Medical Robotics: Interesting Prospects On The Horizon

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  • The use of surgical robots has increased significantly, with ample opportunity for further growth. MarketsAndMarkets expects the medical robots market to reach $16.74 billion by 2023.
  • Shares of established companies have generally outperformed, but some developing companies are worth looking at, especially as sector growth is also driving M&A.
  • We review several robotics companies here and would keep TransEnterix on the radar screen. Pro forma for a pending merger, HAIR shares trade at under 1.0x 2019 revenue guidance.

Factors Driving Medical Robotic Growth

Medical robotics is an emerging sector that has established a solid foundation and continues to grow. According to the Journal of Minimal Access Surgery, "the era of robots in surgery commenced in 1994 when the first AESOP (voice controlled camera holder) prototype robot was used clinically in 1993 and then marketed as the first surgical robot ever in 1994."

Since then, the use of robotic assistance has increased significantly, with ample opportunity for further growth. According to TransEnterix (TRXC), robotic surgery currently accounts for less than 10% of total surgeries with "continued expansion into additional procedures and new global markets" driving growth. Citing WinterGreen Research, TransEnterix forecasts that the market for abdominal robotic surgery will reach $15.8 billion by 2023.

Market research firm MarketsAndMarkets ("MNM") expects the overall medical robots market "to register a CAGR of 21.0% during the forecast period [of 2018-2023] to reach $16.74 billion by 2023 from $5.47 billion in 2017."

The key growth factors MNM cites are "technological advancements in medical robots, advantages offered by robot-assisted training in rehabilitation therapy, increase in funding for medical robot research, and the issuance of IPOs by medical robot companies," as well as "rapid growth in the geriatric population and rising patient preference for minimally invasive surgeries."

The use of robots facilitates surgeries that are generally less invasive than traditional procedures. Robotically-assisted surgeries can also sometimes reduce the length of hospital stay, which lowers hospital and patient costs. Reflecting these benefits, the number of surgeries using robots has increased dramatically, and the sector is expected to continue to grow.

In addition to factors cited above by MNM, anticipated sector growth is expected to be driven by regulatory approval of non-invasive surgical techniques. Although not without its own risks, surgical robots generally help produce smaller and more accurate incisions, leading

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Research analyst with a focus on micro-cap to small cap stocks.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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