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Moving a novel orthopedic implant from conception to market is a time-consuming and costly process for companies. The evolving dynamics at the hospital, reimbursement and regulatory levels make it increasingly difficult for small orthopedic companies to scale their business. Smaller firms are consistently forming strategic alliances with one another to remain competitive in the global orthopedic market. Executives with whom we’ve spoken believe these formal relationships will continue to be necessary for regional distribution, technology development and financing.
The French spine company Implanet has executed multiple device company partnerships to expand the use of its JAZZ product line, increase its portfolio by selling other companies’ technologies and co-develop products.
Implanet had sales of $8.5 million in 2022, +31% vs. 2021. The company has a direct salesforce in France and the U.S., and relies on distribution partners to sell in 29 other countries. SeaSpine, ulrich medical and Sanyou Medical are among its strategic allies. Implanet also acquired Orthopaedic & Spine Development (OSD) in 2021.
“Ten years ago, it was still possible for a small company like ours to do it alone,” said Implanet CEO Ludovic Lastennet. “It’s quite difficult to finance a medtech company today, and one way to scale up is with strategic alliances.”
Mr. Lastennet personally manages each partnership alongside his executive team. We asked him why Implanet has chosen this path, what he’s learned from forming strategic alliances and how to develop OEM partnerships.
Why did you choose to develop strategic alliances, and what have been the upsides and downsides of these agreements?
Mr. Lastennet: We’ve been in the business for 15 years, and the company has developed many different products. We refocused on spine three years ago with our JAZZ technologies for sub-laminar fixation. We are the inventor worldwide of this technology and one of the first companies to bring this type of solution to surgeons who treat spinal disease.
We tried to do it on our own for the first 10 years. We used our money to develop implants and instrument sets, and register them for CE Marking, FDA clearance and other registrations in Brazil, Australia, etc. Then we hit a plateau in our turnover due to staffing demands. In many countries, you need at least one salesperson selling the product and present in the OR during surgeries to advise surgeons. In some countries, finding a distributor for the whole country was difficult. We were struggling in terms of sales growth.
We decided to identify partners to liberate ourselves. Our first partnership was with SeaSpine, which distributes our JAZZ product in the U.S. They use our marketing name JAZZ, but their implants and instruments are labeled with SeaSpine to leverage their sets.
We tried to find a direct distributor in Germany. Because of our very narrow range with JAZZ, we decided to partner with ulrich medical. Our most recent agreement is in China. There are constraints to selling in China, including the financing of many instrument sets, regulatory laws and education about new technologies.
We believe that we must start these alliances by stating the benefits of the partnerships. One of the benefits is that we have more sales staff in the field. In the U.S., we went from three salespeople to about 120. The sales staff isn’t fully dedicated to our products, but at least it gives us momentum.
The downside is that we don’t have the same timeline. It takes more time to integrate and distribute our new product line compared to the big companies’ core products. Of course, when times get more difficult, like with COVID, top management asks everyone at the big companies to refocus on products with better margins. The last thing that is difficult is the transparency of other companies’ activities. It’s quite challenging to completely understand what they’re doing with our products.
Do you think these agreements will be necessary for success in the orthopedic market moving forward?
Mr. Lastennet: Yes. If you’re a small company, meaning that you are focused more on R&D and proof of concept, then you must find a distributor or a strategic alliance to do your sales and marketing. You must also consider education and clinical follow-up. Slightly larger companies like us must be very clever in doing business. We acquired OSD. We have a contract with SeaSpine in the U.S. We also signed a distribution contract about 18 months ago with ulrich, which is warming up. More recently, we entered into a three-band partnership — financing, sales and marketing and R&D — with Sanyou in China.
In the future, every small company will need a partner for R&D, sales and marketing and financial agreements. Access to the market is getting more and more expensive. I believe that starting a company like Implanet today is no longer possible. It’s way too expensive, and the time to market is way too long in Europe.
How do you look for and identify partners?
Mr. Lastennet: By looking at what the partner is doing and what products they have in their portfolio. Do they use an extensive or limited range of products? We need to partner with a company that has a large product line and needs advanced solutions.
We also look at partners that want to do private labeling. You’ll see more and more co-branding. We co-branded with SeaSpine on the Mariner Cap System (SeaSpine’s Mariner pedicle screw and Implanet’s JAZZ Cap technology). They will integrate technology into their own sales and marketing approach. That’s very, very important.
Of course, I think it’s important to look at the financial structure of the partnership, especially if they can cross-invest or make a capitalistic financing approach. I think that’s much better than doing a capital increase that could be diluting for your shareholders.
What are two or three critical elements you evaluate in a company before finalizing a deal?
Mr. Lastennet: The most important thing is that spirit comes from both parties. If you spend too much time selling your product to the management of the identified partner, it will take a long time to sell it to their sales team. It’s mandatory that the top management of the partner is involved in the deal.
