Medtronic invested in Mazor and the robotic spine technology’s new product, Mazor X. However, the robot is still expensive for providers in a value-based world. In a Seeking Alpha report, Avinash Menon discusses the shift toward features-based pricing.
1. So far, Israel-based Mazor shareholders have relied on the number of Renaissance robotic spine surgery systems installed per quarter to gauge performance. From the first quarter of 2010 when there was nine systems installed, the company has grown to 108 systems installed by 2015 internationally.
2. The deal with Medtronic strengthened Mazor’s position as a player in the spinal surgical robot market. Mr. Menon suggested a move to feature-based pricing while continuing the current core model could be beneficial.
3. Mazor currently has a premium pricing strategy with a high price for reliability and quality. However, this strategy could “flounder” as new technologies enter the market. Medtech’s ROSA Spine is priced significantly lower — at $700,000 — compared with Mazor’s $849,000.
A second system, the Alf-X from Transenterix, plans to compete on a cost-basis in Europe.
4. Mazor announced an optional brain module at $129,000, which could move toward features-based pricing. The company could cross-sell advanced features to its larger client base.
5. Increased competition could create demand for surgical robots resulting in smarter, smaller and cheaper technology.