Orthopedic robotics maker MAKO Surgical (UNKNOWN:MAKO.DL) hasn't had to deal with a lot of direct competition in its short lifetime. Certainly, there are plenty of traditional orthopedic device makers in the market and several other notable medical robotics companies such as Intuitive Surgical (NASDAQ:ISRG), but none that -- like MAKO -- has combined the two, cleared regulatory hurdles, and moved into the American health care market.
Unfortunately for MAKO, that idyllic period has come to an end.
Stepping up the competition
Privately held medical robotics company Blue Belt Technologies picked up Food and Drug Administration clearance Monday for its NavioPFS orthopedic robotic surgical system, as the company outlined in a press release. The initial clearance for the system covers just partial knee replacement surgery, but Blue Belt anticipates expanding further into orthopedic surgery.
As the press release iterated, "The Company will commence commercialization in the U.S. immediately for the UKR application and is continuing to develop other applications where the system can be utilized to perform precision bone shaping procedures."
Blue Belt already received European CE Mark approval back in February, so the company's passed its two first major regulatory hurdles. It plans to begin commercialization of the devices in the U.S. sometime next year, and already completed its first operation in Europe in July. While MAKO's competing RIO surgical system offers both partial knee resurfacing and hip arthroplasty as part of its MAKOPlasty surgeries, the NavioPFS presents the first true challenge for the company and the RIO.
MAKO vs. Blue Belt
The markets certainly haven't liked the news so far -- MAKO's stock fell nearly 4% on the day. While MAKO still holds some advantages in this competition, ignoring Blue Belt would be a fatal mistake.
MAKO's clear advantage is time. The company's already built up sales and operations while Blue Belt's still getting off the ground, and having the availability to sell both hip and knee operations gives MAKO a wider patient base -- as well as better selling points to cash-strapped hospitals. It'll clearly take Blue Belt some time to build up acceptance around the medical community.
However, as research firm Piper Jaffrey noted, the NavioPFS is cheaper than the RIO -- something that can't be ignored with the U.S. health care system under a tightening financial climate. Furthermore, Blue Belt's system is open-source and allows surgeons to pick their knee implants, compared with MAKO's specific use of its RESTORIS implant. Should the NavioPFS catch on, the flexibility offered to surgeons is a key advantage.
Piper Jaffrey still gave credit to MAKO, however, stating that the company's RIO maintains advantages in system ease-of-use and implant availability. Expect MAKO to keep pushing its innovative frontiers with true competition cleared to start American operations, but Blue Belt will develop into a force if it manages to establish a U.S. presence and expand the NavioPFS's range of operations.
The looming threat
For now, Blue Belt's news is simply the harbinger of a changing industry. Orthopedic robotics just shifted into a high-stakes game with more than one player firmly in place in the United States. While MAKO still owns the clear-cut first-mover advantage and has years of sales and acceptance in the medical community in place, investors have to hope the company can turn around this year's falling sales. If MAKO can't make definitive progress toward profitability in 2013, Blue Belt's threat could turn into something far more dangerous.
Fool contributor Dan Carroll has no positions in the stocks mentioned above. The Motley Fool owns shares of Intuitive Surgical and MAKO Surgical. Motley Fool newsletter services recommend Intuitive Surgical and MAKO Surgical . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.