(https://www.mddionline.com)–During Mazor Robotics’ fourth-quarter earnings call, executives mentioned Medtronic almost as much as they mentioned their own company. And for good reason. The company received 24 purchase orders for its Mazor X robotic system in the fourth quarter of 2017, and all but one of those orders came from Medtronic. Under a global distribution sale that occurred ahead of schedule last year, Medtronic has assumed exclusive global responsibility for Mazor X’s commercial activity for spine surgery.
Mazor CFO Sharon Levita said the global distribution agreement with Medtronic is expected to deliver significant savings to Mazor by reducing the company’s full-year 2018 sales and marketing expense. The expected savings will be roughly $13 million, she said, according to Seeking Alpha transcripts of the call.On the flip side, the revenue from Mazor X capital systems and disposable will also be impacted by the distribution model pricing with Medtronic, and the company expects that to result in a more modest revenue growth for this year. Beyond 2018, however, the revenue growth is expected to accelerate and be driven primarily by the expanded installed base and increasing recurring revenue from procedures.
“2018 will be a transition year with an emphasis on synergy with Medtronic as well as utilization and procedure growth,” said Mazor CEO Ori Hadomi. “We are encouraged by the overall optimism and enthusiasm of the consensus and with a touch of realism for 2018.”In the long term, Hadomi said Mazor anticipates the installed base of Mazor X systems to expand considerably during the length of the company’s global distribution agreement with Medtronic.
“Over the next five years, the largest result is a cumulative purchase of hundreds of Mazor X systems, which are expected to significantly accelerate procedure volume and growth,” Hadomi said.
As for the competitive landscape in surgical robotics, Hadomi said it’s too early to draw conclusions about how competing technologies, like Globus Medical’s system, competition will impact the sales cycle and market acceptance of Mazor’s technology.
“It will have an impact on the sales cycle. There’s no doubt about it,” he said, adding that the surgeon community will likely take their time comparing each system and learning what to expect from each.
“I’m not concerned with this competition,” Hadomi said.
It is noteworthy, however, that there are two significant surgical robotics players in the spine market now, and that alone speaks volumes about the future of the field.
“I think that the rules of the game have been changed,” Hadomi said. “And it’s very clear today that in order to be a player in this market you need to have a robotic technology. I think that the fact that two big players [are] doing it, it helps a lot in setting the tone that robotics is here to stay.”Already, Hadomi said, the mindset in the surgical community has shifted in such a way that instead of questioning if they need a robot, surgeons are asking, “how can robotics do more for me?”
SOURCE:https://www.mddionline.com