Stryker: Mako Surgical Has Potential to Transform Ortho Market

When Stryker announced its intent to acquire MAKO Surgical in September for a hefty $1.65 billion, analysts described the move as bold and surprising. MAKO makes robotically-assisted surgical products for orthopedic procedures.

On Wednesday, as part of its fourth-quarter earnings call, executives at Stryker provided a bit more color on the role Mako Surgical will play in orthopedics as part of its quarterly earnings call.

“With respect to MAKO, we closed this acquisition in late December and believe, long term, it has the potential to transform orthopedic surgery through procedural advancements and improved patient experience and a new generation of implants,” said Katharine Owen, vice president of strategy and investor relations.

In the first half of the year, Stryker intends to start a clinical trial for a total knee application, she noted.

“With close to 20% market share in the unicompartmental knee segment, we believe MAKO has demonstrated excellent market acceptance of their partial knee application. However, our analysis suggest there’s a bigger opportunity in total hips and total knees to leverage Stryker’s reconstructive implants.”

Another area of initial focus will be to get Stryker marketed orthopedic implants to work with Mako’s robot software, Owen said.

Although she didn’t provide a timeline for when this integration would occur, Richard Newitter an analyst with healthcare investment bank Leerink Swann believes it could take anywhere from six to 12 months. In his research note, following Stryker’s earnings call, Newitter struck a bullish note on Stryker’s future prospects in the orthopedics market.

“We continue to believe that in SYK’s hands MAKO has the potential to: (1) increase physician receptivity to using robotics in hips/knees, and (2) shift ortho implant market share in SYK’s favor, over time,” he wrote.

Another analyst echoed Newitter in his research note.

“If our recent U.S. orthopedic surgeon survey results prove correct, robotics penetration could increase to as much as ~15-16% of U.S. hip/knee volumes 10 years from now (from low-single-digits currently),” wrote Glenn Novarro of RBC Capital Markets.

— By Arundhati Parmar, Senior Editor, MD+DI