Taking on the 800lb Gorilla in Robot Assisted Surgery | LSI USA ‘23

Transcription

Joe Mullings  0:08  

Well, thanks for joining us that panel beforehand was really, really a nice setup for this one where that was digital surgery at large, we're going to take on a little bit more of a micro conversation about and this was meant to be respectful. By the way, it was Scott's recommendation of taking on the 800 pound gorilla in surgical robotics. And I say that with an enormous amount of respect. And if you don't know who that is, of course, it's Intuitive Surgical. While most of the large format robots are attempting to enter that market, and compete against somebody who is written the playbook for it. So I'll allow each of my panelists to introduce themselves and set up the session here. And by the way, Dan Hawkins is stepping in Kurt how to leave for a family situation. So the addition to Dan is pretty profound when you understand what his background was, and his connection also, in digital surgery. So Rachel

Rachel Van Stratton-Kirk  1:11  

Rachel of instrumenten, I'm part of j&j and focused on our robotics, digital solutions and advanced imaging programs.

Adam Sachs  1:22  

Adam Sachs, I'm the founding CEO of vicarious surgical.

John Ma  1:26  

John Ma, founder and CEO of Ronovo Surgical.

Daniel Hawkins  1:31  

Daniel Hawkins, started my evolution in robotic surgery is one of the first guys that intuitive and now I'm in a different part of the spectrum of digital enablement in the OR.

Joe Mullings  1:43  

So let's jump into it. Scott's given us 45 minutes, I could potentially talk about this all day. But let's start right out of the gate. And, Adam, I'll start with you. Why are there only one of two soft tissue robotic companies cleared in the US that are dominating the market? And what's going to be different about your platform?

Adam Sachs  2:08  

That's a lot of questions, I think all in in one. So you know, why is intuitive dominating the market? I think that there are there's a whole bunch All right, so let's, let's start, start at the top and then maybe I'll pass it off to a few other people to pick up here. Intellectual property is kind of one of the original answers to the enemy, and intuitive had a really strong IP portfolio. A lot of the original inventions and patents are from, you know, even as early as the late 80s. Most of them probably early 90s. So, you know, we're off patent for most things. And that's why there's a lot of us on stage here having this conversation. I'd say that's the beginning of the answer. But it really comes down to value. Right? If you look at what intuitives done over the last 2025 years that I think they've they've proven the value of surgical robotics, but it took it was, you know, a hell of a road to do that. They have, you know, it was a real slog in the beginning. And there was actually a lot of adventure trying to find where that value was. And frankly, we're pretty thankful that they did that. And that we actually get to be the second mover in this space and don't have to spend in a 25 years, building out the market, understanding the details of the market, proving to surgeons that there is additional value in providing an interface and, you know, putting a computer between them and their patients. So I'd say that's the top couple things that come to mind. What did I miss guys?

Daniel Hawkins  3:36  

You know, so I think back to the early days of intuitive and robotics was scary. It was scary as hell, frankly, the very first time I mentioned surgical robotics in an operating theatre, I was observing an open chest five vessel bypass, and that was proposing it put a robot between the surgeon and the LED. Bad idea, according to that surgeon so much. So you got angry at me told me to get out of the or throw scalpel at me. That was my welcome to robotics, right? So you start there, and then you evolve and you recognize that that surgeon is actually the second one to purchase a DaVinci. So there's an evolution that happens within all of that. Why is intuitive in the position they're in? It's an install base? Yes, of course. Well, it took a lot to get there. What they had to solve was the value. They also needed to solve the workflow models. They need to solve the innovative adoptive models, they needed to figure out that coronary bypass is a terrible place to start. And as Fred said earlier today, it started out actually launching as we all know, in prostate surgery, that actually happened by a community physician being absolutely bullheaded to try to do something with Fred and Barry Gardner, right that was in the East Bay. Well, that ended up being then a distribution problem right so the 800 pound gorilla not only has a technology event, they not only have an installed base events, I'm sure we'll get to the eco system that's involved there. But they've figured out the processes, commercial processes to get all this done. And right, you're going through right now, what does it look like to launch into that world? It is a giant giant problem, 

Joe Mullings  5:15  

John?

