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Intuitive Surgical Value Declines After da Vinci FDA Warning Letter

shutterstock_116910856-300x225Since 2006, Intuitive Surgical Inc., the manufacturer of the controversial da Vinci Robotic Surgical System, has experienced 20 or more percent growth in revenue each year. In 2012, its revenue grew to a whopping $2.18 billion. However, in February of this year, U.S. regulators began surveying surgeons due to reports of up to 70 deaths since 2009. In fact, FDA records show that injuries involving robotic surgery procedures doubled in the first six months of 2013 alone.

Since the FDA inquiry news broke, Intuitive Surgical’s value has dropped a staggering $7 billion. Earlier this month, the FDA issued a warning letter based on it’s provider surveys. On July 18th, Intuitive admitted it had received an FDA warning letter, and afterward, cut its 2013 revenue projections by half!

Last week, Intuitive’s shares fell by 6.8 percent to $392.67. The company has lost 32 percent of its market value since February 27, the day before Bloomberg News reported that the FDA was surveying surgeons about the product’s safety.

According to Erik Gordon, a business professor at the University of Michigan in Ann Arbor, “They enjoyed some easier, boom years when doctors and patients were awed by the thought of surgical robotics turning surgeons into super-surgeons,” Gordon said in an e-mail. “Now, the people who pay for the surgery are stepping in and questioning whether the robots are worth the extra cost.”

Over 1,300 hospitals currently use the da Vinci system robots, which cost $1.5 million each. In 2012 alone, 367,000 procedures were performed in this country using this system. The da Vinci is the main product of Intuitive Surgical Inc., and has been used for cancer surgery, hysterectomies and gall bladder removals, among other procedures including prostate surgeries. Because of the severe injuries associated with this system, it has been involved in lawsuits filed by patients injured after these surgeries.

In April and May of this year, the FDA found several of deficiencies and said the company hadn’t reported certain device corrections and adverse reactions to patients. Both safety and cost-effectiveness of the robotic surgical system have been scrutinized since the announcement of the FDA’s review. With the Affordable Care Act coming, it is speculated that hospitals will reconsider whether to continue using this system to the extent they have… or at all.

Although the company operates internationally, 80 percent of its revenue is in the U.S. Intuitive’s second quarter sales increased in Asia and Europe but it is highly uncertain if this trend will continue.

In this high-tech age, perhaps there are some lessons to be learned. No doubt, robots will continue to play an integral role in this world’s future, but to what extent and at what cost? Serious consideration should be given to whether machines should take precedence over people – especially when human lives are at risk.

The defective medical device attorneys at Reyes | Browne | Reilley is currently helping da Vinci Surgical Robot victims and their families recover damages from their devastating complications. If you or someone you know suffered injuries from a procedure performed with the da Vinci robot, please call us for a complementary and confidential consultation. You are under no obligation to use our services. Call us today at 214-526-7900, or submit the short case review form on the right.

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