A Bigger Market for Prostate Surgery? (ISRG)

An interesting study was released this week in the Journal of the American Medical Association that might mean the market for prostate surgery is going to get bigger -- which would mean good things for the makers of the da Vinci surgical robot, Intuitive Surgical (ISRG).

The Washington Post ran a good story about the study today, and the basic findings were that treatment may be a good option for prostate cancer sufferers even in the later years of life.

This is significant, because although aggressive treatment (radiation or surgery) has for some time been the agreed-upon standard for younger men with prostate cancer diagnoses, for the most part elderly men (60 and over) have been advised to "wait and see" because prostate cancer generally moves so slowly that many of these men will die of something else before the cancer becomes dangerous.

Now that "wait and see" policy is in some dispute, thanks in part to this new study -- men who received treatment even at more advanced ages had a 30% chance of a longer life, and that is a dramatically significant number.

The study is in some dispute, because it was conducted using patient records instead of actually examining patients -- so it's certainly possible that other factors came into play (though the authors said they tried to correct for other health problems that might have skewed the results).

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But regardless, this is potentially important news for Intuitive Surgical going forward. I have owned ISRG for well over a year now, buying both above and below today's price (my cost basis is about $99). While the markets for the da Vinci are continually expanding, particularly in mitral valve repair and in gynecology, the lions share of da Vinci surgeries are da Vinci prostatectomies, and this is the first robotic surgery that is really being accepted as significantly better than its laparoscopic or open counterparts.

ISRG is shooting for roughly a 35% market share in prostatectomies this year, last time I checked, a share that has increased very rapidly over the last few years.

So if their share of prostatectomies continues to climb ...

and the number of prostatectomies performed continues to climb (not only because of this study, but also because the baby boomers are entering their prostate trouble years) ...

The overall number of da Vinci prostatectomies that are performed should climb almost exponentially.

And with procedure growth being a key component to ISRG's growth prospects moving forward (they need high utilization rates to encourage hospitals to buy multiple robots, and they make money with every surgery thanks to service and accessory sales), this can't help but be good news.

There are lots of moving parts in this equation -- if drugs to fight prostate cancer prove to eventually be better than surgery, that's bad news for ISRG ... then again, if they take hold in hysterectomies the same way they have in prostatectomies, the sky's the limit (I looked at the da Vinci volume drivers here). I'm just pleased to see that the potential market for people who can be helped by the da Vinci's minimally invasive solution is growing.

full disclosure: I do own Intuitive Surgical shares as of this writing, I last wrote about the company in detail after their last quarter's conference call.

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