Published by Harvest ETFs

Medical device companies are expanding their research and development initiatives to bring more robot-assisted surgery to operating rooms.

One area that is growing is orthopedic surgery, where global medical devices giants including Stryker Corp. and Medtronic Corp. are competing to introduce machines that cost more than $1 million each.

These robotic aids are designed to help surgeons be more precise and perform surgery that is less invasive. This is leading to faster patient recovery and satisfaction, a reduction in post-operative pain, a reduction in length of hospital stay and fewer readmissions due to complications.

Stryker Corp. has sold more than 650 of its Mako robots globally, with almost 77,000 knee and hip replacement procedures performed in 2018. Double-digit growth in installations is expected in 2019, according to a recent industry estimates. Stryker acquired Mako for US. $1.7 billion 5 years ago.

In the case of knee replacement, the Mako system takes a CT scan of the knee and converts it into a three-dimensional model of the knee joint. The surgeon uses the scan to preoperatively plan the surgery. Once the plan is approved, it is loaded into the robot. In the operating room, the computer model is compared to the patient’s actual motion in bending and straightening out the knee or hip. The patient movements are replicated on the robot’s computer screen.

After the adjustments, the final plan is locked in and the arm assists the surgeon performing the cuts.

Medtronic is moving forward with its own surgical robots. In December, 2018 it paid US $1.7 billion for Mazor Robotics, an Israeli specialist in robot-assisted spinal surgery. Robotic spine surgery is a safer, less invasive and precise alternative to the traditional open spine surgery.

Stryker  and Medtronic are two components of the Harvest Healthcare Leaders Income ETF (HHL:TSX, HHL.U:TSX).  Both companies offer a broad range of medical devices and equipment and are benefiting from advances in robotics and artificial intelligence.

As of April 30, 2019, HHL held 20 of the largest global healthcare companies with an average market capitalization of $158 billion (CAD). The holdings have an average dividend yield of 2.19% and a 5-year return on equity of 19.97%.

The management fee is 0.85% and the fund is RRSP, RRIF, RESP and TFSA eligible with a distribution paid monthly.

For more on Harvest Portfolio Group click here.

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