Maximizing Minimally Invasive Surgery

The specialist but lucrative German market for minimally invasive surgery is increasingly open to small and medium-sized players from all over the globe. Government support at the national and regional level is boosting this trend.

August 2021

As medical technology advances, so do the possibilities of reducing the negative impact of operations on patients. That’s caused a shift in a sector that in Germany has been dominated by a few large companies, and opened doors for modestly sized, up-and-coming international firms with a presence in the country.

One case in point is Kardium Inc., a Canadian maker of a catheter-based system for the treatment of atrial fibrillation (AF), the world’s most common heart rhythm disorder. It expanded its GLOBAL-AF Clinical Study to Germany in the summer of 2017 by enrolling its first patient at the Leipzig Heart Center. The following year, it made its first local hires at its subsidiary in Dortmund, and by June 2020, Kardium had been authorized to begin commercial sales in Europe.

Investors have been impressed by Kardium’s innovative prowess and the potential of its expansion efforts. The company raised EUR 95.5 million (USD 115 million) in December 2020 to provide financing until the company goes public. “Germany is a large innovative market for our electrophysiology catheters thanks to the number of big centers and renowned doctors, who help us implement them and give us the feedback needed for the continual improvement of our technologies,” says Stefan Avall, Kardium’s director of product management. “Given that we are smaller than our competitors, this is particularly important for us, as it helps us to always maintain an innovative edge.”

The data gained from Kardium’s German clinical trials, he adds, will feed into the devices’ application for approval by the American Food and Drug Administration.

The da Vinci system from Intuitive is one of the automated surgical robots employed in minimally invasive surgery © picture alliance/ZB | Robert Michael

Law helps medium-sized players

The widespread cancellation of surgeries amid the coronavirus pandemic has underscored the appeal of minimally invasive procedures. And a new joint investment program by the German national and regional state governments is making the sector accessible to more companies than ever before. The program, launched in January 2021 under the Hospital Future Act, allocates a total of EUR 4.3 billion for hospitals’ emergency capacities, digitalization and IT security, and devices used for minimally invasive surgery.

Another key motor in the expansion of the devices sector has been Germany’s healthcare reimbursement program, which allots the same fixed repayment for a given intervention to any hospital carrying it out. An additional draw, especially for internationally expanding businesses, is the flexibility of Europe’s regulatory system. As is the case with Kardium, this has led companies to use the data they collected during the certification process in Europe as a stepping stone to acquire certification in the United States as well.

The Bottom Line

Germany has traditionally been a global frontrunner in minimally invasive surgery, but the market is becoming more accessible. International businesses can benefit from a new investment program for hospitals and a trend toward open platforms.

Physicians and business intersect

Professor Tobias Keck of the University Medical Center Schleswig-Holstein (UKSH), one of Germany’s three excellence centers for minimally invasive surgery, says that clinical implementation of minimally invasive surgery systems requires constant close contact between manufacturers and the doctors using their equipment.

Visceral surgery systems, he predicts, will enjoy robust market growth, with thousands of systems in the pipeline and expected to enter the German market by 2027. While the device sector has traditionally been dominated by industry giants like Johnson & Johnson, the trend toward open platforms is now creating opportunities for smaller suppliers, including those from outside the medical realm.

“There are big new open platform projects being developed, which present ample opportunities for the broader robotics supply chain, such as optics, imaging and instrument control,” says Professor Keck. “Another factor opening up the market is that more German hospitals see minimally invasive surgery systems as an important competitive factor – not only university hospitals but hospitals of all sorts. A good example is prostate surgery, which today’s hospitals need to attract enough patients.”

Keck advises potential suppliers to identify solutions they could add to the open systems and to craft sophisticated training and implementation concepts. With the advent of powerful simulation software, the need to implement local training programs no longer necessarily translates into a competitive disadvantage for non-German companies, he explains.

170

Number of da Vinci systems up and running in German hospitals

70%

Growth rate of Intuitive’s staff in 2019, the year it won the “job motor” award

4.4 Million

Number of Germans covered by Intuitive’scontracts for prostatectomy care

Free assistance available

Germany Trade & Invest (GTAI) has been actively assisting Kardium’s entry into the German market, offering help, for example, in navigating the complex regulatory environment and understanding the German disbursement program. In this regard, Kardium has benefited from Germany’s diagnosis-related groups (DRG) browser, which allows companies to access reimbursement rates and surgery data, such as the number of interventions.

“Public availability of the relevant data is something many other countries lack,” says Gabriel Flemming, GTAI healthcare senior manager. “For investors, be it domestic or foreign, the significance of the DRG browser cannot be overestimated, as it greatly helps in crafting business plans and minimizing risks.”

FDI Perspective

Originally founded in California, Intuitive is a world-leading maker of robotics for minimally invasive surgery. Germany has always been a strategic focus for the company, with Intuitive’s trailblazing da Vinci Surgical System delivering its first prostatectomy in Frankfurt in 2001. In 2019, Intuitive launched production lines in Emmendingen and Biebertal as well as a business and training center in Freiburg. In September 2020, an office in Berlin was set up for meetings with decision-makers.

“Freiburg offers an ecosystem of world-class R&D and manufacturing expertise that will help us take minimally invasive surgery to the next level,” said Dirk Barten, Intuitive Deutschland’s CEO.

Health Sector: Germany “understands the value of our technologies”

Intuitive Surgical is one of the world’s leading names in robotic-assisted, minimally invasive surgery and is listed on the NASDAQ and S&P 500 indexes. Its da Vinci surgical system is used worldwide with over 5500 installed units, The US firm has three locations in Germany. We spoke with Dirk H. Barten, Intuitive Surgical general manager, for Germany, Switzerland, Austria, the Czech Republic and Slovakia, about what brought his company to the center of Europe.

Why was it important for Intuitive Surgical to be on the ground in Germany?

First of all, we find the innovators here in the German market, which helped us from the first moment on to develop the product as it is today. Some of the first procedures in prostatectomy, the radical removal of the prostate, took place in Frankfurt here in Germany in ’99. So our success is based in Germany. That’s the historical and clinical reason. On the other side, we have here the third-largest health economy we can address behind the United States and Japan, so we have to be here. The dynamic is very strong in the German market. Commercially we have to be here to place our systems. And the third aspect is that we find the technical talents, the optical and micro-mechanic talents, to facilitate the production of our high-precision products. So we have a production plant here in Germany as well.

How is your business doing in Europe and Germany?

We are expanding globally. We now have around 6000 of these da Vinci systems placed throughout the world, 1000 of them here in Europe, and the dynamic is very strong. The German market has understood the value of these technologies, users are confirming that value, and even politicians have understood the value with the Hospital Future Fund, which had been initiated in 2020 during the pandemic. So hospitals are able to acquire those systems today, and we see a strong dynamic.

Why did you locate in the southwestern German city of Freiburg?

Historically many medtech companies are located in the southwest of Germany. So we find the right resources to enable our growth. On the other side, from the early 2000s, we have found our supply base there. In the meantime we have our own production. But this is why we are located in the southwest of Germany.

How are relations with your parent company in the United States?

We’re one part of the European business of our parent company, which is located in California in Silicon Valley. This is where the key innovation took place at the end of the ‘90s. But we’ve been present here in the German market since the early 2000s. We been growing, first slowly, and in the last five years with a very strong dynamic. But the relation is healthy, full of trust and historically grounded.

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