The Importance Of Robotic Surgery Adoption For Intuitive Surgical

by Trefis Team
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Intuitive Surgical (NASDAQ:JNJ) has one key product line, its flagship da Vinci robotic surgical system. Needless to say, its business primarily depends on how many units the company can sell. Not only does Intuitive get around $1.5 million on average for each unit sold, it also locks in a recurring revenue stream by providing services, accessories and instruments that healthcare professionals need in addition to the base unit to perform surgical procedures. We expect that, despite the hefty price, Intuitive’s annual da Vinci units sold will continue to increase going forward. Take a look at our interactive breakdown of Intuitive Surgical’s business which shows our unit sales forecast and how a change in the growth trajectory can impact the company’s value.

Our price estimate for Intuitive Surgical stands at $314, implying a discount to the market price.

Adoption of da Vinci surgical systems will likely be driven by the fact that robotic surgery has some advantages for both patients and surgeons. Surgical systems can generally lead to fewer and smaller incisions, less blood loss, shorter hospital stays, faster recoveries and fewer scars than traditional open surgery. In addition, with a 3-D view, surgeons can perform the surgery by operating the controllers, resulting in greater control over the surgical instruments and higher precision. We currently estimate that Intuitive Surgical’s annual da Vinci Surgical Systems’ Units Sold will increase from 537 in 2016 to nearly 730 by 2020. However, if the usage of the product broadens meaningfully, so that it can perform a wider variety of procedures with limited incremental training, it can accelerate the number of da Vinci Surgical Systems’ Units Sold as installing such systems will become more economical for healthcare facilities. You can go to our interactive link and modify da Vinci Surgical Systems’ Units Sold chart to see how it impacts Intuitive Surgical Price Estimate.

 

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