Medtronic's Hugo RAS System Makes European Debut Following CE Mark Approval

| Editor: Qin Jiu

Surgical robots have become one of the hottest tracks in the medical device industry. Despite the high technical barriers and significant market share monopolized by the da Vinci Surgical System, many medical device giants are still determined to replicate its legendary success. What is the next step for Medtronic's Hugo robot, once hailed as "the next da Vinci"?

Completed the First Clinical Trial in Europe

Recently, Medtronic's robot-assisted surgery system Hugo was launched in Europe for the first time. Its first surgery on the European continent was a robotic prostatectomy performed at Onze-Lieve-Vrouw Hospital in Aalst, Belgium. The Medtronic Hugo™ Robot-Assisted Surgery (RAS) System received the CE mark last October, granting it the right to be sold in Europe. The CE mark approves its use for urological and gynecological surgeries, which account for about half of all robotic surgeries today.

Prior to this, Medtronic's robot made its debut in Asia. Medtronic announced for the first time that its surgical robot, Hugo, completed the first clinical surgery in Asia at Apollo Hospitals Group in India. In Latin America, the system was used for a series of gynecological surgeries in Panama City.

Moreover, Medtronic's Canadian subsidiary has received authorization from Health Canada for the Medtronic Hugo surgical robot system, intended for urological and gynecological laparoscopic procedures.

Hugo RAS System Aims to Address Historical Cost and Usage Barriers That Have Hindered the Adoption of Robotic Surgery for Two Decades. Although robots offer patients the benefits of minimally invasive surgery — fewer complications, shorter hospital stays, and quicker return to normal activities — globally, only about 3% of surgeries are performed robotically, with the majority still being open surgeries. The remainder are traditional minimally invasive procedures.

Still Facing Challenges

Medtronic, a global medical device giant, launched the Hugo RAS system, which was once considered the strongest competitor to Intuitive Surgical and hailed as the next da Vinci. However, in the past two years, although the Hugo RAS system has made significant progress, it faces challenges on multiple fronts.

On November 23, 2021, CEO Geoff Martha stated that the launch of its surgical robot Hugo would be delayed due to global supply chain constraints and initial manufacturing issues. This also implies that in the fiscal year 2022, Medtronic's sales may fall below the target of $50 million to $100 million set by Medtronic.

This comes just one month after the Hugo RAS system received the CE mark.

Geoff Martha added: "We are not on plan, but we are not off the rails." While the pace has been slower than planned, the company still expects Hugo to achieve double-digit sales growth and strong performance in fiscal year 2023 after its commercial launch.

He added that the market demand for robot-assisted surgery remains high. Meanwhile, Medtronic plans to continue submitting regulatory documents worldwide and intends to begin submitting Hugo to the FDA for review soon.

Rob ten Hoedt, Executive Vice President of Medtronic and President of Europe, Middle East, and Africa, said: "Robotics and artificial intelligence are the undeniable future of healthcare, offering tremendous potential not only in advancing patient care but also in increasing access to these benefits."

During Medtronic’s Q2 Fiscal Year 2022 earnings call, CEO Geoff Martha said the company’s revenue was negatively impacted by the COⅦD-19 resurgence and staffing shortages in healthcare systems. Geoff Martha told investors that procedures utilizing Medtronic’s products, such as “delayed surgeries like spinal surgeries” and those “requiring ICU care,” including transcatheter aortic valve replacement procedures, were “lower than expected” in these markets.

Medtronic Lowers Its Fiscal Year 2022 Revenue Guidance, Now Expects Organic Growth of Approximately 7% to 8%, Down from the Previous 9%.

CFO Karen Parkhill told investors that while the company saw improvement in the November procedures, it expects the pandemic to continue impacting the market in the second half of its fiscal year. "Given the dynamic macro environment, we want to be cautious with our near-term guidance," Karen Parkhill said. Medtronic expects to achieve growth of 2% to 3% in the third quarter. "This represents a slight deceleration compared to October."

The Track is Accelerating "Evolution"

According to comprehensive data from Frost & Sullivan and the China Commercial Industry Research Institute, the market size increased from US$3.581 billion in 2016 to US$8.321 billion in 2020, with a compound annual growth rate of 22.6%. The global surgical robotics market is expected to continue its rapid growth and may reach US$15.574 billion by 2022.

Drawn by such enormous market potential, surgical robots have become a highly sought-after field, with major players competing to enter, and the sector is rapidly evolving amidst fierce competition.

Gary Pruden, Global President of Medical Devices at Johnson & Johnson, once stated that the surgical robots currently on the market are not technically robots. The robots available in the market today merely serve as extensions of the doctor's hands and eyes, unable to think for themselves or provide doctors with useful data.

He believes that the public does not see Johnson & Johnson as a robotics company, but rather as a surgical platform company. If open surgery is considered Surgery 1.0, minimally invasive and laparoscopic surgery as Surgery 2.0, and robotic surgery as Surgery 3.0, Johnson & Johnson believes the next era will be Surgery 4.0. Johnson & Johnson refers to it as "Digital Surgery."

Johnson & Johnson is trying to develop a platform that integrates live imaging and visualization with instruments in one system and uses algorithms to assist doctors in decision-making.

Recently, Johnson & Johnson Medical announced that it will collaborate with Microsoft to further implement and expand the Johnson & Johnson Medical Digital Surgery Ecosystem. Microsoft Cloud will assist Johnson & Johnson Medical in enhancing skills, improving workflows, and strengthening surgical decision-making, providing a better customer experience, improving patient outcomes, and boosting economic benefits. This strategic move will go beyond the current landscape of surgical robotics, building a comprehensive healthcare system.

Intuitive Surgical, as the "leader" in the surgical robotics field, naturally plans ahead. In February 2020, Intuitive Surgical acquired Orpheus Medical to further expand its territory, covering hospital data management and IT services. The aim is to enable doctors to capture and share clinical videos and images, and to analyze surgical treatment methods through AI, improving surgical procedures and enhancing the intelligence of the da Vinci robotic system.

TINAVI mentioned in its 2020 annual report that, from the development trend of surgical robot products, new technologies such as 5G communication, 3D printing, smart materials, medical big data, artificial intelligence, and virtual/augmented reality will continue to be integrated into the technical system of surgical robots. Surgical robots will become increasingly intelligent, with higher levels of interaction with doctors and patients.

From the application trend of surgical robots, the range of indications that surgical robots can handle is becoming increasingly broad, and they will be fully integrated into all scenarios of medical operations.

Intelligent, personalized, and remote surgical methods will become increasingly mainstream as surgical robot products continue to iterate and improve. The surgical process will also gradually revolve around surgical robots, which will become a core element in the entire surgical procedure.