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Medacta is expanding significantly faster than its competitors, especially in joint replacement. The Swiss-based company achieved sales of $551 million in 2023 and 17% growth over 2022, substantially outpacing the orthopedic market. Nearly 40% of those sales came from the company’s knee replacement business. Medacta’s personalized kinematic alignment solutions for knee replacement have played a pivotal role in its recent success.
We spoke with Medacta CEO Francesco Siccardi about what is driving the company’s strong sales, knee replacement market shifts and orthopedic market opportunities.
How would you describe Medacta’s company culture?
Mr. Siccardi: We were founded by a patient, my father. He sold his previous company to Baxter after being an entrepreneur in the medical device space for many years. He received two hip replacements and, in his early 50s, restarted from scratch with Medacta in 1999. He was a young hip replacement patient, and many surgeons didn’t want to perform surgery on him. He didn’t like the experience and said, “Okay, let’s address these problems by communicating with patients.”
The idea failed because you cannot easily communicate with patients in Europe. However, being patient-founded generated our cultural point of view and a strong focus on key aspects that remain important to us: innovation that delivers through improved patient-reported outcomes and a drive to change the status quo for patients. To do that, you need to change surgeon habits. That’s why we focus on medical education.
Education, innovation and attention to surgeons’ requests all stem from the values on which our company was built.
Medacta’s philosophy focuses on what you’ve termed “responsible and sustainable innovation.” What does that phrase mean?
Mr. Siccardi: The responsible side is linked to protecting patients from the innovations we saw in the past that were detrimental to patient outcomes. Think about the poor execution of minimally invasive techniques or implant materials that claimed to be better and turned out to be much worse for the patient. Responsible innovation necessitates that we do our homework on regulations and go well beyond the requirements. We keep our products in limited market release for years until we are certain that the immediate and midterm results are aligned with the clinical need and then fully sustained by medical education.
Innovation is sustainable when you can deliver value to the patient. As defined by [Michael] Porter, value is the improved outcome versus the potential increase in cost. We have seen sustainability issues over and over, and even more recently with robots, which Medacta doesn’t have precisely for this reason. It is challenging to deliver better outcomes without increasing costs, but you can do it when you have blockbuster products. We have been able to do it with minimally invasive procedures. When you move surgeons from a standard surgical approach to a well-performed, minimally invasive procedure, you can improve outcomes and potentially decrease costs. A good example is the movement of patients from the hospital to the outpatient setting, thanks to minimally invasive procedures.
Personalized medicine is another avenue because you can invest the right amount of effort in the right direction, depending on patient needs and expectations. Optimizing the cost of care for each patient creates sustainable innovation.
Can you give me a general sense of kinematic alignment’s penetration into the knee replacement market today?
Mr. Siccardi: There is kinematic alignment and then flavors of non-mechanical alignment philosophies, which are present among our competition. The trend of alternative alignment is picking up pace and has been a central part of Medacta’s philosophy for at least five years. We started to play with kinematic alignment eight years ago, long before we began working with Professor [Stephen] Howell, the surgeon inventor of kinematic alignment. His philosophy was criticized heavily by other surgeons for lack of data. Today, it’s clear that kinematic alignment provides better short-term results without increasing short-, mid- and long-term drawbacks.
While alternative alignment is the hottest topic at knee replacement congresses, it accounts for less than 15% of the market. Stryker is pushing an alternative alignment, which they call functional alignment, with Mako. They claim there are advantages to the technique, and it’s good marketing for them to say that a robot is needed for the procedure. We are convinced that’s not the case.
Pure kinematic alignment only needs an implant that can accommodate the philosophy. You need a good ball-in-socket design that allows for lateral laxity, which is patient-specific, and optimized patellofemoral joint articulation. In general, kinematic alignment is here to stay. It will be a much faster evolution because the technical changes are less demanding than, say, moving from a posterior to an anterior approach for hip replacement. Also, the results are more spectacular because knee replacement patients are typically less happy than hip replacement patients.
In October 2023, Medacta released a knee implant specifically tailored for this approach. How has that launch progressed?
Mr. Siccardi: We have been implanting SpheriKA for over two years in selected centers, collecting data to understand if the modification improved outcomes in selected subgroups of patients. We released the product once we were sure that was the case.
The demand is massive. My biggest concern today is producing product fast enough. The market is eager to learn more and gain access to this implant because the results from our limited market release are quite strong.
You mentioned that orthopedic robotics does not currently fit Medacta’s value equation. Do you foresee a future in which these systems can contribute the right amount of value to joint replacement surgery?
Mr. Siccardi: We had a robot in 2006 when we were a $30 million company. We then developed PSI, which still accounts for close to 50% of our knees, and augmented reality. We like technology, but we must judge the cost-benefit. Technology adoption will increase in orthopedics, but I’m sure that the current technology is not improving patient outcomes and is increasing cost.
