Zimmer Biomet Holdings, Inc. is joining Stryker Corporation, Smith & Nephew plc and Medtronic plc in the robotics gold rush.
On July 18, 2016, Zimmer Biomet announced it will acquire 59% of a French-based robotic manufacturer, named Medtech SA.
ROSA System
Medtech, based in Montpellier, France, was founded in 2002 by Bertin Nahum. The company designs, develops and markets the ROSA robotic device, an “innovative robotic applications to assist surgeons during their medico-surgical interventions, ” according to the Medtech press release.
The ROSA system was designed for various neurological procedures. The company says the system is “comparable to a ‘GPS’ for the brain, ” and can be used for “any type of cranial procedure requiring surgical planning with preoperative data, patient registration and precise positioning and handling of instruments.”
It is the only robotic assistant approved for neurosurgical procedures in clinical use in Europe, the U.S. and Canada.
The company stated the system has an advanced haptic capability that gives the neurosurgeon the ability to easily guide the instruments by hand within the limits and restrictions established during the planning stage. “The surgeon is able to easily interact with the robot without changing any of his surgical techniques thus reaping the full benefits of robotic movement.”
Spine and Brain
According to Needham & Company analyst Mike Matson, ROSA’s initial application was for brain surgery and can be used in 80% of brain surgery procedures. The brain application received a CE Mark in 2009 and an FDA clearance in 2011 and the brain application has driven most of its system sales so far. ROSA can also be used for spine surgery including lumbar fusion. The spine application received a CE Mark in 2014 and an FDA clearance this past January.
Matson noted that Medtech’s business has been more brain-oriented while Mazor Robotics’ business (recently affiliated with Medtronic plc) has been more spine-oriented. “However, we expect this to change given Zimmer’s large spine implant business and as a result we now view ROSA as more of a threat to Mazor. We think that the deal is positive for Zimmer since it provides it with a robotics platform that might eventually have applications beyond brain and spine surgery for a relatively low price.”
March of Robotics
This deal makes Zimmer Biomet the fourth major orthopedics company to offer a robotic system, added Matson. Zimmer Biomet joins Stryker (Mako System for hips and knees), Smith & Nephew (Navio System for knees), and Medtronic (Mazor X for spine) in offering a robotics system for orthopedics procedures. “We note that Globus Medical, Inc. is also developing a robotics system for spine surgery. Johnson & Johnson is currently the only major orthopedics company without a robotics system, ” observed Matson.
Medtech had $8 million of revenue through the first nine months of its fiscal 2016 (ending June), representing 107% year-over-year growth. Medtech has an installed base of 82 systems (36 in U.S.).
Wells Fargo analyst Larry Biegelsen points out that Medtech sold its first ROSA spine application in the U.S. in March 2016, while Mazor has a U.S. installed base of over 80. “As of May 2016, there had only been 100 spine surgeries worldwide using the ROSA and those were completed by four surgeons. In contrast, Mazor’s technology has been used in over 17, 000 cases globally with more than 300 surgeons currently using the robot.”
Zimmer Biomet’s 59% stake in Medtech cost the company around $130 million with plans to launch a tender offer for the remaining shares.
