Surgical Robots Market

Bargaining Power of Suppliers

The industry impact of the supplier’s bargaining power is considered to have a medium-level impact. The bargaining power of the suppliers estimates how easy it is for the suppliers to influence the prices of surgical robots. Businesses must obtain the necessary resources that they need from the resource suppliers to carry out their activities. The price of the surgical robots is determined by the interaction between the suppliers and the end users.

The number of suppliers serving the surgical robots industry is comparatively higher than the number of firms operating in the sector, thereby advantaging the firms due to lower switching-cost. The suppliers-to-firm concentration ratio also favors the firms, while the competition among the suppliers is high due to the high value of the transaction. The factors favoring the suppliers are the high-quality and degree of differentiation of inputs required, which reduces the chances of substitutes.

Bargaining Power of Buyers

The bargaining power of the buyer is considered to have a low impact on the industry. The bargaining power of the buyers assesses how easy it is for the buyers to affect the price of surgical robots. The bargaining power of the buyer is low as surgical robots are generally customized as per the client requirements, which raises the switching costs. Customization also reduces the chances of substitution due to the greater risk of compatibility issues while the cost of procedural switching is high, and the threat of backward integration is low. The buyers to firm concentration ratio are medium, which restricts the power of the buyers. However, the latest trend of mergers between large healthcare providers, coupled with strategies such as demand pooling by multiple players, is increasing the power of the buyers.

Threat of New Entrants

Threat from a new entrant is considered to have a high impact on the industry. In Porter’s Five Forces Analysis, ‘Threat of New Entrants’ refers to the threat that new competitors pose to existing competitors in an industry. A profitable industry will attract more competitors looking to achieve profits. As the number of entrants increases, the profitability of the present players in the industry subsequently decreases.

The surgical robots industry has a high capital intensity, which raises the barrier for entry. The cost of production is also high and devising lower-cost manufacturing methods quickly, is difficult, especially for a new player. Proprietary technology remains the critical factor in raising the cost disadvantages independent of size. Thus, any new player cannot capture the market only by going for economies of scale, which due to the low volume of robotic surgery cannot be achieved easily. The distribution chain is another hurdle facing any new player which is dominated by the existing players. The number of distribution chains is low, and the development of newer distribution chain is very costly. Another source of entry barrier is the strong intellectual property laws and the worsening conditions of access to capital, especially venture capital. The access to venture capital has been on a negative trend since the economic recession and is also biased towards existing players with end-stage projects.

Strong brand identities and extreme differentiation of products impart high marketing costs on any newcomer. Switching costs are high as there are only a few dominant players to divest the existing facility in case of exit, which may lead to distress sale of the facility. However, the high profitability of surgical robots is an incentive for a new entrant, especially if he is armed with an innovative product.

Threat of Substitutes

Any threat from a substitute is considered to have a low impact on the industry. The threat from the substitutes arises when the customers or the buyers in the market can achieve the end-result using other means excluding the market we are concerned. Threat from substitute is low as the buyers switching costs are high. Substitution involves high training cost on the new systems, which also reduces the incentive for it. Also, many large hospitals and surgical robots manufacturers are in a partnership to reduce operating costs and to increase market exposure, which makes substitution a part of strategic partnerships.

Intensity of Rivalry

Degree of competition is considered to have a high impact on the industry. The Intensity of Competitive Rivalry evaluates the capability and the level of rivalry among competitors in the market. It also refers to the extent to which firms within an industry put pressure on one another and limit each other’s profit potential. Industries strive for a competitive advantage over their rivals, and the intensity or rivalry varies across industries. Rivalry among industry players can affect industry profits through downward pressure on prices, increased innovation, increased advertising, and increased service/product improvements, among others.

If the rivalry is fierce, the competitors might try to steal profit and market share from one another. This reduces profit potential for all firms within the industry. Factors that increase a certain level of competitive rivalry among existing firms include the analysis criteria such as many suppliers, price and quality wares, and the presence of application-specific players. Also, the high growth rate of industry enhances the competition among the players. Surgical robots have a high-profit margin compared to the low volume of production, which automatically creates intense competition as each new firm tries to cut the advantage of established competitors. However, increasing volumes of business may result in greater accommodation of players as the US surgical robots market is set to expand.

The secretive proprietary technologies also impart high rivalry and competition between the firms. The market players in these sectors have huge economic clout along with market channels. Thus, the dominance of a handful of large players provides an opportunity for intense competition and rivalry.