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Should Stryker Worry About Zimmer's New Robotics Offering?

Should Stryker Worry About Zimmer's New Robotics Offering?
Zimmer Biomet is expected to launch a robot soon that will compete with Stryker's Mako Total Knee offering.

Stryker's Mako Total Knee offering continues to gain traction and drive growth for the Kalamazoo, MI-based orthopedics company, but the company faces imminent competition in the space from Warsaw, IN-based Zimmer Biomet.

During Stryker's third-quarter earnings call, CEO Kevin Lobo said the company is approaching 600 robots globally, and Lobo said he feels bullish about the future of robotic-assisted surgery

Katherine Owen, vice president of strategy and investor relations at Stryker, said 37 Mako robots were installed globally during the third quarter, with 26 of those installs being in the United States. Comparing those numbers to the same quarter last year, Owen said 33 Mako robots were installed in the year-ago quarter, with 23 of those installs being in the U.S. market.

Owen also noted that more than 50% of robots installed during the recent quarter were in competitive accounts where Stryker either has no market share or share well below the company's average number. Also, she said about 145 surgeons were trained on the Total Knee application, bringing the total number of surgeons trained since launch to about 1,350. As for procedure volume, Owen said roughly 11,300 Mako Total Knee procedures were performed with the robot during the third quarter in the United States.

Zimmer Biomet is currently waiting for FDA approval of its Rosa robotics knee application and in Australia, the first five procedures have already been done. CEO Bryan Hanson told analysts during Zimmer Biomet's third-quarter earnings call to expect the full launch of that product in the back half of 2019.

"We did five procedures in one surgical day with one surgeon," Hanson said. "... That would speak to the efficiency that we are looking to bring to the table with our robotic system, and this is the first [that[ surgeon has used the system in the operating room. So not only are we ahead of schedule, but that's a pretty good stat that we feel good about."

But if Stryker executives are at all worried about the incoming competition in robotics, they're not letting it show.

Bob Hopkins, a medtech analyst at Bank of America Merrill Lynch, asked Owen and Lobo about the stickiness of the competitive business Stryker has won with Mako, considering Zimmer Biomet will soon be launching its Rosa robotics knee application.

Installing a Mako robot and training surgeons and OR staff on the procedure is a significant investment on a hospital's part, Owen said, and that investment will help to ensure that those accounts stick with Mako in the long run.

The company also has a competitive advantage in terms of what the Mako robot is capable of doing, and by having a head start in getting robots into the market, Owen said. She also pointed out that the company is beginning to see early clinical data supporting the clinical and economic benefit that is specific to Mako.

A prospective study recently published in The Bone & Joint Journal compared early postoperative functional outcomes and time to discharge between conventional jig-based total knee arthroplasty (TKA) and Mako-assisted TKA. The study included 40 consecutive patients in each arm with all surgeries performed by a single surgeon. 

"Overall, the study concluded that the Mako treated patients achieved statistically significant improvement with respect to decreased pain, improved early functional recovery, and reduced time to hospital discharge compared with conventional knee surgery," Owen said. "And as it relates to hospital stay, patients treated with the Mako robot were discharged over one full day earlier than traditional knee surgery patient."

Recently the Hip and Knee Society also published a paper recently comparing 90-day episode of care cost with patients receiving a Mako total knee replacement versus conventional knee surgery. Overall, the study determined that Mako patients episode of care cost were $2,391 less than conventional knee replacement, Owen said. Mako patients also were discharged less to skilled nursing facilities and had a 90-day readmission reduction of 33%, she added.

"And so obviously, competition is coming," she said. "You don't grow ahead of the market at the rate we are without people thinking that maybe they need a robot, but this is a very sticky business once we get a robot in there."

Lobo added that the early studies have pointed to a specific benefit related to the haptic feature of the Mako robot, and the fact that Mako does not use jigs. "And by not using jigs, you really protect the soft tissue envelope and really that less invasive nature of the procedure is a massive advantage. And many surgeons will pick up on that," he said. "They are anecdotally seeing that with their patients and I know that the competitive offering will still have a jig, and ours is a jigless offering."

"Some surgeons will be interested [in Zimmer's Rosa robot], and we will have to obviously compete in the market, but we like our chances," he said.

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