John Ma  5:15  

Yeah, I think I was fortunate to spend some of my years with Intuitive Surgical, I think the emphasis on the value of the technology is a huge differentiator, you know, very consistent. You know, throughout the span of 20 years, they only introduced four generations of the systems and the very carefully introduced. The other thing that I observed that is that is our very strong desire in working with clinicians very closely. So at any given time, if you had the opportunity to visit the Sunnyvale headquarters, there, you will see like a 1620 base that with the field or with surgeons, and the helping surgeon to realize the value that system can offer, that the bass failed with the animal trials in the you know, surgeons from around the world, that working with the technicians and the engineers on site, so that they develop their own skills and own ways of doing surgery. Those are the, like the surgical car that you know, divided by Intuitive, but the skills is a perfect heist the by the surgeon. So I think the emphasis on the clinical value is really a huge differentiator, you know that they are very close to the surgeons, Rachel.

Rachel Van Stratton-Kirk  6:29  

I'm gonna think for they've said it very well. Right, all the all of the top points, the continued footprint, the clinical value in them, paving the way, right, we have a ton of examples. It's almost like an HBs case, right? Harvard Business School case sitting right in front of you, as to how how did this work? Where did they make the mistakes along the way that we all maybe don't have to make, that we can we can learn from and then determine also, is there an area of differentiation? You know, where can you be differentiated? Or where can you make a difference? And I think not being the first always does help in those regards, because you have those opportunities to step back and take a look, and where did they have missed ups or not even missed ups, but they ended up being a fast failure, but it was actually a success. And so how do you how do you incorporate that into what you're building and doing today?

Adam Sachs  7:30  

Yeah, I think if I can even just build, I think, you know, to, you know, what you guys are working on? It's sometimes it's not even what are their missteps, it's what choices have they made that leave other opportunity. And I think different markets being a fantastic example of that.

Joe Mullings  7:45  

In regards to that, and you set this up perfectly, the best defense from attending market share is good offense. And intuitive spends this year I think about 870 million in r&d. And next year, I think Gary said in the recent release, there's almost a billion now some of that's going to be the supply chain and owning some of that, which I think is brilliant, but product innovation. How are we or do we even bother? And I'll start with you, Rachel, do we even bother trying to over compete or compete with intuitive with them being one mission, one focus, and their r&d dollars spent directly where we're trying to break into the market?

Rachel Van Stratton-Kirk  8:25  

I mean, I mean, you can't compete with that, right? When you already have the footprint, and then you're you're putting that kind of dollars and money into r&d. I think that your focus has to continue to just be on your customers, and what is it that your customers are either missing, are needing, or that you are already able to provide, but can do that now in a robotics framework?

Joe Mullings  8:53  

So John, where are you looking at these gaps? Right now? Opportunities, if you will, not necessarily the gaps but opportunities?

John Ma  9:00  

Yeah, I think that before we talk about competition, we really need to talk about segmentation, we can make a general comment about compete against, you know, Intuitive Surgical, I think a segmentation is important, particularly in international region, whether this is the urology or whether this is a general surgery, segmentation, if this is only used in tertiary hospital, or it is used in secondary hospital. So these are important differentiations. And I think if you look from that perspective, it completely opens the landscape of possibility they offer alternatives to the hospitals, to the surgeons and ultimately to the patients.

Joe Mullings  9:41  

Interesting numbers on that so you can say intuitive. We've heard the argument they've had the market for 20 years, they've only got 5% penetration. So with that in mind when you look at 7500 systems as of December 31, and last year, they did 1.9 million procedures That's less that's 0.65 procedures per day. So there's that not that much saturation of the market. So Dan, what do you think about when you consider those numbers?

