Jamie Hartford

Intuitive Surgical's da Vinci Xi system

As a pioneer and longtime leader of the surgical robotics space, it would be easy to see how Intuitive Surgical could get complacent at the top. But on the company's second quarter 2016 earnings call on July 19, executives seemed acutely aware that they are facing increasingly fierce competition.

In particular, the heat is coming from Medtronic, which is developing its own robotics platform and in May also inked a development and distribution deal with Israel-based Mazor Robotics, and Verb Surgical, an upstart formed by Johnson & Johnson and Verily (formerly Google Life Sciences). (Just this week, orthopedics player Zimmer Biomet also entered the surgical robotics ring with its purchase of French surgical robotics firm Medtech, which plays in brian and spine procedures.)

Both Medtronic and Verb Surgical--neither of which currently have a surgical robotic platform on the market yet--have staked their claims on making surgical robotic systems smarter by incorporating advanced imaging and analytics. In response, Intuitive Surgical is increasing its investment in analytics and imaging, executives said on the call.

While 90% of the company's systems today are connected to the Internet, they mostly provide offline analytics around system performance rather than patient data, president and CEO Gary Guthart explained on the call. Down the road, the company hopes to be able to provide surgeons with information that can help them during procedures.

"Going forward, I think that as our computational structures get more powerful, we can bring some of that intelligence more real-time. So rather than offline insights, you can start generating real-time insights," Guthart said according to a Seeking Alpha transcript. ". . . [Y]ou'll see from us in future years a series of products that come out using that set of kind of digital pipeline."

In terms of imaging, Intuitive Surgical is looking ahead to "other indications for fluorescence" he said, while adding that it could be a while before the technology comes to market.

". . . [G]oing forward a decade, what you'd really like to be able to do is mark tissues of interest in real time," Guthart said. "Paint for the surgeon what the elements and boundaries are that allow for a good dissection or the proper resection or the best margin performance. And that's what's really directing our investments." 

Medtronic and Verb Surgical have also stated their intentions to bring down the cost per procedure of robotic-assisted surgeries, possibly to a level closer to that of laparocopy. Asked by an analyst on the call how Intuitive would contend with that, Guthart tossed the ball back into his competitors' court.

"I think there's a big challenge for new entrants there, which is what benefit do you bring at which price point? So I think you're going to have to show benefit over laparoscopy, what can be done that lap can't do? And that's going to require some innovation and some technology, and that technology is going to have to be paid for," he said. "So I think over time, folks are going to have to come out and show what it is that they plan to do to make that happen."

A selling point for Intuitive, Guthart added, is that the company offers surgical robotic systems that can fit a variety of budgets.   

"Intuitive will offer multiple price points," he said. We will give them that opportunity. We have already and we will continue to. And what value they find at what price point will be their decision."

And if all else fails, Intuitive Surgical still has an ace in the hole: $4.2 billion in cash that could be deployed to help drive organic growth or used for mergers and acquisitions. 

Jamie Hartford is MD+DI's editor-in-chief and serves as director of medical content for UBM's Advanced Manufacturing Group. Reach her at [email protected] or on Twitter @MedTechJamie.

[image courtesy of INTUITIVE SURGICAL]

Correction: An earlier version of this article incorrectly characterized the development deal between Medtronic and Mazor Robotics. While Mazor's surgical systems focus on spine and brain procedures, Medtronic's own robotics platform under development will play in the soft-tissue space.