30 Day Trial

ORTHOWORLD » Other Articles of Interest

Articles of Interest

January 26, 2017 | DePuy Synthes' President Set to Lead AdvaMed's Orthopaedic Priorities of Registries, Payments

AdvaMed announced its orthopaedic priorities and the leader of its initiatives.

The organization has named Juan-José Gonzalez, President, U.S. DePuy Synthes, to head its orthopaedic sector by assisting with coordination of the regulatory and reimbursement advocacy priorities that impact AdvaMed’s orthopaedic member companies.

AdvaMed identified its orthopaedic priorities as:
1. Working with stakeholders to design, develop and maintain an effective device registry in the U.S.
2. Ensuring that new payment methodologies capture the value of orthopaedic implants

Both priorities speak to the U.S.’s shift to value-based medicine and its connection of quality and cost measures. The importance of data for benchmarking has increased as hospitals face the demands of public and private payors to meet set outcome metrics. The pressure has trickled down from the hospital to device companies, which are expected to prove product quality and cost through data. Hip and knee replacement, $8 billion and $6.5 billion markets respectively, arguably face the greatest scrutiny in orthopaedics.

In 2016, the Centers for Medicare & Medicaid Services (CMS) required hospitals in 67 regions to participate in its Comprehensive Care for Joint Replacement (CJR) Model, a five-year program that compensates providers by episode of care, from the time of the hip or knee replacement through 90 days after discharge, rather than just for the surgery itself.

CJR is just one model in the emergence of bundled payments. The impact that bundled payments will have on implant pricing remains unknown. The pricing models have, however, driven device companies to launch services to help hospitals address the components of an episode of care. DePuy Synthes, Zimmer Biomet, Stryker, Smith & Nephew and Medtronic—the five largest orthopaedic companies by revenue—have introduced solution platforms for joint replacement customers. 

DePuy Synthes, Smith & Nephew, Stryker and Zimmer Biomet also support the American Joint Replacement Registry (AJRR). AdvaMed has representation on AJRR’s board.

The top five companies account for 61% of worldwide orthopaedic revenue and ~80% of joint replacement revenue, according to the ORTHOPAEDIC INDUSTRY ANNUAL REPORT. Gonzalez takes the lead of AdvaMed’s orthopaedic sector following representation most recently from Smith & Nephew, Biomet and Zimmer.

January 04, 2017 | 2017's Industry Opportunity: Diversification of Portfolios

We know that, like us, many of you rely on our financial forecasts and industry insight to assist in budget and business development.

As we all look to the new year, we thought it timely to offer our estimates for end of year performance for the top five companies, as well as share an observation on one theme that shaped the industry in 2016 and is expected to remain top of mind in 2017: that is, diversification. Read on.

October 06, 2016 | Headcount Reductions, New Appointments at Biologics and Spine Companies

Alphatec Spine announced a workforce reduction of ~20%, part of its plan to reduce operating expenses by $20 million following sale of its international business to Globus Medical. At the end of 2015, Alphatec employed approximately 430 people worldwide.

Moving forward, Alphatec is focused on U.S. expansion of Arsenal™ Degenerative and Deformity systems, the Battalion™ Universal Interbody System and launches of Battalion Lateral and XYcor® Expandable Spinal Spacer systems (the latter of which received FDA 510(k) market clearance in August 2016).

Amedica has reduced its workforce by ~38% in a move to realize savings of ~$2.0 million in cash operating expenses, on an annualized basis. The company will continue its focus on adding new surgeons, territories and distributors. In March 2016, the company employed 56 people.

Carmell Therapeutics has added members to its senior management team in support of U.S. FDA clearance for REPAIR™ Putty, a plasma-based bioactive product designed to accelerate bone healing. New hires there include Donna Godward, Chief Quality Officer; Stephanie Kladakis, Ph.D., Vice President of R&D and Janet Vargo, Ph.D., Vice President of Clinical Sciences.

Xtant Medical has selected Carl O’Connell as its President, bringing perspective from a range of responsibilities within a variety of medical device segments including spine, extremities and orthobiologics.

Sources: Company press releases, filings with the U.S. Securities and Exchange Commission

September 15, 2016 | 2016 M&A Activity Edges Past Full-year 2015

By Julie Vetalice

With the recent bump in merger and acquisition announcements, I got curious. Checking ORTHOWORLD's M&A Activities database affirmed my hunch; I see that it's logged 39 transactions year-to-date for 2016, already ahead of 2015's whole-year total of 36. 