Daniel Hawkins  10:13  

So, you know, I had a unique role. When I was at intuitive I was asked to write the management description of the business part of the s one. Really, bizarrely, Lonnie said here, here's a project takeaway, and I need to draft. So I ended up looking at 30 different procedure categories. And we ran estimations where we can end up right, I was wrong by move the decimal point divide by five. Right? It was, it was bad, it was really bad, it was horrifically wrong. The stats you just described really talk about, to me, the clinical enablement of robotics enables a differentiation enough, that creates a causality to acquire. But it also tells me, it's not in the flow. It's not truly in the flow. And for it to be in the flow, you've got to do exactly what you just described, right? You go in and intuitive at any given moment. And there's 2030 talks lined up practicing your technique. Why? Because this is hard. This is really, really hard. And the commercial operations to get that done, are horrifically hard. Now we're going to take the economics of a particular procedure, we never thought this would ever get to hernia repair. It's in hernia repair. Why? Because there are portions of hernia repair that are hard. And those portions digital meaning robotics can help that. But the bread and butter hernia repair probably will never happen. Right? So there's some segmentation that happens within category in that fashion. So I do think that we've got lots and lots of opportunity. But I'm not a believer that it'll be 90% robotic and the ultimate end of the world here. I do believe that there's going to be portions that will end up getting cleaved off because of clinical need outweighs every other factor on the board. And you need that robot to be able to do that procedure, because he can't do it with your hands. But you might only have three a week, right? But there's enough reason that it causes you to spend a million bucks whatever it is for the robot.

Adam Sachs  12:11  

 Can I push back on on something there? Yeah, please. While you're here, Adam said he's a chippy, man. So I totally agree. I totally agree about the workflow. And I pretty much everything he said, it's the 90% that I want to challenge. And I don't know, like, obviously, I don't know what's going to happen in the next 50 years either, do I but I want to believe that that's not true. And I want to believe that that's not true, just just because it's good for our business. But but also because, you know, if you look at it to, you know, take take one of our colleagues, I actually part of CMRS pitch a little bit, you know, and a huge focus on, you know, what, what actually kind of personally inspired me in this industry is aviation. And, you know, we're at a point where, you know, most years, there are zero aviation deaths in the US from major commercial aviation, with occasional major outliers, which is truly astonishing. And we're many, many orders of magnitude from that in surgery. And the the only real way to stop that is to stop human errors that the surgeon makes from becoming patient injury. And the way that you do that is by putting a computer in between like that is, you know, ultimately the way this this has to go, if we are going to make surgery, you know, safe. So

Joe Mullings  13:29  

That though is in the aviation world. It's a mandate, that we're commercial pilots have to use the electronics, the gear, the autopilot, and there's policy and procedure. Surgeons are artists. And if you take away that art from them, you ask any general aviation pilot, he or she doesn't care if there's an autopilot with them if they're out doing their thing. So I hear you on that. And I'm hoping that the digital world embraces that. But it'll it's I think we've got to have a bigger strategy than hope on that.

Adam Sachs  14:04  

Oh, I we certainly have a bigger strategy than hope. I think most people here do. But I think if you asked a pilot even 25 years ago, they would have strongly disagreed with that statement. And there's a huge debate in the 90s over over autopilots and automation and plants. And it is, you know, frankly, Airbus winning that debate that has led to the aviation world that we're in today.

Joe Mullings  14:27  

So of question, we've talked about major investments here, we've talked about 20 base surgical centers. The medical device world until digital has been accustomed to an enormous r&d spend up until we get cleared or approved by the FDA. And after that the r&d investment falls off precipitously. It's the opposite. In surgical robotics, especially a large format, tissue, surgical robotic, are the large strategics committed to this because the margins change dramatically and how you're making your money today on the analog side. And that's a cultural mindset that Gary has set up there. And CMR is setup. So what happens to these 100 soft tissue robots under development right now, if you don't have a buyer, that's one of three or four major strategics out there, and are the major strategics prepared culturally, to change the mindset. And I'll start with you, for obvious reasons, Rachel.