The second element, which is not easy, is to define where your product range fits into their product portfolio. Is your product a nice-to-have or a must-have for the company? You need to concentrate on the companies that want your product, which is what we have done.
What additional advice do you have for orthopedic executives considering similar strategic alliances?
Mr. Lastennet: Be critical during the selection process. It’s always nice when a mid-sized player wants your product portfolio and promises X millions of euros. But make sure that you take your time. I’m well placed to know this. We made decisions years ago that we might not make today. Do not do the agreement by default. ‘Nobody wants to take it, so I’ll give it to you.’ No.
Be cautious about the contract that you’re signing with the partner. Ensure you have a quantitative objective, especially if they’re looking for exclusivity or private labeling. Also, make sure that there is a nice organic run and an organization dedicated to your product in terms of sales, marketing or even R&D and regulatory if you go with a private label. Don’t only sign with a CEO. Make sure that the contract is well supported and that the company has enough resources to finance the development of what they want to do with your product.
At the end of 2022 and early 2023, you announced new partnerships in China. What is the status of those? What else can we expect from you in 2023?
Mr. Lastennet: We’ve been in discussion with top management at Sanyou for at least 18 months. They approached us to distribute JAZZ in China. During the discussions, we went all in. The President is a French-Chinese person, who speaks perfect French. The CEO is Chinese-American and has worked at Medtronic for a long, long time.
After the OSD acquisition, we decided to develop fixation systems for global use. We were struggling to finance the development and R&D. Sanyou is bringing us technology that we can adapt to the needs of the European and U.S. markets and produce in France with Implanet’s name. Sanyou recently acquired a bone scalpel from SMTP, which we have been selling since mid-January.
And at the end of the day, they said, ‘Okay, we want to help you finance the company.’ Instead of using dilutive financing solutions, Sanyou brought a €5 million capital increase, and they own 40% of the company’s shares. They showed us that there is value for the company and that they are invested in making something big in the next three to five years.
This year is important for us to sell the existing technology product like the bone scalpel. We hope to complete JAZZ registration in China by mid-2024. We are working with Sanyou’s R&D to finetune our future product lines under the Implanet umbrella.
Moving a novel orthopedic implant from conception to market is a time-consuming and costly process for companies. The evolving dynamics at the hospital, reimbursement and regulatory levels make it increasingly difficult for small orthopedic companies to scale their business. Smaller firms are consistently forming strategic alliances with one...
Moving a novel orthopedic implant from conception to market is a time-consuming and costly process for companies. The evolving dynamics at the hospital, reimbursement and regulatory levels make it increasingly difficult for small orthopedic companies to scale their business. Smaller firms are consistently forming strategic alliances with one another to remain competitive in the global orthopedic market. Executives with whom we’ve spoken believe these formal relationships will continue to be necessary for regional distribution, technology development and financing.
The French spine company Implanet has executed multiple device company partnerships to expand the use of its JAZZ product line, increase its portfolio by selling other companies’ technologies and co-develop products.
Implanet had sales of $8.5 million in 2022, +31% vs. 2021. The company has a direct salesforce in France and the U.S., and relies on distribution partners to sell in 29 other countries. SeaSpine, ulrich medical and Sanyou Medical are among its strategic allies. Implanet also acquired Orthopaedic & Spine Development (OSD) in 2021.
“Ten years ago, it was still possible for a small company like ours to do it alone,” said Implanet CEO Ludovic Lastennet. “It’s quite difficult to finance a medtech company today, and one way to scale up is with strategic alliances.”
Mr. Lastennet personally manages each partnership alongside his executive team. We asked him why Implanet has chosen this path, what he’s learned from forming strategic alliances and how to develop OEM partnerships.
Why did you choose to develop strategic alliances, and what have been the upsides and downsides of these agreements?
Mr. Lastennet: We’ve been in the business for 15 years, and the company has developed many different products. We refocused on spine three years ago with our JAZZ technologies for sub-laminar fixation. We are the inventor worldwide of this technology and one of the first companies to bring this type of solution to surgeons who treat spinal disease.
We tried to do it on our own for the first 10 years. We used our money to develop implants and instrument sets, and register them for CE Marking, FDA clearance and other registrations in Brazil, Australia, etc. Then we hit a plateau in our turnover due to staffing demands. In many countries, you need at least one salesperson selling the product and present in the OR during surgeries to advise surgeons. In some countries, finding a distributor for the whole country was difficult. We were struggling in terms of sales growth.
We decided to identify partners to liberate ourselves. Our first partnership was with SeaSpine, which distributes our JAZZ product in the U.S. They use our marketing name JAZZ, but their implants and instruments are labeled with SeaSpine to leverage their sets.
