospital in Mission Viejo, Calif., cited the Whipple procedure, a complicated surgery for treating tumors in the pancreas, small intestines and bile ducts.
Most of these surgeries are performed open and take around five to six hours to complete. Laparoscopic surgery offers a better option.
The smaller incision means a shorter recovery time and less time spent in the hospital. Patients generally also experience less pain and have better outcomes down the line.
'Here Comes The Robot'
But only a handful of "very talented" surgeons — fewer than 10 in the country — can do a Whipple procedure laparoscopically, Abbass estimated. And it takes them nine to 10 hours to complete.
"Here comes the robot," said Abbass, who uses the da Vinci system.
He described the current technology as "a great tool for complicated surgeries to be done in a minimally invasive fashion. It allows you to do certain surgeries that are very complicated that historically would only be done open."
In fact, by making procedures less physically and mentally taxing, robotic surgery makes it possible for surgeons to stay in the field longer. This is an important benefit given the shortage of health care professionals.
Intuitive Surgical As Trailblazer
Intuitive Surgical blazed the trail for robotic surgery. The company rolled out the first version of its robotic system, da Vinci, in the U.S. market in 2000. That was the same year Intuitive Surgical stock went public.
The da Vinci robot, which has gone through several iterations since it launched, has been used for cardiac, colorectal, general, gynecological, head-and-neck and chest surgeries. The company also sells a robotic surgery system for lung biopsies called Ion.
In January, Intuitive Surgical announced that it was coming out with da Vinci 5, which it says has 10,000 times the computing power of its predecessor. The new system also features "hundreds" of design changes, the company said.
Intuitive Surgical Stock Rises
Intuitive Surgical stock has had several runs this year, including a 10% pop on Jan. 10 after the firm announced its preliminary fourth-quarter earnings. Shares slowly climbed to a record peak on March 27, but have since pulled back amid concerns that the da Vinci 5 launch won't really take off until 2025.
The company is the industry's de facto leader. But Intuitive Surgical shares retreated recently after a Mizuho Securities analyst said da Vinci 5 supply "remains constricted." That means a "full-scale launch will likely not come until next year."
Intuitive Surgical stock currently has an IBD Composite Rating of 90. This means the shares rank in the top 10% of all stocks in terms of fundamental and technical performance.
The stock broke out of a cup-with-handle base in December and quickly rocketed into a profit-taking zone, MarketSurge research shows. Shares have undercut their 50-day moving average, however.
'Force Feedback'
Wellstar's Miller, who tested da Vinci 5 at Intuitive Surgical's headquarters in Sunnyvale, Calif., called it "another game-changer."
"Every time I think they've done it all, they top themselves, and they topped themselves pretty big on this one," he said. "They've added some additional features."
The big one, he says, is "force feedback." The technology feature allows the human surgeon to feel what's happening at the surgical site.
Previously, surgeons could only visually watch how much pressure they were applying to a patient's tissue with the robot.
With laparoscopic surgery, a surgeon can feel the feedback from the instrument in their hand, says Dr. Andrew Shapiro, a general surgeon and medical director at Advanced Surgical Physicians in Wellington, Fla. As of mid-March, he had performed almost 1,900 surgeries robotically.
"We have to use visual cues when we're grabbing and pulling and manipulating tissue because we can't feel what's on the other end of the equipment," he said. "With a robot, since I'm not physically touching the instrument, we could pull things apart if we're not paying attention to the visual cues on the monitor."
Intuitive Surgical says da Vinci 5's force feedback reduces force on the tissue by up to 43%. Sales of the company's systems are expected to creep 3% higher this year to $1.74 billion. But in 2025, analysts who follow Intuitive Surgical stock expect a nearly 18% jump to $2.05 billion, according to FactSet.
Intuitive Surgical Stock Drivers: The Da Vinci 5
Guthart, Intuitive Surgical's CEO, described da Vinci 5 as a more efficient system that gives the human surgeon more control at the console.
"There are more capabilities that are controlled from the surgeon's console — cockpit — without having to ask someone else to do it," he said. "The design is intended to speed workflow, and there are indicators that it does."
