INTUITIVE SURGICAL

This week's cover story in the financial magazine Barron's (July 28, 2008) is about Intuitive Surgical.

Intuitive Surgical is the company which makes the Da Vinci robot. The Da Vinci robot is a robot with 4 arms that a doctor controls from a console in the operating room.

The advantage of the Da Vinci procedure, as it's called, compared to the traditional open prostatectomy, is less bleeding, less scarring, and quicker healing. The data on side effects seem good and the data on oncologic control also seem good although more time is needed to judge outcomes after 10 years.

The Barron's article describes the phenomenal growth of Intuitive Surgical, the company's stock price, and how it has penetrated the prostatectomy market.

Each Da Vinci robot costs the purchasing hospital more than $1.3 million. The hospital pays another $135,000 a year for service and support. Each procedure, in addition, consumes $1,500 to $2,000 in disposable instruments and accessories.

The robot is used primarily in the prostate market but further growth is expected in other markets, especially the gynecology market. 

The installed base world wide grew by 42% from 2006 to 2007. At the same time, the number of procedures performed using the Da Vinci robot grew by 75%.

The company's stock price has obviously been the recipient of such good news.

But, Barrons does a serious analysis of the market size by looking at the number of hospitals, the number of robots a hospital typically purchases, and the size of the prostate and gynecology markets.

To read the excellent article click Barron's Article.