Rachel Van Stratton-Kirk  15:32  

So I think that if you look at j&j from at least an investment perspective, or being willing to invest in r&d r&d Every year is pretty substantial. I think in all truthfulness, I think that some of the investment is obviously going to continue. But also some of that investment has to also be focused on the selling and the commercial aspects of it. Right. And you cannot discount intuitives work that they did around the commercial expansion. And the ability to succeed at that and service the customers. You'll hear at times, though, you know, we're not happy with intuitive their customer service this or this or, or that. And trying to make sure that, again, it's not that we're trying to avoid their missteps. It's trying to make sure that are we still continuing to meet the customer service expectations that j&j already has put out there for our customers? So, yes,

Daniel Hawkins  16:41  

and one of the things I think about when I consider that if you rewind the tape to the earliest days of medical devices, we created the problem. Okay, so we trained our customers being the surgeons job to expect us to be there. And then we glom on to new technology, and they expect us to be there more. And we glom on a new one, and then we put in digital of Forget it. Now, you really have to be there. So on a panel earlier today, it was on with Fred Moll, he talked about Mako surgical, right, that was an independent public company, until they couldn't make the commercial model work. Because they needed to have a body in the room every time to operate the Mako robot. And you know, the problem they had their revenue was the robot. It wasn't the recurring on a procedure. So they ended up having to sell striker. And what what Robert Cohen and Kevin Lobo did over at Stryker with that is they married implants to the robot. Now you've got something to offset the expense of that, right? You guys are doing it with Ellis beautiful thing. Absolutely beautiful thing. But that commercial model has to be solved, the training has to be solved. But to your point about r&d, for me, yes, it has to be a decision that you're going to continue to evolve the robot. But what intuitive did I think was brilliant, is they changed the game from being just a robot, it's now an ecosystem around the robot. Right. So if you're going to try to pull a customer in, this is a challenge, you're gonna face it, that Medtronics is going to face it, every other company is trying to compete directly is going to face it. If you're going to break that standardization of usage. Who here has an iPhone, you got an iPhone in your pocket, and I tell you, I've got an Android for you. You're gonna go Wait, itch. If you've got an Android and I have an iPhone, it's the exact same thing standardizations happened. So you're gonna have to break that. Well Intuitive did a great job of putting an ecosystem around the robot. So it's not just the technology the robot anymore. Now it's starting to get a little ugly, it's a little harder to pull that away. So you got to break the habits, right? We talked about that. And you got to break the ecosystem.

Joe Mullings  18:47  

So Intuitive. Again, this is this is a head nod to intuitive, it's arguable to say that they have some best in class across every category, although you could argue visualization bullets, every category in robotics. And so how is it possible to have best in class? Once you leave the startup world? The best people in the categories, and I know this is a headhunter was placed 350 plus people in robotics. The best minds do not want to work for a large strategic because of what comes with that. And so, you get your robot to an acquisition. And now you're a strategic. How do you maintain the best in class there? Or is there another possible model, a JV or an aggregator which may be j&j and Medtronic become an aggregator of robots, not a creator and allow those to remain like Lenovo? Right like by Kara standalone organizations like we believe j&j may do with biosense. Webster, as well as with IBM edge because you can't kill that innovation. Are you able to have best in class? Last outside of that, so John, I want to know what your thoughts on Yeah, I

John Ma  20:03  

think, you know, to that question, first of all, absolutely, we are open to partnership with strategics. And you know, in the likes, and right now, from where I come from, you know, first of all, the market is huge in China that the dynamics is so different. And if I may just speak about the massive market, you know, we have a 10,000 hospitals that performs minimum invasive surgery, every year 10 million procedures are performed that you have 120,000 surgeons and you know, actively doing minimally invasive surgeries and the robotic surgery is only for soft tissue is only a very tiny fraction of that, you know, they do very well in urology, but gynecology, general surgery, which is less than 1% is like a point 2.5%. So there's a huge potential. And we're not just competing wheezing to do I think we offer a very good alternative. Because when you look at medtech, I think innovation will have to realize value through you know, safety, efficacy and economics. It's a balanced, you know, equation that when the hospital makes decision to purchase, and etc. So when we have that in mind, and when we try to bring innovative solutions to the market, I'm not worried that that if there's no strategics or if ultimately we don't have buyers, because, you know, for for me, we spend all the way from the industry, we spend a year to do very deep dive of interviews with the surgeons understanding what are their pain points, what are the unmet needs, so the end of the innovative nature of the system were offering is completely different than everybody else in Chinese market, because everybody else is just using the same technology platform. So I think that that value stands out if there is a strategics. And it's really the capability of, you know, bring innovation to the whole thing, that not necessarily a continuation of existing platform. So I think that probably, you know, is what I see, the prospect of working with strategics are just to keep your foot on the on the note of, you know, the clinical needs and the on the capability of innovation.