Robotic surgery improves a patient's recovery process. Guthart estimates that 10% of patients promised a minimally invasive procedure "go home with an open surgery incision and all the recovery challenges that come with it." With robotic surgery, that 10% drops to less than 1% he says.
"It's a win for patients. They're getting what they were promised," he said. "It's a win for care teams; they can deliver it more consistently. And it's a win for the hospital; their economics look good and they serve their mission for patients and surgeons."
But Intuitive Surgical stock dropped almost 2% on April 19, the day after its first-quarter earnings report. The Street expects some choppiness as the company slowly launches the da Vinci 5.
Downside Of Robotic Surgery
Robotic surgery technology has faced some criticisms, including a lawsuit.
A 2016 study compared prostate removal using robotic, laparoscopic and open means. The results didn't show better outcomes for recipients of robotic surgery over laparoscopic or open surgeries, Clarivate analyst Precia Christian said in an email to IBD.
Partly for that reason, adoption remains limited in some countries, she said.
In February, Intuitive Surgical was hit with a wrongful-death lawsuit alleging that the company's device tore a woman's small intestine during a procedure. The woman died because of the injury, the suit said. That day, Intuitive Surgical stock lost more than 1%.
Robotic Surgery's Limitations
Robotic surgery's use also remains limited.
There's still a need for surgeons who can perform open and laparoscopic procedures, says Shapiro of Advanced Surgical Physicians.
Zeno Mercer, an analyst with VettaFi, a financial consulting firm, says emergency surgery, for example, doesn't give surgeons a lot of time to set up a robot.
"At some point in time they will be capable of coming in and being involved in that," he told IBD. "I'm not saying we're going to have autonomous robots solve all of our needs for random emergencies in the emergency room. But I'm not even saying that's impossible because of the rate things are going with the fusion of data, actions and robotics."
Intuitive Surgical Stock: Sales Trends
Then there's the issue of cost.
Da Vinci robots cost $1 million to $2 million apiece. Hospitals often enter into leasing agreements for the robotic surgery systems. Besides the cost of the system, the health care system must foot the bill for single-use instruments and accessories.
Intuitive Surgical has said the da Vinci 5 will cost about 30% more than its predecessor. That translates to about a 15% price hike when accounting for the added features the new system incorporates, says April Chan Tsui, another Clarivate analyst.
Last year, Intuitive Surgical notched almost $1.68 billion in sales of its robots, $4.28 billion in sales of instruments and accessories, and $1.17 billion in revenue from servicing those robots. Intuitive Surgical stock analysts expected a lower number for systems sales, but revenue from the other segments came in line with their projections.
Reimbursement remains a challenge, says Clarivate's Christian. Robotic surgeries typically get reimbursed under the same billing codes as laparoscopic procedures "despite the fact that robotic surgeries, which involve the use of robotic devices, incur higher costs," she said.
"The lack of sufficient reimbursement consequently discourages surgeons from opting for robotic-assisted techniques," which "will hinder robotic-assisted procedure volume growth," Christian added.
Economic Benefits Of Robotic Surgery
Yet robotic surgery offers other economic benefits.
Patient outcomes are often better with robotic surgery, proponents argue. Sham Shiblaq, chief operating officer of Procept BioRobotics, says it makes economic sense to avoid hospital readmissions, longer stays in the intensive care unit and complications down the line. Procept sells a specialized robotic surgery system.
With its added features, da Vinci 5 could also improve workflow and turnover. That means procedures could require fewer staff members, Bank of America Securities analyst Travis Steed said in a March 10 report.
The system also standardizes the operating room by adding in devices that hospitals previously had to buy separately.
"Having definitively better outcomes vs. laparoscopy materially accelerates the shift to robotics," Steed wrote.
'Democratizing Surgery' Via Robotic Systems
The shift to robotics could also help address a key issue: broader access to surgical procedures.
Procept's Shiblaq said robotics holds the promise of "democratizing" surgery.
"Most health care companies talk about, 'How can we democratize surgery? How can we get to a point where patients can receive similar outcomes or similar safety profiles no matter where they go get care?' " he told IBD. "The idea is you don't have to travel 100 miles, 1,000 miles to get the best care."
