Robotic surgery: investing in the joysticks of health care
Surgery is a job only humans can do... isn’t it? How could a robot ever perform surgery on a human patient? What seemed like science fiction 20 years ago is increasingly becoming reality. Medical technology is making giant leaps forward. As a risk-conscious investor, you can benefit from this innovation.
Investing in robotisation is more than a casual choice; it is a crucial link in future-proofing health care. Artificial Intelligence (AI) will only increase the possibilities.
Liesbeth Van Rompay, Thematic Portfolio Manager at KBC Asset Management
The first surgical robot, the PUMA 560, was used in 1985 to perform a brain biopsy, a procedure that is prone to errors due to the shaking of the doctor’s hand during needle placement. A robot does not shake or vibrate. That procedure turned one of the main advantages of robotic surgery into a reality. Since then, the use of surgical robots has revolutionised minimally invasive procedures. Surgical instruments can be manipulated with exceptional precision, even in a confined space. Only a small incision is required.
Greater precision means faster recovery
‘Complex operations require extreme concentration from the surgeon, often for hours at a time and in uncomfortable positions’, says Liesbeth Van Rompay, Thematic Portfolio Manager at KBC Asset Management. ‘Using a surgical robot not only increases the surgeon’s concentration but also their endurance. The surgeon can take a rest when they need to by literally letting go of the joysticks on the console briefly. In a classic procedure, with a clamp in one hand and a medical instrument in the other, the surgeon obviously cannot just let go. Advanced visualisation techniques, such as high-definition 3D imaging and augmented reality, also allow surgeons to visualise complicated anatomical structures more clearly.’
Surgical robots deserve their place in the operating theatre of the future, with human and machine complementing each other to achieve the best outcome for the patient.
Liesbeth Van Rompay, Thematic Portfolio Manager at KBC Asset Management
‘The recovery time for the patient is also shorter’, Van Rompay adds. ‘Fewer complications also mean fewer follow-up operations, making robotic surgery not only less stressful for the patient, but also ensuring shorter hospital stays. That’s a crucial element in the management of patient flows and therefore a hospital's efficiency.’
Technology is evolving at breakneck speed
‘Broadly speaking, robotic surgery can be divided into two main categories’, says Van Rompay: ‘soft tissues and hard tissues. In reality, our bones are the only really hard things in our bodies. Soft tissues include organs such as the lungs, intestines and kidneys. Orthopaedic procedures focus on our musculoskeletal system, including bones and joints, for example a knee or hip replacement. General surgery, with more and broader specialisations, focuses on soft tissues, for example urological or gynaecological procedures, gall bladder removal or excising cancerous tissue.’
‘The da Vinci robot from the US-based Intuitive Surgical is the most advanced system within the soft tissue surgical field’, says Van Rompay. ‘The company has set the global benchmark in what we call the ‘soft tissue robotic system’.’ Intuitive Surgical launched the first da Vinci system in 2000. Its capabilities have increased since then and it was followed in 2006 by the da Vinci S, their second-generation robot. As technology continued to improve, subsequent generations such as the da Vinci Si, X, Xi and SP also saw the light of day. ‘Intuitive Surgical also markets very specific robots’, adds Van Rompay. ‘The company launched Ion in 2019, a robot-assisted bronchoscopy system designed to improve the biopsy of suspect lung nodules. This enables lung cancer to be detected earlier.’
The market for medical technology companies is constantly evolving. Health and innovation increasingly go hand in hand.
Liesbeth Van Rompay, Thematic Portfolio Manager at KBC Asset Management
‘In March this year, the US Federal Food and Drug Administration (FDA) approved the da Vinci 5’, adds Van Rompay. ‘The da Vinci 5 not only has more computing power than its predecessors, it is also the first of its kind to be equipped with Force Feedback technology. That was one of the biggest challenges in using robots: as a surgeon, you couldn't really feel what you were doing, so you had to compensate visually. Inserting sutures is a good example: because you couldn't feel how hard you were pulling the threads, you had to observe how the tissue reacted and adjust the amount of force you were using accordingly. That force feedback, or force feedback by feel, is so naturally present when we move our bodies that we find it hard to imagine it not being there.’
The MAKO system from the US company Stryker is a leader in the field of orthopaedic surgery. The MAKO system is used in around 60% of knee and 30% of hip surgeries in America.
Extra resources to keep up
A standard robotic surgery system can easily cost up to two million euros. The purchasing manager of a hospital will want to see that as an investment for the long term, whereas the surgeon would prefer to trade in the old robot for the latest model after only a few years. Surgical robots are also a matter of prestige. They offer hospitals a competitive edge in the competition for highly qualified young health care professionals. Technology is evolving rapidly today. Hospitals need more and more financial resources to keep up with the latest developments. With innovative life-cycle management concepts, hospitals can partially overcome the hurdle of high acquisition and maintenance costs.
