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How MAKO Robots Could Contribute to SYK’s Orthopedics Growth

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Overview

Stryker (SYK) entered the robot-assisted surgery market with its acquisition of MAKO Surgical in December 2013. Sales of MAKO Robots have risen substantially since then.

In 2Q16, 17 MAKO units were placed. Until now, the application of Stryker’s MAKO Robots has been in the unicompartmental knee business.

Stryker received FDA approval for the Triathlon Total Knee System in August 2015, but it’s had a limited launch in order to work out the workflow and training protocols. The full launch of MAKO Robots with the Total Knee application is expected to take place next year.

Stryker’s Triathlon Total Knee implants have seen long-standing success, and they’re expected to substantially drive the company’s growth via their use with MAKO Robots.

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Disruptive opportunity market

MAKO Robots have provided Stryker with the opportunity to gain market share in the huge robotics surgery market. The knee and hip orthopedics surgical robot market is expected to be about $5 billion by the end of 2022. Some other major players such as Medtronic (MDT), Zimmer Biomet (ZBH), and Johnson & Johnson (JNJ) have also entered this segment and are providing stiff competition for Stryker.

A MAKO Robot costs over $1 million, which is expected to work well given the bundled payment structure being implemented in the industry. Until now, Stryker has mainly focused on the application of robotic surgery in the reconstructive segment. It’s likely to enter the robotics surgery spine market also over the long term.

Investors can invest in the PowerShares S&P 500 Low Volatility ETF (SPLV) for exposure to Stryker. SPLV is a volatility-weighed index. It’s made up of the 100 least volatile stocks present in S&P 500.

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