You stated in your year-end results that supply chain was a strength, which is an unusual circumstance given the environment. What steps has Medacta taken to ensure that you have the supply you need to grow like you have?
Mr. Siccardi: This is the third consecutive year that we have grown 20%. It could be because we were at the center of the pandemic crisis early. Our Switzerland plant was about 40 miles from the epicenter of COVID in February 2020. It created a lot of stress and concern about our ability to supply — we didn’t know that the world would soon shut down. Italy was the first market impacted by COVID in the West, and probably 80% of our production workers commute from Italy every day. When Italy’s Prime Minister announced that he was closing the areas where our people travel from, we asked them to move to Switzerland for an undetermined amount of time. And they did.
We started to produce as much product as we could, and we reinforced our supply chain in terms of raw materials. We moved product to the U.S., Australia, Japan and key markets in Europe, increasing our stock all over the world because of the unknowns with shipping. We also reinforced our central stock for months by working at maximum capacity.
Those steps allowed us to create a buffer. We knew that orthopedic patients wouldn’t disappear and they would eventually require surgery. We kept a high level of product in hand in 2020, 2021 and 2022 as opportunity or recovery stock. We had issues with packaging like everyone else, but had enough stock to continue to serve our customers and enough to capture additional opportunities that arose because most of our competitors struggled quite a bit, especially in 2023 when the U.S. market suddenly bounced back.
Could you lay out Medacta’s strategic goals for the next five years?
Mr. Siccardi: We started our hip and knee venture 20 years ago, and there is still a lot of room for market penetration. We are beginning to push kinematic alignment on the knee side while continuing to expand anterior minimally invasive surgery on the hip side. We plan to go deeper geographically with those two product lines in the key markets where we are already present.
We also plan to expand our extremity line, specifically our shoulder line, which is newer and growing extremely fast. Sports medicine is another area that will become a critical success factor in the midterm, especially as ambulatory surgery centers (ASCs) become more critical in the U.S.
We want to be a significant player in the ASC space, especially in the U.S. market. I believe ASCs will become important in markets outside the U.S., too, depending on reimbursement. To meet that demand, we will expand our sales and manufacturing forces. Growing the number of employees while maintaining our culture is an important element of the next five years.
Medacta is expanding significantly faster than its competitors, especially in joint replacement. The Swiss-based company achieved sales of $551 million in 2023 and 17% growth over 2022, substantially outpacing the orthopedic market. Nearly 40% of those sales came from the company’s knee replacement business. Medacta’s personalized...
Medacta is expanding significantly faster than its competitors, especially in joint replacement. The Swiss-based company achieved sales of $551 million in 2023 and 17% growth over 2022, substantially outpacing the orthopedic market. Nearly 40% of those sales came from the company’s knee replacement business. Medacta’s personalized kinematic alignment solutions for knee replacement have played a pivotal role in its recent success.
We spoke with Medacta CEO Francesco Siccardi about what is driving the company’s strong sales, knee replacement market shifts and orthopedic market opportunities.
How would you describe Medacta’s company culture?
Mr. Siccardi: We were founded by a patient, my father. He sold his previous company to Baxter after being an entrepreneur in the medical device space for many years. He received two hip replacements and, in his early 50s, restarted from scratch with Medacta in 1999. He was a young hip replacement patient, and many surgeons didn’t want to perform surgery on him. He didn’t like the experience and said, “Okay, let’s address these problems by communicating with patients.”
The idea failed because you cannot easily communicate with patients in Europe. However, being patient-founded generated our cultural point of view and a strong focus on key aspects that remain important to us: innovation that delivers through improved patient-reported outcomes and a drive to change the status quo for patients. To do that, you need to change surgeon habits. That’s why we focus on medical education.
Education, innovation and attention to surgeons’ requests all stem from the values on which our company was built.
Medacta’s philosophy focuses on what you’ve termed “responsible and sustainable innovation.” What does that phrase mean?
Mr. Siccardi: The responsible side is linked to protecting patients from the innovations we saw in the past that were detrimental to patient outcomes. Think about the poor execution of minimally invasive techniques or implant materials that claimed to be better and turned out to be much worse for the patient. Responsible innovation necessitates that we do our homework on regulations and go well beyond the requirements. We keep our products in limited market release for years until we are certain that the immediate and midterm results are aligned with the clinical need and then fully sustained by medical education.
Innovation is sustainable when you can deliver value to the patient. As defined by [Michael] Porter, value is the improved outcome versus the potential increase in cost. We have seen sustainability issues over and over, and even more recently with robots, which Medacta doesn’t have precisely for this reason. It is challenging to deliver better outcomes without increasing costs, but you can do it when you have blockbuster products. We have been able to do it with minimally invasive procedures. When you move surgeons from a standard surgical approach to a well-performed, minimally invasive procedure, you can improve outcomes and potentially decrease costs. A good example is the movement of patients from the hospital to the outpatient setting, thanks to minimally invasive procedures.