Joe Mullings  22:24  

So, if you're going to take market share from a leader, you've got to have a differentiation and a couple areas, assuming it's a growing market. So we all agree that that's a growing market. Now you've got to have a differentiation either in your, your value your pricing side, and or the technology it seems most of the large format soft tissue robotic platforms seem to emulate very closely what intuitive has done. So going up against them on the same form factor may not be the way to go. But the issue in soft and soft tissue robotics is you had cast that dies 8 9 10 years ago. And on a platform like that it's very difficult to switch five years into it. It's actually prohibitive. And when you look at the format's of whether it's a CMR, Hugo, J and J's whichever census, it seems eerily similar. Now John, yours is different. Adam, yours is very different. And j&j seems to be differentiated as well. So Adam, starting with you, what is the competitive advantage workflow advantage, as well as the economic advantage of yours?

Adam Sachs  23:31  

Yeah, so I, it absolutely all starts with surgical workflow. I mean, I do think that you know, the comment before about training. This is this is one of the biggest things that holds robotic surgery back today. And, you know, we see article after article after article about how the average robotic procedural time is longer than the average laparoscopic time. There are certainly surgeons who are exceptions to that. But then when you go talk to them, it turns out they've done 3000 DaVinci cases. And it turns out, you know, that's, that's how you get your time's down, that can't be the answer. And especially if you want large, widescale meaningful adoption, so, you know, kind of my pitch a little bit for what we're doing is, we really fundamentally believe that the answer to these workflow challenges starts with a different hardware architecture, and we believe it starts with single port. So I think overcoming a lot of the challenges with single port if you can have you know, sort of a, if it's real whitespace if you can have a system that you really just create one incision, so you're not choosing port placement doesn't matter where that incision is in the abdomen. And then once you're inside, you can go anywhere in the abdomen and face in any direction and operate anywhere, then you remove a lot of that that procedural planning that realistically happens in the or with the patient on the table. So today, you know, what a lot of the workflow looks like is surgeons will actually draw out with with a permanent marker on the patient where they're going to put their trocars they use there's all sorts of different techniques for This, including, you know, a lot of surgeons measure with their fingers, and you measure out where you're going to put them, you make your incisions, you put in the trocars, often, especially when surgeons are at, you know, case 50, and not 500, or 5000s, they're doing them one at a time, put the camera and look at where the target anatomy is put one instrument and see if you get good motion, because all of the motion pivots about the abdominal wall, and about that incision site. So that was a very long way of saying that, you know, what we're intending to do differently is different architecture that fundamentally removes these workflow challenges, and then build all of that the software, really the sensing, and then the software on top of that.

