Numerous medium- and small-sized companies are making bold strategic moves in orthopedics. We've identified 10 orthopedic companies to watch in the short and midterm.
- Acumed | OsteoMed
- Anika Therapeutics
- Globus Medical
- Paragon 28
We featured these companies in our recently published 10 Orthopedic Companies to Watch and pulled much of the following insight from that report. These companies were selected for their aggressive acquisition strategies, philosophies on enabling and digital technologies and shifts in selling practices.
The COVID-19 pandemic changed the landscape of orthopedics and other markets around the globe. Over the course of nearly two years, however, we've learned that the fundamentals of orthopedics remain as strong as ever. Companies absolutely can remain effective in this environment, as demonstrated by the 10 companies on our list.
"Businesses learned so much about our personalities, our resilience, our ability to be nimble and productive in this hybrid work environment. I don't anticipate ever returning to a more normal work environment. This is our chance to modernize our businesses, which I think a lot of us aspired to do," said Paragon 28 CEO Albert DaCosta.
Executing on Orthopedic Trends
We've long identified ASCs, enabling technology and M&A as three dynamics within the orthopedic market that are steadily growing in importance. These trends are not reserved for the largest players in orthopedics. It's no surprise that the strategies of the companies covered here align closely with those three vital areas. We expect an increase in momentum for ASCs across market segments over the next five years. The expectation is that reimbursement will become more favorable and more hospitals and independent practices will expand their operations in the outpatient setting.
As all of healthcare moves toward digital technology, orthopedics demonstrated the demand for novel technologies within capital constrained environments. Robotic sales hit all-time highs in 2020, even as surgical volumes plummeted. Likewise, software solutions are quickly gaining traction in the market. ATEC CEO Pat Miles said, "Those that are only delivering mechanical devices without information are going to suffer. So much of the opportunity to make something better is through the informatics of surgery."
The ongoing pandemic and resulting market disruption may preclude us from seeing another deal of the size of Stryker and Wright Medical. But the pandemic certainly didn't slow down the rate of tuck-in acquisitions. Companies across orthopedic segments are using smaller deals to grab new technologies, improve synergy at sales call points and enter new geographies. We expect these types of deals to continue at a brisk cadence.
Colfax Corporation CEO Matt Trerotola said, "We've built a very robust funnel of opportunities, some of which are direct bolt-ons that strengthen and improve the businesses, and some of which are more adjacencies. We're really looking at things more in the small- to medium-sized range, because there's a lot of attractive stuff that we can do in that range that can create a lot of value."
Looking Deeper at 10 Orthopedic Companies' Initiatives
So, why did we deem these 10 mid- and small-tier players top orthopedic companies to watch? They each have a different narrative.
Acumed merged with OsteoMed to become Acumed | OsteoMed, a major trauma player with an effective ASC strategy. The company is expanding its portfolio through acquisitions and internal business unit changes.
Anika Therapeutics has nearly finished its integration of Arthrosurface and Parcus Medical. The company could soon return to the acquisition market to further build scale. Finally, it is leveraging its expertise with hyaluronic acid to launch new regenerative therapies.
ATEC continued taking share from larger spine players during the pandemic and is poised to re-emerge as an international player. The addition of EOS imaging adds to ATEC's compelling suite of information-based enabling technology.
Bioventus successfully completed its IPO and acquired Misonix to expand its addressable market by $2 billion. The company's aggressive M&A strategy focuses on market expansion while leveraging existing commercial infrastructure.
DJO used acquisitions in rapid succession to stand up a fully-realized foot and ankle business, as well as gain considerable scale in Europe. DJO's parent company, Colfax, is spinning it off as its own med device business and recently noted its aim to be a $1 billion joint replacement company.
Exactech has a comprehensive suite of enabling technology and is under the helm of new leadership. Exactech's high-growth markets like extremities and enabling technology should help offset pandemic-related joint replacement slowdowns.
Globus Medical described entering the platonic ideal of robotics pull-through with their "virtuous cycles," and could be a candidate to make a significant acquisition. The company's forays outside of spine have thus far been methodical crawl-walk-run affairs.
Medacta outperforms the market average across its segments, and is using enabling technology and education to reduce the economic burden of healthcare. The company weathered the pandemic better than most peers, especially given its exposure in heavily impacted product segments.
Paragon 28 is notable among foot and ankle companies for its size, scale and forward-looking view of enabling technology. The company recently finalized its IPO.
Surgalign is making a high-stakes bet that the future of surgery is about more than metal or plastic with its Holo platform software. However, the company's separation from RTI Surgical was marred by problems and continues to impact its supply chain.
Reviewing Strategic Activity
Clearly, these 10 orthopedic companies to watch have remained active. Dating back to 2018, we've tracked a combined 88 announced strategic product launches, 28 acquisitions or divestments and 20 partnerships formed.
In 2021, these companies are projected to secure $3.8 billion in orthopedic sales and make up 7% of the global market, a full percentage point higher than their $3.2 billion revenue total in 2019 as shown in Exhibit 1. Additionally, some of them are significant players in the segments in which they play and give the top 5 companies competition.
Mike Evers is ORTHOWORLD's Digital Content Strategist.