X Marks The Spot For Intuitive Surgical

| About: Intuitive Surgical, (ISRG)
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The FDA put on an unusual turn of speed in granting 510(k) clearance for Intuitive Surgical's (NASDAQ:ISRG) new da Vinci X robotic surgery platform less than a month after the application was filed. The system is a cheaper, simpler version of Intuitive’s flagship da Vinci Xi, and thus could appeal to hospitals whose budgets are squeezed.

That said, the majority of these customers are not in the US. Other markets tend to be more price-conscious, so it is useful that Intuitive has already secured CE mark for the X. But the company also sells an even cheaper system, the da Vinci Si, and while it intends to conduct a trade-in programme to persuade customers to upgrade the Si to the X it may find the market hesitant.

According to analysts from Wells Fargo, the da Vinci X uses the same patient cart – the part of the system containing the instruments as the cheaper Si – but replaces the arms with the more advanced Xi arms and adds the Xi operating system. The X can therefore use the same instruments and employ the same imaging technology as the Xi.

The downside is the X does not have multi-quadrant access – the ability to reach different areas of the patient’s body without having to be repositioned . This was one of the main USPs of the Xi.

“Value-oriented”

At least it is cheaper. Wells Fargo analysts put the list price of the X at around €1.2m ($1.3m) compared with €1.9m ($2m) for the Xi. The service fee for both systems comes in at around €130,000 per year.

Intuitive is hoping to target European and other markets with the X rather than the US, as it sees these territories as interested in the Xi but put off by the price tag. The device was CE marked just last month. Launch in Europe is scheduled for the current quarter and the group plans to implement a programme whereby European customers who purchased an Si can upgrade to an X.

It seems likely that Intuitive will expand this programme to the US, though there are relatively few customers there who will be able to take advantage. US launch had not been anticipated until the first half of next year, but with clearance being granted so quickly Intuitive may be able to bring this forward.

The company’s next effort to keep its customers loyal will be the da Vinci Sp – its first single port system, allowing robotic surgery through only one incision. The Sp uses a single cannula 25mm in diameter, through which three surgical instruments plus a camera can be inserted into the body. Single-port surgery can allow faster recovery times and a better cosmetic appearance as some procedures can be performed through natural orifices.

The surgeon's console and video display system are interchangeable between the Sp, Xi and X patient side carts, so a hospital that already owns the Xi or X would not need to purchase these two extra items. The Sp is expected to launch in the US in the first half of next year, and Intuitive is counting on this built-in compatibility to increase the appeal of the X.