In addition to the necessary medical knowledge, robotic surgery requires the surgeon to have the right digital mindset. Bringing surgeons and engineers together is essential.
Liesbeth Van Rompay, Thematic Portfolio Manager at KBC Asset Management
‘The initial investment isn’t the only challenge’, says Van Rompay. The complexity of both the technology and the regulations is also an issue. There is also the need for appropriate training programmes, to equip doctors with the necessary skills so that they can maximise the potential benefits of surgical robots.’
Market trends, growth factors and outlook
The growth of robotic surgery is being driven by a number of global trends. The growth outlook for the sector is supported not only by technological innovation, but also by population ageing. ‘We are all living longer’, says Van Rompay. ‘And our lifestyle is changing. That automatically brings an increase in health expenditure and therefore in surgical procedures, too.’ We are also seeing a growing shortage of health care personnel around the world. According to the World Health Organisation, we are heading for a shortage of no less than 10 million health care workers by 2030. ‘Our healthcare system is overburdened’, stresses Van Rompay. ‘Using robots in health care, and more specifically surgical robots, can support doctors by taking over simple and routine tasks during surgery. Doctors can then focus on the critical stages of surgery and make higher-quality decisions.’
Market operators compete on factors such as product quality, innovation, service and pricing strategies. ‘The extremely positive response from surgeons to the da Vinci 5 reinforces the belief that the latest surgical robot will further enhance Intuitive Surgical's substantial technological lead. Other players, such as Johnson & Johnson or Medtronic, are likely to compete among themselves on price and market share with their robot systems focusing on niche markets. Medtronic's Mazor robot, for example, is mainly used for neurosurgery and spine surgery.’
Fully autonomous surgery, without human intervention?
Will the integration of AI and machine learning mean that we will be moving towards autonomous robotic surgery any time soon? ‘Autonomous surgical robot systems are still in the experimental phase,, says Van Rompay. ‘That said, remarkable success has already been achieved with the STAR system, for example, in the pre-clinical phase.’
AI and machine learning provide a boost for robotic surgery. Autonomous robotic surgery is no longer a futuristic fantasy, but has become a potential reality.
Liesbeth Van Rompay, Thematic Portfolio Manager at KBC Asset Management
STAR, or Smart Tissue Autonomous Robot, was developed at Johns Hopkins University in the US. STAR was able to perform a complex and delicate surgical procedure, connecting two sections of a pig’s intestine without any human intervention. ‘Soft tissue is fragile’, explains Van Rompay. ‘Suturing not only requires precision but also extreme caution, and thus supreme concentration from the surgeon. STAR has a highly specific control system. A three-dimensional endoscope takes continuous real-time images. An algorithm, trained using machine learning, views those images and adjusts the robot as needed, just as a human surgeon would. It will obviously be some time before a system like STAR is able to operate on humans, but there is no doubt that it could revolutionise surgery in the future.’
‘Another innovative example is the Lithuanian medtech startup Sentante’, says Van Rompay. ‘The company is currently developing the first fully tele-operated robot system to perform endovascular interventions remotely. This shortens the response time, which is crucial in the event of heart attacks or brain haemorrhages. The first clinical study in humans was initiated in Riga this year, and the first surgery was performed.’
It remains a topic of discussion... for example, who bears responsibility if something goes wrong - the human or the machine?
Capitalising on growing demand for medical technology
Health care is one of the most stable sectors in which to invest. The medical equipment and supplies segment, like the pharma sector as a whole, is supported by an increasingly ageing global population and the accompanying growing disease burden. There will always be simple procedures where robotics does not add much value, but robotic surgery remains the hotly tipped standard for the future. ‘Surgical robots continue to push the boundaries of what is possible in the operating theatre’, says Van Rompay.
‘Medtech stocks are more volatile than the average pharma sector company. Generally speaking, mid-term recessions are slowing down the growth of the surgical robot market because of financial constraints and shifting priorities of hospitals and governments. On the other hand, medtech companies are recording higher revenue growth on average than traditional pharma players’, Van Rompay stresses, ‘which could present opportunities for the risk-conscious long-term investor.’
Medtech has a number of specific characteristics that make them attractive for the long-term investor. The market is made up of just a small number of major players. The competition is limited. Barriers to entry are high. And innovative product cycles are short.
Liesbeth Van Rompay, Thematic Portfolio Manager at KBC Asset Management
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The information contained in this publication is for information purposes only and should not be considered as investment advice.
