Another investment firm is warning investors that the stock price for Intuitive Surgical may fall substantially over the coming months due to problems with the da Vinci surgical robot.
Northland Capital Markets has initiated coverage for Intuitive Surgical, the manufacturer of the complex surgical system that allows surgeons to operate through a virtual reality representation of the patient’s internal organs by manipulating four remote-controlled arms with hand and foot controls.
In a report issued on March 4, Northland Capital Markets warns that the popularity of the da Vinci Surgical System may be more due to aggressive marketing by Intuitive Surgical than any actual medical benefits provided over alternative surgical methods.
“Our extensive field checks highlighted a story where aggressive marketing drives the message, and true clinical utility seems secondary in nature,” the report states. “Our field checks highlighted a physician base frustrated with the changing focus of [Intuitive Surgical] reps towards meeting sales targets, rather than optimizing training and outcomes. This is manifesting itself in poor outcomes (some of which are being evidenced by recent lawsuits) and greater number of instruments being used per case, especially in low-volume centers.”
This is at least the second research firm to highlight concerns about the company’s stock price as more information comes to light about problems with their main product and an increasing number of da Vinci robotic surgery lawsuits are filed by individuals who experienced complications following surgery that were allegedly caused by training problems or design defects with the machine.
Late last year, the investment research firm Citron Research released a report that predicted the stock price for Intuitive Surgical will drop to $350 before eventually falling to $250 over the next 18 months. That group indicated that the number of robotic surgery procedures involving the da Vinci robot will dramatically drop over the coming year and new sales will “flatline” amid increased awareness about the risk of complications following da Vinci robot surgery and evidence emerges about the lack of established long-term benefits.
Lack of Training and Aggressive Marketing A Concern
The Northland Capital Markets report found that da Vinci surgeries cost about 20% more than surgeries performed without the robot’s aid. Those costs are absorbed by the hospitals, it notes. It also cited a lack of training and credentialing standards as problematic, especially at health care facilities that perform a low volume of surgeries, where it may be difficult for surgeons to develop their skill with the machine.
Northland estimates that Intuitive Surgical stock will drop from $541 to $400 over the next year.
Last week, the price of Intuitive shares dropped $63 following a revelation that the FDA was surveying doctors about problems with the da Vinci.
Adverse event reports submitted by doctors and patients have repeatedly claimed that the surgical robot accidentally caused burns, tears or other injury to internal organs, and a growing number of product liability lawsuits over the da Vinci surgical robot allege that the device is defective and that the electrical current used to cut and cauterize tissue is prone to arc outside of the surgical field.
Last month, a study was published in the Journal of the American Medical Association (JAMA) that found robotic hysterectomies performed with the da Vinci Surgical System cost hospitals thousands of dollars more than other surgical methods, without improving outcomes or reducing the rate of complications experienced by patients. The study found that using the da Vinci cost an average of $2,189 more per procedure, when compared to hysterectomies done without the robot. However, the rate of complications was 5.5%, compared to 5.3% for laproscopic hysterectomies. The difference is considered statistically insignificant.
In part two of the Citron Research report, which was released in January 2013, the group highlighted adverse event reports submitted to the FDA, identifying more than 4,600 reports of injuries following da Vinci robotic surgery, including more than 80 deaths.