John Ma  25:43  

You mentioned that the difference, and it's important to to speak about the why we are different. And now coming back to the, to the title of the panel, the 800 pound gorilla, you know, if it's expression, it's okay, but actually, accurately, it's 800 kilo, so it's 1800 pounds. And so the system is the sushi, the system is really big, it is heavy, it is expensive. And then these are the things that from hospital perspective, they have to consider. I mean, you mentioned the important factor that it's utilized in the US less than one procedure, they, you know, some of the hospitals can handle that in China. There. For example, if the operating room occupied by an 800 pounds equipment that is only used once per day, that's under utilization of the operating room, because they you know, how procedures are performed how many procedure performed in a typical operating room, five to six procedures a day. So that is, you know, you can work out the economics behind it. So why we are different, because the you look at the perspective, it's too big, it's too heavy, it takes too much space, it takes too long to learn. And that's why we come up with the concept of being modular. So it's not tried to be different. So at different, it's that providing value to the surgeons, and the by being modular, you offer more space to the surgeon to the assistant, etc. And on top of that, you know, it's completely configurable, that's very important for the surgeon because the surgeon get to choose, we want to use three arm system for arm system. Why we do that too, because when we interview, the surgeon, Chinese surgeons are telling me 90% of the time, they only use the three arms out of the four arms into Finchy Sr, three arms, meaning the camera plus two has to instrument arms, and the why they only use three, it's not just to save money, because the minute procedures they perform that cause the arm coalition. It's a distraction. So that's why we say that we need to be configurable and configurable. And also, we need to reduce costs. So that's why we come up with idea, that instrument that we continue to allow surgeon to use conventional laparoscopic instruments, that the stress test instrument it to many people, it doesn't make any sense, you can make money out of that. But if you get the surgeon to use the system, you will ultimately make money but then the benefit that you can pass to the patient is huge. So that's why we have this concept of adapter that will hold a straight stick instrument for simple surgical tasks when it comes to cutting suturing that you have arrested articulate instrument that you can use on the system. So these are the things that are not simple. They tried to be different. So a different but it's also clinical economic value to either surgeon or the patients.

Joe Mullings  28:39  

And it's interesting that format, we're seeing that with Moon, we're seeing that with distal where it's giving the options as well as well as renewable. So going to j&j here, you're sitting on for close to the hot seat. You've integrated or attempted to integrate a number of platforms verb surgical, Oris had a soft tissue robotic surgery running alongside the monarch platform. And those are architectures. I was there when it was Warren robotics in the early days. How are you managing that? And is it is a considerably different than the current value prop that intuitive has.

Rachel Van Stratton-Kirk  29:19  

I don't know that. I would say it's significantly different than a value prop. I think we're just focused on at least as to answer that question. We're very much focused on ensuring that the tools and the medical device that we sell today as Ethicon that that portfolio is well represented in our surgical robotics. I know we do have a lot of surgeons that are our our Ethicon j&j loyal they may still use intuitive platform, but they prefer to get our stapler out like they choose not to use intuitive stapler. So I think from our perspective, having had Being the, as you said, introducing multiple robotic platforms has given us the opportunity to, in our opinion, create the best opportunity, the best platform. And I think we're differentiating the way that we are know how, especially with the tools that we have in market today. And then also focusing on our visualization, trying to ensure that we're continuing to meet customer needs. I think you made the comment earlier about there's a question about whether or not intuitive truly has the best visualization around. I think there's opportunity to improve in visualization, but also build on that, to enhance surgeon viewing not just viewing, but providing them with additional additional capabilities within that viewing.

Joe Mullings  30:57  

Yeah, most of the surgical robotic conferences you've been to, or meetings you've been to, nearly every single surgeon will say, if you give me an intuitive give me a robot that can do 80% Of what intuitive does, but allows me to see what I can see today. I buy that robot Exactly. So let's jump into the meat and potatoes here a little deeper. So Dan, you've commercialized products at ACS and the logics and paramedics avail restore, and certainly intuitive. So you've been down that road of you can get a prototype going great. You've played high school football, you can get through V and V. Nice job, you played d3 in college, you make it through the FDA. Fantastic. You sell 10 robotic systems, you will figure out, you really didn't know what you were doing. You get to 100. It's a different game plan, but it requires reshuffling of the deck. And you've got to then become Super Bowl player. When you get to that point. How difficult is that been in an analog system? And now you add that to a digital complex system like this?

