Bionics Update: M&A Heating Up In Surgical Robotics, Who's Next?
14 February 2019
- Yesterday, healthcare giant Johnson & Johnson announced the acquisition for $3.4bn in cash (and additional contingent payments of up to $2.35bn) of Auris Health, a private robotics company focused on detecting and treating lung cancer. Auris’ platform, which received FDA approval last year, uses endoscopy to insert a flexible robot into hard to reach places inside the human body and allows physicians to navigate inside with help from 3D models thanks to video game-style controllers.
- This deal is a significant addition to Johnson & Johnson’s two robotics assets (Verb in partnership with Google and Orthotaxy) and follows the acquisition last September of surgical robotics company Mazor by Medtronic for $1.6bn, confirming that medtech giants are determined to play a major role in surgery robotics.
- This is not surprising in light of the rapid adoption of robots by surgeons/patients driven by the accuracy and less invasive nature of procedures and in light of the attractive business models offered by robotics. A robot installed within a hospital will indeed give rise to recurring and highly profitable sales of consumables and/or implants.
- Even if, for now, most of these competitive initiatives are not aimed at its area of focus, laparoscopic surgery, Intuitive Surgical, the leading medical robot maker will arguably face increased competition in the future. That being said, the company does not stay idle and is also expanding its addressable market through the development of new applications, one of them being… lung cancer detection and treatment, just like Auris.
- Against this backdrop of strong appetite for surgery robotics assets, we believe that some of the small listed players including TransEnterix ($600m market cap., laparoscopic surgery) and Globus Medical ($4.5bn market cap., orthopedic and spine surgeries), both part of our Bionics portfolio, could consider selling themselves to larger players. While they already received FDA clearance for their robots and have some commercial traction with hospitals, they clearly lack the distribution/sales channels that medtech giants could bring to the table.
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