Some diseases cannot be cured by traditional drugs but instead require a surgical procedure. This is one of the reasons for constant and increasing demand for medical equipment. The global market for medical equipment is expected to increase at a compound annual growth rate of 7.1% from $307.7 billion in 2012 to $434.4 billion by 2017. In order to monetize this opportunity, the medical equipment manufacturing companies are constantly conducting research and development to create new and efficient equipment.
Medical equipment manufacturers stand to gain from increasing demand. Let’s analyze the growth opportunities for three such companies.
Japan: a growth opportunity for da Vinci systems
Intuitive Surgical, Inc. (NASDAQ:ISRG) installed 105 da Vinci systems in Japan in the first quarter of 2013. The da Vinci system is a single-site robot, which assists surgeons performing single-incision cancer removals. Da Vinci systems can be used to treat a wide range of cancer conditions including:
- Bladder Cancer
- Colorectal Cancer
- Gynecologic Cancer
- Kidney Cancer
- Lung Cancer
- Prostate Cancer
- Throat Cancer
The Japanese Ministry of Health says cancer is the leading cause of death, accounting for 30% of deaths in the country. Every year, around 600,000 Japanese residents are treated for stomach, colorectal, and prostate cancer.
Japan, ranked second, accounts for 10% of global medical technology sales. Japan’s demand creates the opportunity to install 300 da Vinci systems this year. According to the company’s estimate, Japan represents a more than $400 million market opportunity for da Vinci.
Source: Intuitive Surgical
There is also an increase in demand for Intuitive Surgical, Inc. (NASDAQ:ISRG)’s instruments and accessories used with the base da Vinci systems. The instruments and accessories need to be replaced periodically as they have limited life. A simple change of instruments and accessories eases use of the da Vinci systems. Around 2,650 da Vinci systems are now installed globally. The demand for instruments and accessories is directly proportional to the demand of the da Vinci systems. Expected revenue of the instruments and accessories segment for this year is $1 billion and $1.32 billion next year.
Huge market opportunity for renal device
Medtronic, Inc. (NYSE:MDT)’s new renal denervation – or RDN – device, Symplicity, is showing positive results for patients with high blood pressure. Symplicity decreases the production of hormones, which results in lower blood pressure and calms the hyperactive nerves in the kidney. More than 1.2 billion people suffer from high blood pressure across the world with 75 million residing in the U.S. With 10% of patients unresponsive to available drugs, RDN devices have an opportunity to grow. The overall renal denervation market is expected to increase from $17 million in 2011 to $561 million by 2015.
The pacemakers and defibrillators segment of Medtronic, Inc. (NYSE:MDT) observed an increase in demand for its second-generation MRI-safe pacemaker, Advisa. A pacemaker is an electronic device implanted in the chest or abdomen of cardiac patients. It controls abnormal heartbeats and increases slow heartbeats. Due to increasing heart problems worldwide, there is a huge demand for its pacemakers and second-generation MRI-safe pacemaker, Advisa. The global cardiac pacemakers market is expected to increase at a compound annual growth rate of 11% from 2009 and reach $5.1 billion by 2015.