Medtronic's robotic spine market lead threatened as smaller rivals look to edge inWall Street analy
Wall Street analysts see Medtronic and Globus Medical currently in a "two pony race" in the robotic spine market, but market share can be stolen as other companies launch systems and adoption grows.
The robotics surge in orthopaedics has primarily been driven by hips and knees, with offerings from Stryker and Zimmer Biomet leading the way, leaving the spine market further behind.
But momentum has been building in recent years, and now Wall Street analysts and industry predict the spine robotics space has similar potential as the robotic hip or knee markets.
"The majority of the spine market today is still tied to more open, invasive procedures, so there's a lot of runway to convert those open procedures to minimally invasive or robotic cases," Kaila Krum, managing director for Truist Securities said. "Longer term, I do think that robotics is going to make up a bigger portion of the market."
Leading the market is Medtronic, which bought into the spine robotic space with its $1.6 billion acquisition of Mazor Robotics in 2018. However, smaller companies like Globus Medical and NuVasive are looking to compete with the medtech giant as the market grows.
The robotic spine market can be hard to define as system placement numbers are not always clear. Krum estimated a total of about 5,500-6,000 robotic spine accounts, but hospitals or health systems can have multiple robotic systems.
Furthermore, the way companies account for placements can be muddled. Placements may not always mean a direct sale of a system, which can cost upwards of $1 million. A placement can be sold outright, leased and paid off over time or bundled with other products and technologies.
Still, analysts view placements as a strong indicator of revenue development.
Richard Newitter, an analyst with SVB Leerink, said that while other companies like NuVasive and the Johnson & Johnson-partnered Brainlab will compete in the space going forward, the robotic spine market is currently a "two pony race" between Medtronic and Globus.
While Medtronic is in the lead, both Krum and Newitter said that Globus is grabbing market share with its Excelsius GPS system.
Medtronic has more overall procedures and placements with its Mazor system, but Globus is placing robots at a comparable rate to Medtronic, and Globus is likely placing more systems through outright sales versus flexible financing arrangements, according to Newitter.
"If you're collecting a million dollars upfront, for example, per robot, you might have fewer placements because you want to actually charge for the capital piece," Newitter said. "Whereas if you're using a more flexible financing arrangement, you might be able to get higher placement numbers, but you're not actually charging the same upfront."
Robotic systems will have a different strategic purpose for each manufacturer as the space further develops and adoption grows.
Globus, which accounts for about 10% of the U.S. spinal implant space, can use their robot to grow overall spine procedure numbers by attracting new customers and stealing a larger share of the total spinal implant market, Newitter said. The company's U.S. core spine business is growing three times as fast as Medtronic's, fueled by robotic adoption.
Medtronic may use it as a way to maintain its market-leading position by transferring existing customers to a robotic system.
Regardless of the jockeying among market leaders, the robotic spine market is still in its infancy.
Procedures evolving
Robotic spine technology is different from other orthopaedic robots. For example, spine systems are primarily used for screw placements to secure spinal implants as part of minimally invasive surgeries. That contrasts with Stryker's Mako or Zimmer's Rosa systems, which are used in total and partial joint replacements and can cut bone.
Medtronic, Globus and Brainlab couple their systems with navigation, so surgeons can navigate patient anatomy with pre-operative CT scans. NuVasive is also developing a navigation system to go with its robotic arm.
Themistocles Protopsaltis, an orthopaedic surgeon with NYU Langone Health who consults for both Medtronic and Globus, said the complexity of spine procedures in general, such as managing neurological elements and cerebrospinal fluid, has contributed to slower development.
But Protopsaltis added that the technology has caught up to procedure complexity.
NYU Langone was hesitant to get into the robotics space but now owns three Globus robots across its health system, all acquired in about the last three years.
For certain surgeries, like anterior/posterior lumbar fusions or lateral/posterior lumbar fusions, average procedure times at NYU Langone dropped 110 minutes when using a robotic system, according to Protopsaltis. Infection and re-operation rates for certain robotic procedures are lower as well.
AUTHOR Ricky Zipp
PUBLISHED MedTech Dive April 9, 2021