Daniel Hawkins  32:01  

So I'd say there's a lot of questions in that. There's a lot of questions. Exactly. Fundamentally, creation of a technology is it allows you to play the game doesn't mean to use your analogy doesn't mean you're gonna play it a DI or an NFL level, certainly not the Super Bowl. Commercialization is hard. Because you're changing some version of behavior. They were either doing using something that was nothing like what you were doing, or worse, they're using something that is like you're what you're doing, and you have to convince them off of that dive. Right. So to me, the most interesting example I'll use here is actually my last company prior to avail is shockwave medical. We're doing angioplasty. You got to be kidding me. It's been around since 72. Right. And Dred Scott engine came up with angioplasty in 1972. There's so many bodies in a graveyard trying to fix calcium, that I couldn't raise any money while we raise money. We got it done. We did some clinical work. Now. We're up there in the marketplace. Simple, easy to use workflow. Okay, we talked about that. That turned out to be Yeah, I'll try it. I'll try it. Now. You needed to scale. Okay, so you're talking about a scale problem. The scale problem is we had eight people. Medtronic had 150 j&j had a sorry, a bus. So David got 150, avid had 150. Phillips had 75, spectranet. I mean, you just run down this list, and we're eight. What in the hell do you do is eight? It's It's laughable, right? It's absolutely laughable, where you end up having to create an environment where you have to quickly identify who are the first adopters, right? It's all a bell curve, and the first 10% And there's the chasm, what you're talking about is heavier crossover, you reinvent yourself, as you get closer and closer and closer to the edge of the chasm, then you realize, I now need to scale efficiently. And the efficiency problem is where you start to get yourself into trouble. It goes around in an analog world, you've got to move somebody from their current practices to yours. So you get over the idea, I want to try it, then you got to get the workflow done for the operator, whoever that is. And you got to get the back table workflow done. Okay, now you're talking about a lot of time in the room, and there's bodies in the room. This is actually the core reason why I started Avail. And there are other companies that are out there trying to do this sort of notion of remote. We did this the way we did it to be able to scale a repeatable high volume, remote experience, not to replace anybody but to augment not for the aid as we were at at at shockwave trying to pretend like we're 150 But the 150 that now instead of having 5000s places they needed to go and just acute care. Now they've got 15,000. When you add ASCs and MBLs, how do they scale? You can't keep doing it with bodies. You add in the notion that there's digital in the middle of that, and you're logarithmic, logarithmic ly more complicated, because you're not only changing workflow Oh, you're changing all sorts of habits, because now the physician is not next to the patient. They can't do a rescue maneuver that they learned in med school and through 20 years worth of practice? No, because they're not even scrubbed. Right? How are they doing that? Well, Moon is solving that I recognize that some of the other robotic platforms are trying to solve it, it gets increasingly more difficult. And that's when I was referring earlier today, Joe, about the commercial model, it's really, really hard. Because what you love to do is throw bodies at it. But you can, you can't source him. Yes, you can, right, you source lots of people. But you can't source enough of them in the geographies where you want to be cost effectively. And the key issue to me and all of that, and it really gets down to with all due respect to early stage robotics companies, it's going to change from a technology game, to a commercial game. And in that commercial game, there's going to be consolidation. I love your notion here, Joe of, of jayvees, other commercial models to allow great technology that might not have a closed market, right? To be able to see the light of day in a meaningful way those commercial models are, they're going to be tough. That's where it's gonna end up, rubbers gonna meet the road.

Joe Mullings  36:15  

Thank you, John, as you mentioned, the China market, the dynamics in the China market are tremendously different than the US market for a number of reasons. But as you put your model together, and China, and then you convert to the US, that's two different companies, two different commercial models. How do we navigate that?

