I have been following this board for about two months now and really appreciate all the information provided here. There appears to be a great blend of clinical and investment contributors, which is absolutely critical to understand what is going on. I am a medical device account manager that sells high end equipment, some would call it "disruptive" technology.
Clearly Intuitive will try and block Titan from entering the market. Device manufactures utilize GPO's (group purchasing organizations) as a way to lock up business from a contractual basis. I do not know if ISRG is on contract or not. They may not use GPO's as they do have to pay usually a 3% royalty to the GPO, which is calculated off the final sales price. Since they have been the only surgical robot for many years, it would make sense not to be on GPO's (from a cost perspective). They may be on GPO's just to utilize legal T's and C's and to transact deals easier and faster. BUT with Titan making a move into this space, I would certainly be curious if ISRG either starts using GPO's more frequently or negotiates sole source status.
Hospitals/physicians do not have to purchase 100% of dollars spent on whatever GPO the business uses, but often times it is a %. I have sold technology both on and off contract. At the end of the day, most physicians could care less, administration seems to pay close attention to this as they get a rebate on every dollar they spend through the GPO.
I think Titan will be able to navigate through this by doing a couple of things right:
1) Most GPO's will give an out if the product presents "something unique" that the current contracted device does not offer. I am very intrigued to hear more about SPORT's ability to stereotactically fuse a previous MRI/CT. This is going to be huge! There could be a multitude of other clinical advantages (single port, ect..) one could use to justify a purchase going against the GPO contract. It will be key for Titan to understand how these contracts are written now as they develop their product. They will need technology to unwind ISRG contractual status IF ISRG has all of these contracts locked up. I have seen this done before and it is very possible. At the end of the day, the GPO serves its members and if there is technology they should have on contract they will, sometimes offering dual status so more than one manufacture has a "hunting license".
2) Price - if the only competitive product is 25-30% more expensive, then supply chain/administration is going to bless any purchase on or off contract.
3) Titan begins having talks to all the major GPO's, informs them this product is coming, and educates them on why they DO NOT want to just give ISRG sole source status on their GPO.
I think Titan is going to be a $12-15 stock in the next 18 months. Go Titan!