Procept makes an automated robot that performs surgery to correct benign prostatic hyperplasia, the enlargement of the prostate that is considered a precursor to prostate cancer. The company's system differs from Intuitive Surgical's. It doesn't involve a console. Instead, the robot performs the surgery autonomously based on a patient's unique anatomy.
Procept is on the IBD 50 list of elite growth stocks with a strong Relative Strength Rating of 97. The RS Rating is a 1-99 measure of 12-month stock price performance. Intuitive Surgical has an RS Rating of 80.
Intuitive Surgical Stock: A Fast-Growing Market
The robotic surgery market was valued at $3.3 billion in 2023 and is expected to grow steadily in the coming years, according to GlobalData.
The space will be worth roughly $7.2 billion by 2033, GlobalData says. MarketsandMarkets, another researcher, is even more bullish, projecting the robotic surgery market will be worth a whopping $18.4 billion by 2027.
Abbass, the Providence Mission Hospital surgeon who uses a da Vinci system, doesn't see any companies making a dent in Intuitive Surgical's sales in the next five years. Tom Shrader, founder and president of R2 Surgical, which sells pre-owned surgical robots, says it's not "merely a battle for market share with Intuitive; it's a race for second place."
Intuitive Surgical could face more competition from new robots from Medtronic and Johnson & Johnson. Both companies are working on big console-like systems.
Robotic Surgery Competitors: Medtronic, Johnson & Johnson
Medtronic's Hugo system is already available in Europe, UBS analyst Danielle Antalffy said in a Jan. 22 report. The company is enrolling U.S. patients in a study for urologic procedures. She says the Hugo system could launch in the U.S. in late 2024, but more likely 2025.
"I say our confidence is high," Medtronic CEO Geoffrey Martha said on the company's third-quarter earnings conference call. "I know we're up against a strong competitor in Intuitive, but we like our competitive positioning overall and especially against the other potential robotic companies there."
Johnson & Johnson is farther behind with its Ottava system. UBS' Antalffy says J&J's system could launch in 2026 at the earliest.
She said the market is "large enough and growing fast enough to support multiple players."
Robotic Surgery: An Under-Penetrated Market
RBC Capital Markets analyst Shagun Singh echoed that point. The robotic surgery market isn't about market share, she said. She sees room for two or three major robotic surgery companies and a handful of smaller players.
"It's a highly underpenetrated market — in the single digits globally," she said in an interview. "It will be positive for the market to have more players like J&J, Medtronic and Intuitive Surgical really making the case for surgical robotics."
Intuitive's Guthart downplayed the competition, as he touted the company's advantages.
"Medtronic and Johnson & Johnson are in the most narrow bucket of systems that look in our footprint," he told IBD. "We are competing today all over the world."
Medtronic and J&J didn't return requests for comment.
Meanwhile, Intuitive Surgical is also facing off with competitors in Japan, Korea and India. A number of smaller companies make portable and modular robots.
Smaller Robotic Surgery Players
In fact, the market features niche players focused on specific surgical needs.
Procept designed its robots to address urologic conditions led by prostate cancer. Levita Magnetics, a privately held company, introduced the Magnetic-Assisted Robotic Surgery, or MARS, system, for gallbladder, bariatric and colorectal procedures.
The MARS system uses a foot controller and a joystick to control two robotic arms. Levita Magnetics CEO Alberto Rodriquez-Navarro says the technology is ideal for less complex procedures. The da Vinci robot can perform these surgeries, but it's easier to prep a MARS robot, he said.
Rodriguez-Navarro doesn't see a benefit from playing "follow the leader" with Intuitive Surgical.
"If you are able to bring something that da Vinci isn't bringing now, you will have the ability to compete," he said. "The bigger companies, they aren't disruptive. They follow the leader and try to catch up. Our technology is totally disruptive. We are fulfilling another need."
Intuitive Surgical Now Works An Established Market
The disruption has advanced to a point that knowing how to work with robots in the operating room is now important for surgeons.
Working with surgical robots has become standard training for surgical residents, says Miller, the Wellstar Urology surgeon.
In fact, embrace of the technology is happening so fast that Abbass, of Providence Mission Hospital, offered this advice to fellow surgeons: "If they're not doing robotics, they are probably falling behind. You are never too old to learn new technology for the patients' benefit."
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
