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Launch of Medtronic’s Hugo System Hampered by Supply Chain and Manufacturing Issues

Hugo, Medtronic’s robotic-assisted surgical system, received a CE mark in October, marking a major milestone in surgical robotics.

There have been slight setbacks, however, which will delay the company’s broader commercial launch of Hugo.

Medtronic CEO Geoff Martha revealed during the quarterly earnings conference call Tuesday that the company was experiencing some supply chain issues and initial manufacturing challenges during its limited release phase, meaning that the company’s Hugo revenue for the current fiscal year will fall short of its target.

Those issues are being worked through by the company, which wants to ensure that the initial experiences with this new technology run smoothly.

Geoff Martha commented: “We’re off schedule, but we’re not off track, and while we’re disappointed in the revenue push out for this important program, we’re confident that we have line of sight to the solutions we need to be successful and to optimize the customer experience.”

Medical device sales are likely to fall short of Medtronic’s $50m to $100m target this fiscal year, but the organization still anticipates double-digit million-dollar sales for fiscal year 2022, and a very strong increase into fiscal year 2023.

Martha also noted that the need for robot assisted surgery remains strong, while surgeons continue to operate, orders continue to come in, and the company is still on schedule to begin its investigational device exemption trial in the US in the near future.

From the clinicians who have been using Hugo in its desired setting, the Medtronic company has heard that Hugo addresses certain cost and utilization issues that have limited robotic surgery up to the present. Martha added:

“We remain confident in the success of this program, and we believe that we’re poised to meaningfully expand the soft tissue robotic market and drive growth for years to come. This is a complex program, and that’s on us. We should have probably provided a little bit more cushion there because we really, like we said all along, want to make sure that we’re optimizing the customer experience here.”

The $7.85 billion in revenue Medtronic collected in August, September, and October represented a 3% increase over the same period in 2020, and was also comparable to the growth experienced in the third quarter of 2019 before the pandemic.

Medtronic’s larger portfolio of medical surgical instruments generated $2.3b in revenue, which represented a 1% gain. This was predominantly driven by the sale of devices such as staplers used for surgery and various devices for wound management. These devices represented a 7% increase in comparison to its respiratory, renal and gastrointestinal business segments, which marked a 10% decline in sales.

© Medtronic

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