When you think of robots to help human on tasks, you might think of a smart robot vacuum cleaner such as the Roomba.
Yet the trend of automation is touching every part of our everyday lives – even extending into surgery.
That’s right, medical robots can now help surgeons in operating rooms (ORs) operate with pinpoint precision.
However, with the onset of Covid-19 last year many non-emergency procedures had to be postponed or even cancelled as hospitals had to prioritise emergencies.
One of the leading companies in the space is Intuitive Surgical Inc (NASDAQ: ISRG), with its industry-leading da Vinci robotic-assisted surgery (RAS) system helping surgeons worldwide better operate on minimally-invasive procedures.
Here’s why Intuitive Surgical could continue be one of the big winners in the healthcare industry when the global economy fully reopens after Covid-19.
As economies worldwide shut down last year, the number of operations using Intuitive Surgical’s da Vinci systems fell sharply.
This matters because the company actually makes most of its profits from the surgical tools and instruments that go along with its RAS device.
The da Vinci system itself, while expensive at between an eye-watering US$500,000 and US$2.5 million to install, isn’t actually that profitable for Intuitive Surgical’s bottom line.
Consequently, the number of da Vinci systems it shipped in the second quarter of 2020 (when the pandemic first hit) only numbered 178 – down 35% year-on-year compared to the second quarter of 2019.
Recovery on the up
However, that has gradually bounced back and in the final quarter of 2020 the number of da Vinci systems shipped had rebounded to 326, just 3% down year on year from the fourth quarter of 2019.
At the end of 2020, Intuitive Surgical had just under 6,000 systems installed worldwide. Readers might be surprised to know that the da Vinci RAS system was first approved by regulators for use all the way back in 2000.
Over the past two decades, the da Vinci has been approved for more and more surgeries. That has allowed Intuitive Surgical to build an unbelievably solid competitive position.
That doesn’t mean that competitors aren’t out there. Yet the likes of medical device maker Medtronic PLC (NYSE: MDT) were late to the game.
Hospitals reopening and tailwinds
As global economies reopen, particularly in the US which is seeing a fast rate of vaccination, Intuitive Surgical and its leading da Vinci system should benefit.
That’s because these types of surgeries should start to resume in bigger numbers (good news for patients as well as the tools and instruments required for the da Vinci systems).
Meanwhile, robotics are becoming much more accepted in the healthcare industry – particularly for procedures which are not invasive, while at the same time providing more precision and saving surgeons time.
Add to that an ageing population globally, and the increased demand for surgery that will go with that, and Intuitive Surgical looks like a great long-term investment in the healthcare space.
Disclaimer: ProsperUs Head of Content Tim Phillips doesn’t own shares in any companies mentioned.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be.
In his spare time, Tim enjoys running after his two year-old son, playing football and practicing yoga.