The introduction of robots to operating theatres has long promised to revolutionise the way that surgery is done. The precision that comes with robotic and computer-assisted surgery can make surgeons’ jobs easier and facilitates more effective minimally invasive procedures, leading to lower rates of post-operative complications, advances in remote surgery and ultimately better outcomes for patients. Speedier recovery times and shorter hospital stays after robotically assisted surgery also point to sustainable economic benefits for healthcare systems and society at large.
While the operational upsides of robotic surgery are clear, there are other factors that are potentially holding the market back. The high upfront development and manufacturing costs for robotic tech means that prices remain high for hospitals and other end users, while the bulky dimensions of many systems limits the range of procedures they can perform.
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By GlobalDataWhen a surgical robot costs more than $1m to acquire and an operation using the system costs thousands more than a manual procedure, there’s a bottleneck that medical robotics companies will have to solve before the technology surges into the mainstream and the market’s potential is realised.
With these kinds of challenges it’s little surprise that the surgical robotics sector is dominated by a few large, mostly US-based firms, chief among them Intuitive Surgical, whose da Vinci robotic surgical system was approved by the FDA in 2000 and has now been used in more than three million laparoscopic procedures worldwide.
But the market seems ripe for disruption by new players, and entrants to the space – including Verb Surgical, a robotic surgery venture launched in December 2015 by Johnson & Johnson and Google’s life sciences subsidiary, Verily – are working to push the technology forward.
Cambridge Medical Robotics: the Versius vision
One company to cotton on to the opportunities in surgical robotics was UK-based Cambridge Medical Robotics (CMR), which was established in 2014 with the aim of massively boosting access to robotically assisted surgery. Although based just outside Cambridge, the company isn’t a spin out from the university.
As CMR chief executive Martin Frost puts it, the company’s origins are rooted in “former colleagues and friends getting together to try and answer a very big question, and that question was if you were to design a robotics system that could do the vast majority of laparoscopic procedures at an affordable cost, what would it look like?
“We were all familiar with the space in terms of medical devices and robotics in particular and we just believed that robotics hadn’t yet delivered the revolution that was promised in healthcare systems around the world”, Frost explains. “We felt that the reason it hadn’t done that is they were too confined to urology and urological procedures and they were just too expensive, and we felt that the millions of patients that don’t get the right surgery today needed a better answer.”
CMR’s better answer is Versius, which the company bills as the world’s smallest surgical robot. For the last three and a half years, CMR has been quietly developing Versius from the ground up for laparoscopic surgery. Versius’s compact size, a fraction of the mass of a system like Intuitive Surgical’s da Vinci, is intended to make setting up and moving the robot much easier, while its bio-mimicking surgical arms are designed to be flexible enough to access all four surgical quadrants, facilitating urological, gynaecological, colorectal and upper gastrointestinal procedures.
As for cost, CMR is hoping to dramatically disrupt the status quo in robotic surgery, which involves high capital costs to purchase a robot and sizeable operational and maintenance costs to keep it running.
“At the moment everything in a procedure that is done robotically costs the NHS £2,000 to £3,000 more than the manual procedure, and we want to reduce that difference to hundreds of pounds per procedure,” says Frost. “If we can do that, we believe that we have levelled the playing field between manual instruments and robotic instruments.”
Going to market
CMR has conducted several cadaveric studies and dozens of usability studies with Versius, and is now transitioning into its manufacturing stage, with Frost stating that the company is expecting to receive the CE Mark in Europe and bring Versius to the market by the end of 2018.
What have been the challenges for a small company developing a complex medical device for a demanding and highly regulated market? Ramping up has been a significant headache, admits Frost. The company has ballooned to 130 employees, half of whom joined in the last year.
“This is a very complex collaborative method to cross multiple engineering disciplines,” Frost says. “There aren’t many places in the world you can do this actually, and we believe Cambridge is one of them. So a big task has been to recruit and integrate those very talented people into our organisation.”
While going up against major players like Intuitive Surgical with a brand-new technology is a nerve-wracking prospect, CMR is hoping to have the same advantages as its Versius system against more established players in the market – that is, being smaller, more agile and less cost-intensive.
“If you add together the market capitalisation of the companies we compete against it’s over a trillion dollars, so what right do we have to think that we can enter the market? I think it’s all to do with the speed in decision-making, the agility, the pace at which we moved, the fact that we can be commercially flexible, we don’t have an entrenched position in the market we’re seeking to protect,” says Frost. “That’s helped us to move very, very quickly to this stage. Compared to our competitors we have spent a lot less money getting to the same stage and that mitigates the risk for our investors.”
Luckily, after nearly four years of development, the team is as enthusiastic about the disruptive potential of its technology now as it was at the beginning of CMR’s journey. “You set out on this journey, you don’t know exactly where that market is going to be as you get market-ready,” Frost says. “We’re fortunate that the market that we planned to enter four years ago is even more ripe for disruption and innovation than we believed it was.”
Securing investment for UK medical tech
Of course, for a growing company looking to penetrate a market as cost-intensive as medical robotics, lack of access to capital is a major disadvantage when compared to larger and more established rivals. According to Frost, this issue is compounded in the UK, which – Smith & Nephew notwithstanding – has lagged behind Europe and especially the US when it comes to medical devices.
“The UK hasn’t produced big winners [in medical devices],” he says. “You end up in this sort of chicken and egg situation where because we haven’t, as a country, produced big winners, we haven’t got big funders here. We are the only British company in this space; in fact we are really the only European company now in this space. Most of our competitors are big American companies and our desire here is not only to bring great technology to patients and to surgeons and to healthcare systems, but it is to build a global medical devices company in the UK. We only have one in the top 50 at the moment and we’d like that to be more.”
CMR has had significant success in securing financing, raising a total of $46m in two Series A funding rounds in July 2016 and September this year, but Frost notes that, with the exception of key investor Cambridge Innovation Capital, the company has had to look abroad (primarily Scandinavia and continental Europe) for financing. Nevertheless, CMR now seems in a strong position to push towards commercialisation, with solid backing, including from leading robotics specialist ABB in its only medical robotics investment, which Frost describes as “great validation” for the company’s tech.
So for a company entering a sink-or-swim sector with established competition and high capital costs, what is the key to mitigating investment risk? It certainly looks as though there is plenty of upside potential in robot-assisted laparoscopic surgery, with global revenues in the field reaching $4bn this year and projected to hit $20bn by 2025.
“I think not everyone will win in the market but the overall market will expand so I don’t think it’s a case of just one winner, I think it will be three or four participants in the market,” says Frost.
As well as progressing to market in a cost-effective way, Frost believes CMR has demonstrated that there is space for the company in the market and demand for its product at the right price. In just over a year, the company will likely be in a position to find out for sure.
