Smaller Players Find Opportunity In Large Joints

The business of selling hip and knee implants is dominated by five principal players – Biomet Inc., DePuy Orthopaedics Inc., Smith & Nephew PLC, Stryker Corp. and Zimmer Biomet Holdings Inc. Historically, their grips have been impossible to break as surgeons have become comfortable working with not only the implants but also the sales people who represent them. But the past three years haven’t been the easiest for hip and knee implant manufacturers. (See Also see "Total Joint Market: Slowly Recovering" - Medtech Insight, 1 May, 2011..) The settlement of the investigations by the US Department of Justice loosened the ties between surgeons and companies. Meanwhile, the bid to reform the US health care system in a post-recession economy has squeezed the system across-the-board. A market as large as hip and knee couldn’t escape without taking a significant hit. Hip and knee sales went from registering strong, single-digit annual growth (6% and 9%, respectively, in 2008) to actually shrinking beginning in 2009, with analysts predicting no comeback in the next few years. (See Exhibit 1.)

Such disruptions create opportunities for newcomers with innovative approaches. A handful of companies are pushing new technologies – such as robotics and customized implants – as well as different business models – including a plan to get rid of the orthopedic sales rep – to grab a larger piece of $11 billion industry in the next few years