Zimmer Biomet is staking out territory in the fast-growing robotic surgery market by acquiring Medtech, a France-based company that has already commercialized robotic systems used in brain and spinal procedures.
Warsaw, IN-based Zimmer Biomet (NYSE: ZBH) paid an estimated $77 million for a majority stake in Medtech (EURONEXT: ROSA), marking its third acquisition in as many months. In June, Zimmer Biomet announced a $1 billion deal for Austin, TX-based spinal surgery products company LDR Holdings. And in May, the company completed its buyout of Scottsdale, AZ-based sports medicine products company Cayenne Medical. Terms for the Cayenne deal weren’t disclosed.
Zimmer Biomet said Monday it acquired 1.4 million Medtech shares for 50 euro (about $55) per share, a 61 percent premium over Friday’s closing stock price. Those shares amount to a nearly 59 percent stake in the robotics firm. Zimmer Biomet also bought convertible bonds and warrants in the deal. The company says it plans to make a cash offer for Medtech’s remaining shares at the same 50 euro per share price.
Medtech, founded in 2002, has two robotic systems currently on the market, both of which were cleared by the FDA in December. Rosa Brain, a robotic arm that a surgeon controls with a touchscreen computer, is cleared for use in neurosurgery. Rosa Spine is a computer-assisted surgical device that uses a robotic arm to guide instruments during spinal surgery. Medtech robotic systems are now in place in more than 30 U.S. hospitals, according to the company’s website.
The Medtech deal comes as activity heats up in the robotic surgery space. On Monday, U.K.-based Cambridge Medical Robotics closed a $20 million series A round to continue work on a surgical robot that it says offers flexibility and feedback that provides surgeons “life-like sensitivity.” The device is still in development, though the company aims to use some of the cash to begin prepping regulatory work.
Cambridge Medical is trying to gain ground on companies that are further along in robotics development. Research Triangle Park, NC-based TransEnterix (NYSE MKT: TRXC) plans to submit an application with the FDA for its ALF-X surgical robot during the fourth quarter. TransEnterix shifted its focus to ALF-X after the FDA rejected another one of its products, the SurgiBot. Meanwhile, Toronto-based Titan Medical (TXS: [ticker:TMD]]) expects to seek clearance on for its Sport Surgical System in both the U.S. and Europe this year.
Sunnyvale, CA-based Intuitive Surgical (NASDAQ: ISRG) is the juggernaut in robotic surgery, with 2015 revenue of $2.3 billion. But Intuitive, TransEnterix, and Titan focus on procedures in the abdomen, so they won’t directly compete against Zimmer Biomet’s newly acquired robotics technology. The company’s main competitor is likely Israel-based Mazor Robotics, whose Renaissance system is approved in the U.S. for use in brain and spinal surgeries. Mazor has the backing of medical device giant Medtronic (NYSE: MDT), which announced a minority stake and co-promotion agreement for the robotics company’s systems in May.
Zimmer Biomet says it will keep Medtech’s operations at its current location in Montpelier, France, which will now become the Indiana company’s center for robotic development. Medtech founder and CEO Bertin Nahum will stay on board to lead that robotics work.