Personalized medicine is another avenue because you can invest the right amount of effort in the right direction, depending on patient needs and expectations. Optimizing the cost of care for each patient creates sustainable innovation.
Can you give me a general sense of kinematic alignment’s penetration into the knee replacement market today?
Mr. Siccardi: There is kinematic alignment and then flavors of non-mechanical alignment philosophies, which are present among our competition. The trend of alternative alignment is picking up pace and has been a central part of Medacta’s philosophy for at least five years. We started to play with kinematic alignment eight years ago, long before we began working with Professor [Stephen] Howell, the surgeon inventor of kinematic alignment. His philosophy was criticized heavily by other surgeons for lack of data. Today, it’s clear that kinematic alignment provides better short-term results without increasing short-, mid- and long-term drawbacks.
While alternative alignment is the hottest topic at knee replacement congresses, it accounts for less than 15% of the market. Stryker is pushing an alternative alignment, which they call functional alignment, with Mako. They claim there are advantages to the technique, and it’s good marketing for them to say that a robot is needed for the procedure. We are convinced that’s not the case.
Pure kinematic alignment only needs an implant that can accommodate the philosophy. You need a good ball-in-socket design that allows for lateral laxity, which is patient-specific, and optimized patellofemoral joint articulation. In general, kinematic alignment is here to stay. It will be a much faster evolution because the technical changes are less demanding than, say, moving from a posterior to an anterior approach for hip replacement. Also, the results are more spectacular because knee replacement patients are typically less happy than hip replacement patients.
In October 2023, Medacta released a knee implant specifically tailored for this approach. How has that launch progressed?
Mr. Siccardi: We have been implanting SpheriKA for over two years in selected centers, collecting data to understand if the modification improved outcomes in selected subgroups of patients. We released the product once we were sure that was the case.
The demand is massive. My biggest concern today is producing product fast enough. The market is eager to learn more and gain access to this implant because the results from our limited market release are quite strong.
You mentioned that orthopedic robotics does not currently fit Medacta’s value equation. Do you foresee a future in which these systems can contribute the right amount of value to joint replacement surgery?
Mr. Siccardi: We had a robot in 2006 when we were a $30 million company. We then developed PSI, which still accounts for close to 50% of our knees, and augmented reality. We like technology, but we must judge the cost-benefit. Technology adoption will increase in orthopedics, but I’m sure that the current technology is not improving patient outcomes and is increasing cost.
You stated in your year-end results that supply chain was a strength, which is an unusual circumstance given the environment. What steps has Medacta taken to ensure that you have the supply you need to grow like you have?
Mr. Siccardi: This is the third consecutive year that we have grown 20%. It could be because we were at the center of the pandemic crisis early. Our Switzerland plant was about 40 miles from the epicenter of COVID in February 2020. It created a lot of stress and concern about our ability to supply — we didn’t know that the world would soon shut down. Italy was the first market impacted by COVID in the West, and probably 80% of our production workers commute from Italy every day. When Italy’s Prime Minister announced that he was closing the areas where our people travel from, we asked them to move to Switzerland for an undetermined amount of time. And they did.
We started to produce as much product as we could, and we reinforced our supply chain in terms of raw materials. We moved product to the U.S., Australia, Japan and key markets in Europe, increasing our stock all over the world because of the unknowns with shipping. We also reinforced our central stock for months by working at maximum capacity.
Those steps allowed us to create a buffer. We knew that orthopedic patients wouldn’t disappear and they would eventually require surgery. We kept a high level of product in hand in 2020, 2021 and 2022 as opportunity or recovery stock. We had issues with packaging like everyone else, but had enough stock to continue to serve our customers and enough to capture additional opportunities that arose because most of our competitors struggled quite a bit, especially in 2023 when the U.S. market suddenly bounced back.
Could you lay out Medacta’s strategic goals for the next five years?
Mr. Siccardi: We started our hip and knee venture 20 years ago, and there is still a lot of room for market penetration. We are beginning to push kinematic alignment on the knee side while continuing to expand anterior minimally invasive surgery on the hip side. We plan to go deeper geographically with those two product lines in the key markets where we are already present.
We also plan to expand our extremity line, specifically our shoulder line, which is newer and growing extremely fast. Sports medicine is another area that will become a critical success factor in the midterm, especially as ambulatory surgery centers (ASCs) become more critical in the U.S.
We want to be a significant player in the ASC space, especially in the U.S. market. I believe ASCs will become important in markets outside the U.S., too, depending on reimbursement. To meet that demand, we will expand our sales and manufacturing forces. Growing the number of employees while maintaining our culture is an important element of the next five years.
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ME
Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
