Robot-assisted surgical devices are ripe for innovation

By David Stuart and Yaara Avitzur, RSM Canada

The global robotics market was valued at around $ 30 billion in 2020 and is expected to grow to over $ 70 billion by 2026. The potential market opportunity differs according to economists, but there is consensus that the robotic device industry is here to stay and will continue to grow. Ongoing advances in machine learning and artificial intelligence will continue to expand the applicability and efficiency of robots. Today, in many industries and applications, the work of robots has measurable advantages over that of humans, including improved accuracy, improved reliability, and cost savings.

In the healthcare industry, the robotic-assisted surgical devices (RAS) industry is dominated by a few key players. Going forward, several new companies are expected to enter the industry at lower prices, reducing cost barriers for customers and accelerating adoption of RAS devices. However, the industry should remain strongly consolidated, as competitive prices will limit the number of successful players. Competition is intensifying; Private venture capital and private equity investment has increased dramatically over the past decade. Since the start of the year, the investment has already exceeded $ 1 billion, largely thanks to a $ 600 million investment in CMR Surgical, which focuses on the development of robotic systems designed to bring patients the advantages of minimal access surgery.

Source: PitchBook, RSM USA

The problem of an aging population

Private capital is betting big on the expected market opportunity for RAS devices. Investors take a close look at demographic and professional trends to determine this opportunity. The national population is expected to increase by 10.6% over the next 15 years, and the population over 65 is expected to increase the most during this period, increasing by 42.4%. On the labor front, a June 2021 study by the Association of American Medical Colleges predicted a shortfall of 37,800 to 124,000 physicians by 2034. Surgical specialists account for 15,800 to 30,200 of that total. In addition, more physicians are expected to retire over the next decade. This is because more than two in five active physicians will reach the age of 65 by 2034.1

There are three ways the medical community can remedy this deficiency. First, to increase the number of graduates entering the labor market. It requires a collaborative effort between medical schools, medical institutions and government. In 2021, the Consolidated Appropriations Act of 2021 provided medical schools and institutions with the funds to increase the number of students in US medical schools by 200 each year from 2023 to 2027, which translates to 1,600 additional physician positions from 2028 to 2034. On average, it takes about 12 years to become a registered physician from the time a person graduates from high school until the completion of a residency program. However, it takes longer to become an experienced surgeon, as surgical residencies vary between five and eight years, while the average residency across all specialties is four years. Therefore, while the 2021 Consolidated Appropriations Act partially alleviates the shortage, more funds must be invested in increasing educational resources. In addition, due to the length of training required by each physician, the labor shortage will not be alleviated in the short term. A second solution is to grant permanent residence to foreign doctors. However, long-term planning is difficult due to the ever-changing rules of immigrants and visa applications.

Third, we can take advantage of RAS devices to reduce the number of physicians and the resources required per procedure. While surgeons should always be present for surgeries with RAS devices, the devices should shorten the time per procedure and will often provide surgeons with the ability to sit while working. In addition, the postoperative time in hospital by surgery should be shortened, as many devices have been proven to reduce the risk of infection. This will create an opportunity for surgeons to devote more time to complex surgeries for which RAS devices have not been developed, while decreasing the physical pain and fatigue experienced by surgeons during RAS device-assisted surgeries. Overall, the decrease in the time spent on certain surgeries, combined with the reduction in physician burnout due to lower fatigue levels, could lead to a decrease in physician shortages, thereby supporting investment in RAS devices. However, due to the early stages that the market is currently in, continued validation of RAS devices through clinical trials is needed to prove that the devices perform better and improve physician efficiency while reducing time. output and recovery.

Meeting the challenges ahead

Successful commercialization of the traditional robotics industry is a fairly straightforward formula. Do the gains in efficiency and profitability exceed the investment required? In the health sector, the formula is much more complicated. The safety and effectiveness of these devices are of the utmost importance and their validation requires considerable investment, time and human testing. In recent years, the FDA has repeatedly sounded the alarm bells on the use of RAS devices, citing concerns primarily focused on the effectiveness and safety of the devices.2 The FDA’s concern is valid; there is still limited clinical data to support the safety and efficacy of the devices. The trial begins as a percentage of private capital invested continues to lag behind. The global pandemic has exacerbated the problem, as clinical trials in all sectors have slowed. The impact should be temporary as we’re starting to see an increase in the number of test starts, but it will take time to regain the lost momentum. Meanwhile, as investments continue to be invested in the development of RAS devices, much more testing is needed in all areas to validate the results and safety of these new devices.

Source: ClinicTrials.gov, RSM USA

The opportunity ahead

It is estimated that people over 65 undergo about 50% of all surgeries while they make up only 16% of the population.3 The most common procedures are knee and hip replacements, and cataract and heart surgeries. Manufacturers of RAS devices have the opportunity to focus on these areas, as the demand for these procedures will exceed all others. In addition, complications during and after the procedure are most often multifactorial rather than specific to a given organ system or process. For this reason, the current trend in surgery for the elderly is to shift to less invasive procedures. The desired effect of this trend is to reduce intraoperative risk, trauma from the invasive procedure, postoperative pain, infectious complications and length of hospital stays. Future trials should focus on minimally invasive procedures. By addressing this growing trend, the market for RAS devices has the opportunity to grow and continue to raise high levels of capital from investors.

Source: ClinicTrials.gov, RSM USA

Takeaway meals

Recent developments in the fields of machine learning and artificial intelligence have dramatically improved the dexterity, vision and utility of robots in complex environments. There is a significant opportunity for manufacturers of RAS devices to exploit this technology to improve the success of surgical procedures and recovery times. Successful commercialization of RAS devices will require additional time and resources to validate the results. Human trials lag behind device development, so it’s critical that device makers remain proactive and focus on future areas of need to successfully compete in this highly concentrated and competitive market. Changing demographic and professional trends will create a significant market opportunity which, if properly addressed, will benefit device manufacturers, physicians and, most importantly, patients.

About the authors:

David Stuart is Director and Senior Life Sciences Analyst at RSM Canada. He has over nine years of corporate finance and capital markets experience supporting debt and equity transactions for various industries including life sciences, technology, telecommunications, energy renewable and consumer products. David is responsible for supporting local and cross-border transactions and leading M&A and capital advisory transactions in the private and public sectors. He focuses on providing advisory services for buy and sell mandates, specializing in transaction structuring and closing assistance.

Yaara Avitzur is a Senior Partner at RSM Canada and currently holds the CPA designation. She has experience in M&A advisory for financial and strategic buyers and sellers in a wide range of industries. Previously, she worked for two years at KPMG in their practice of auditing financial institutions and real estate, where she started her career in 2017 as an intern.

About Arla Lacy

Check Also

Beijing city center set to be completed by 2035

The water quality of the Tongzhou section of the Beijing-Hangzhou Grand Canal has improved. The …