John Ma  36:37  

Well, we are focusing on the China market, I have some familiarity of the US market. But another lot to say, let me speak to the China market. First, as I mentioned before, the market is massive. But I entered the industry from the perspective of affordability, very interesting, because 10 years ago, when I initially started working on surgical robotics, each procedure costs 50,000, RMB. For it's an all cash payment by the patient self pay, the state insurance doesn't cover that you have to understand the contest, but prepare behind the 55,000 because that's a three times of annual disposable income for urban residents, not even rural urban residents, three years of the disposable income, three years. So not a lot of people can afford that. Now, this, this is not a political statement, by the way, you know, this is literally it's, it's, you know, the health care is not the becoming a right, you know, to some extent to a lot of people. So I think, you know, we, I entered this space and realizing that it hasn't, it cannot be a privilege that we need to work on the affordability. So from technology perspective, and you know, I mean, Intuitive, did a lot of great things and improve the utilization a lot. But still, there are a lot of room for us to do. And that's why this company Renovo existed. Speaking of the commercial aspect of it is tough, because the payer system is different, the policy is different, and the hospital procurement very different. And that you have to work on the economics as well, as I mentioned before, so it's totally different than the payer system in the US. So I think the way that the way I approach that is a Fortunately, that we are seeing the big trend of, you know, for countries like China, emphasis on the DRG. What that means is whoever is more cost competitive, whoever is comparable in clinical outcome, that you you will have a certain advantage. So we're sticking to that value proposition is a from technology perspective, that we bring very solid clinical outcome, but the in terms of affordability, that the business model, you have to keep that in mind. So maybe and I think that you know that we work with a lot of technology, clinical advisors from outside of China. That's how we, you know, we're moving so fast in three years, that we are ready for clinical human clinical trial. And I always say diseases a disease, the prostatectomy is going to be the same, maybe different surgeon performed differently. But however, I think, you know, the technology if can solve the problem clinically in China, that we believe that, you know, it shouldn't be it should be boundaryless. And essentially, that there can travel outside of China to the other countries as well. But I can't speak for how we can sell in the US because, you know, I mean that the payer system and distribution may be very different.

Joe Mullings  39:48  

Alright, so let's we've got a little under a minute left here. I'm gonna go down starting with you, Rachel. The last five years we have a record of what intuitive has done incredibly well. We'll start and end with intuitive. What does the model look like going to market for large format soft tissue robotic platforms? Moving forward? I sort of threw one out does Medtronic Stryker j&j become aggregators to keep best in class? Or is it all going to be a vertical? And the large strategics? Who are not digital natives try and pull it off themselves?

Rachel Van Stratton-Kirk  40:22  

I mean, I think I think we're, we're always going to be our individual selves, right? You're always gonna have the Medtronic, the j&j is the intuitives of the world. So I don't see that changing. And so I think it's how do you coexist? Because to your point, then the volume and the numbers are very, very small, there is more share to be had. And how do we continue to coexist? I think, Wait and see, we'll soon find out.

Adam Sachs  40:53  

I think it's, it's like not a great answer. But it really depends on on the specific company, the technology, the market, they're in just to touch for a second on what you were saying, you know, different markets have different needs have different surgeons that are influential and drive purchases, and within different specialties have, you know that this is it's an incredibly complex map of a problem. And that means that each one of these is going to be a different result, based on the specific market, the specific price point actually thought that's where we were going was, you know, like lease versus sell the specific, you know, procedures that they're targeting the tool set and the margins behind the tool set that each of the strategics has. There's, there's it's such a deep web, but within that web provides a ton of opportunity, because there are so many different options with a relatively small total penetration.

John Ma  41:48  

John, yeah, I'm just so super excited, very, very happy after 20 years, that this is the point of time that we can be potentially disruptive, we can potentially transforming the market, there are so many players in there, I think, ultimately, that competition is going to bring value to the patients. And I'm so happy for that.

Joe Mullings  42:09  

Dan, bring us home.

Daniel Hawkins  42:11  

So I'm not sure there's gonna be a popular answer. Sorry, I'll just get it, I'm going to own it. I think the commercial footprint requirements are going to dictate that there's less than five that will ultimately end up bringing the robots to market, there will be dozens, if not 50, plus more robots that are going to come out. But at the end of the day, the technology will get created by incredibly smart, clinical and engineering folks, there will be in house teams that will do it. There'll be third party teams with great expertise that create the actual technologies on behalf of these companies. There's a great one based out of the UK called Syngenta, they do a phenomenal job, right to take a look at that kind of capability and answer your earlier question. Where do Where does Where does large medtech find the innovation? How do they keep it going? I personally think it's third party solution. But after you've created that technology to actually bring it to market, it's going to be less than five it's going to be aggregated because they're going to figure out the workflows.

Joe Mullings  43:15  

Well, thank you all for attending. Please round of applause for the panelists.