We tried to find a direct distributor in Germany. Because of our very narrow range with JAZZ, we decided to partner with ulrich medical. Our most recent agreement is in China. There are constraints to selling in China, including the financing of many instrument sets, regulatory laws and education about new technologies.
We believe that we must start these alliances by stating the benefits of the partnerships. One of the benefits is that we have more sales staff in the field. In the U.S., we went from three salespeople to about 120. The sales staff isn’t fully dedicated to our products, but at least it gives us momentum.
The downside is that we don’t have the same timeline. It takes more time to integrate and distribute our new product line compared to the big companies’ core products. Of course, when times get more difficult, like with COVID, top management asks everyone at the big companies to refocus on products with better margins. The last thing that is difficult is the transparency of other companies’ activities. It’s quite challenging to completely understand what they’re doing with our products.
Do you think these agreements will be necessary for success in the orthopedic market moving forward?
Mr. Lastennet: Yes. If you’re a small company, meaning that you are focused more on R&D and proof of concept, then you must find a distributor or a strategic alliance to do your sales and marketing. You must also consider education and clinical follow-up. Slightly larger companies like us must be very clever in doing business. We acquired OSD. We have a contract with SeaSpine in the U.S. We also signed a distribution contract about 18 months ago with ulrich, which is warming up. More recently, we entered into a three-band partnership — financing, sales and marketing and R&D — with Sanyou in China.
In the future, every small company will need a partner for R&D, sales and marketing and financial agreements. Access to the market is getting more and more expensive. I believe that starting a company like Implanet today is no longer possible. It’s way too expensive, and the time to market is way too long in Europe.
How do you look for and identify partners?
Mr. Lastennet: By looking at what the partner is doing and what products they have in their portfolio. Do they use an extensive or limited range of products? We need to partner with a company that has a large product line and needs advanced solutions.
We also look at partners that want to do private labeling. You’ll see more and more co-branding. We co-branded with SeaSpine on the Mariner Cap System (SeaSpine’s Mariner pedicle screw and Implanet’s JAZZ Cap technology). They will integrate technology into their own sales and marketing approach. That’s very, very important.
Of course, I think it’s important to look at the financial structure of the partnership, especially if they can cross-invest or make a capitalistic financing approach. I think that’s much better than doing a capital increase that could be diluting for your shareholders.
What are two or three critical elements you evaluate in a company before finalizing a deal?
Mr. Lastennet: The most important thing is that spirit comes from both parties. If you spend too much time selling your product to the management of the identified partner, it will take a long time to sell it to their sales team. It’s mandatory that the top management of the partner is involved in the deal.
The second element, which is not easy, is to define where your product range fits into their product portfolio. Is your product a nice-to-have or a must-have for the company? You need to concentrate on the companies that want your product, which is what we have done.
What additional advice do you have for orthopedic executives considering similar strategic alliances?
Mr. Lastennet: Be critical during the selection process. It’s always nice when a mid-sized player wants your product portfolio and promises X millions of euros. But make sure that you take your time. I’m well placed to know this. We made decisions years ago that we might not make today. Do not do the agreement by default. ‘Nobody wants to take it, so I’ll give it to you.’ No.
Be cautious about the contract that you’re signing with the partner. Ensure you have a quantitative objective, especially if they’re looking for exclusivity or private labeling. Also, make sure that there is a nice organic run and an organization dedicated to your product in terms of sales, marketing or even R&D and regulatory if you go with a private label. Don’t only sign with a CEO. Make sure that the contract is well supported and that the company has enough resources to finance the development of what they want to do with your product.
At the end of 2022 and early 2023, you announced new partnerships in China. What is the status of those? What else can we expect from you in 2023?
Mr. Lastennet: We’ve been in discussion with top management at Sanyou for at least 18 months. They approached us to distribute JAZZ in China. During the discussions, we went all in. The President is a French-Chinese person, who speaks perfect French. The CEO is Chinese-American and has worked at Medtronic for a long, long time.
After the OSD acquisition, we decided to develop fixation systems for global use. We were struggling to finance the development and R&D. Sanyou is bringing us technology that we can adapt to the needs of the European and U.S. markets and produce in France with Implanet’s name. Sanyou recently acquired a bone scalpel from SMTP, which we have been selling since mid-January.
And at the end of the day, they said, ‘Okay, we want to help you finance the company.’ Instead of using dilutive financing solutions, Sanyou brought a €5 million capital increase, and they own 40% of the company’s shares. They showed us that there is value for the company and that they are invested in making something big in the next three to five years.
This year is important for us to sell the existing technology product like the bone scalpel. We hope to complete JAZZ registration in China by mid-2024. We are working with Sanyou’s R&D to finetune our future product lines under the Implanet umbrella.
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Carolyn LaWell is ORTHOWORLD's Chief Content Officer. She joined ORTHOWORLD in 2012 to oversee its editorial and industry education. She previously served in editor roles at B2B magazines and newspapers.
