Giant multi-national medical device company Medtronic has acquired full ownership of the Israeli spinal surgery company Mazor Robotics for $1.6 billion.
In one of largest acquisitions of an Israeli company this year, Medtronic has agreed to pay $58.50 per American Depository Share or $29.25 per ordinary share in cash, the companies said in a statement.
Medtronic, a multinational company headquartered in Ireland and Minnesota, held a stake of about 11 percent in Mazor before the deal unanimously approved by the boards of both companies.
The takeover is expected to be finalised in Medtronic’s third fiscal quarter ending January 25, next year.
Mazor is a maker of ground-breaking robotic guidance systems for spine and brain surgeries.
The company made headlines last year when Israeli surgeons performed the world’s first dual robotic surgery using Mazor’s Renaissance Guidance System and Siemens’ Artis Zeego.
The three-hour surgery at Hadassah Medical Centre at Ein Kerem in Jerusalem was performed on a factory worker who broke his leg in two places and broke six spinal vertebrae in an accident.
In May 2016, Medtronic entered a multi-phase strategic partnership with Mazor, making equity investments and becoming a distributor of its products. In 2017, Medtronic became the exclusive worldwide distributor of the Mazor X system, which was launched in 2016.
Medtronic said it expects the acquisition of Mazor “to generate a double-digit return on invested capital by year four, with an increasing contribution thereafter.”
“We believe robotic-assisted procedures are the future of spine surgery, and provide surgeons a more precise, repeatable, and controlled ability to perform complex procedures,” said Geoff Martha, executive vice president and president of the Restorative Therapies Group at Medtronic.
“The acquisition of Mazor adds robotic-assisted guidance systems to our expanding portfolio of enabling technologies, and we intend to further cultivate Mazor’s legacy of innovation in surgical robotics with the site and team in Israel as a base for future growth.”
Standard procedure in many hospitals
Ori Hadomi, CEO of Mazor Robotics said: “The Mazor team and product portfolio’s full integration into Medtronic will maximize our impact globally through Medtronic’s channels, advance our system’s leadership position in the marketplace, and drive the realization of our vision to heal through innovation.”
More than 200 Mazor systems are in clinical use on four continents and have guided the placement of more than 250,000 implants during some 40,000 procedures, enabling minimally invasive spine surgery to become standard procedure in many hospitals.
Studies have shown the robot can reduce patient complications that might otherwise lead to additional surgeries or delay recovery times relative to traditional freehand surgery.
In a recent 379-patient study at 10 investigator sites, 287 patients underwent robotic-guided-arm surgery and the rest underwent freehand surgery. Patients in the freehand cohort of the trial had a 5.3 times greater risk of an adverse event or complication than patients that underwent robotic surgery.
Reducing costs and improving patient safety
Further, freehand patients had a 7.1 times greater relative risk of having to undergo revision surgery than did robotic surgery patients.
Medtronic's agreement with Mazor Robotics includes the development of new solutions that merge solutions from both companies. The first one of those, the Mazor X Stealth Edition, is being unveiled next week at the North American Spine Society.
The Mazor X Stealth Edition is a next-generation robotic-surgery platform that combines Medtronic's StealthStation navigation system with the Mazor X to offer surgeons better insight into the location of surgical tools or instruments during surgery.
It enables 3D planning, robotic-guided surgery, and real-time verification of a surgeon's surgical plan, and it removes the need for guide wires, which could reduce surgical costs and improve patient safety.
In the US alone there are about 500,000 spine surgeries every year and the potential revenue opportunity associated with robotic-assist surgery is significant.