This is a good time to revisit some of the M&A recaps that ORTHOWORLD has assembled. (Don't forget that the database itself spans back to 1993, contains transaction detail where available—including sales multiples—and also has a downloadable Excel version for ORTHOWORLD Members.)

1H16 M&A Recap: Big Players Make Moves

36 Acquisitions Completed in 2015

NASS PREVIEW: A Guide to the Recently-merged in Spine

Suppliers Consolidate in Response to OEM M&A Activity


August 03, 2016 | Amendia Adds Manufacturing Expansion to List of Major Strategic Moves

Amendia, a vertically-integrated U.S. spinal implant company, has expanded its manufacturing facility in Marietta, Georgia to support growth in multiple capabilities, such as manufacturing, surgeon training and R&D efforts.   

The expansion comes on the heels of several major announcements from Amendia. In early 2015, Amendia acquired Custom Spine, SpineSelect, Baxano Surgical’s iO-Flex and iO-Tome, and announced a strategic venture to develop Promimic’s HAnano surface technology. In April 2016, private equity firm Kohlberg & Company acquired majority ownership in Amendia, and in June 2016, the company named Chris Fair, a spine industry veteran and investment manager, as its President and CEO. 

Amendia is one of multiple spine companies focused on internal manufacturing expansion. Most notably, NuVasive and Globus have shifted their percent of in-house vs. outsourced manufacturing. In its 2Q16 earnings calls, NuVasive leadership said that its initiative to achieve 100% in-house manufacturing remains on track, with initial production slated to commence in August at a new Ohio facility, while Globus leadership said the company remains on schedule to grow in-house manufacturing capacity to 50% by 2018.

These in-house manufacturing strategies are largely attributed to companies’ beliefs that they’ll be better positioned to control operating margins.

July 18, 2016 | Recent Activities Further Progress for 2-level Cervical Disc Replacement in the U.S.

Recent announcements have brought new players to the 2-level cervical disc replacement market in the U.S. Zimmer Biomet finalized its $1 billion acquisition of LDR, which added Mobi-C to its spine portfolio, while Medtronic received FDA Premarket Approval for a 2-level application for Prestige LP.

Mobi-C had been the only 2-level disc on the U.S. market. Expanded reimbursement coverage, updated labeling claims and published peer-reviewed papers resulted in U.S. Mobi-C sales increasing 80% in 2015 vs. 2014.  

Further, in April 2016, LDR reported that Mobi-C surpassed >$100MM in cumulative U.S. revenue since its 2013 launch. Half of the Mobi-C units sold are for 1-level indications and half are for 2-level indications. 

The acquisition of LDR allows Zimmer Biomet to capture about 1% of the worldwide spine market, increasing its share of the market to about 5%, according to ORTHOWORLD estimates. While the purchase of LDR also expands Zimmer Biomet’s traditional cervical and lumbar offerings, Mobi-C is presumably the technology that attracted Zimmer Biomet in seeking to enhance its portfolio.

Medtronic’s entry into the 2-level market is expected to put competitive pressure on Zimmer Biomet and Mobi-C. The 2-level discs will be sold in a small market that faces a lack of reimbursement. To dive into specifics, >50 million lives are covered for Mobi-C’s 2-level procedure, and ORTHOWOLD estimates place the total artificial disc market at ~$275 million in 2016. 

Medtronic’s clout as the largest player in the global spine market, with nearly 30% market share, could drive increased reimbursement coverage and spur market expansion, analysts have said, but the volume and pace of that growth is hard to predict.

Still, Medtronic clearly sees promise in the disc market. In 2Q16, it released data showing that the Prestige LP 2-level disc demonstrated favorable clinical outcomes and patient satisfaction vs. 2-level anterior cervical discectomy and fusion. Though the company has yet to launch the Prestige LP 2-level disc, leadership has said that it is one of a handful of new products among its strategies to invigorate growth in its spine business.

Overall, Medtronic’s worldwide spine sales decreased 4.3% from $2.5 billion in 2014 to $2.4 billion in 2015. (Please note that ORTHOWORLD estimates exclude biologics.) Medtronic also recently restructured its Restorative Therapies Group, which includes spine, orthobiologics, neuro and surgical technologies, to turn the business around. 

The upside for the two companies is that the barrier for approval for a 2-level disc in the U.S. is quite high, e.g. Medtronic’s study took seven years to complete, which is not uncommon. Therefore, Medtronic and Zimmer Biomet are only competing against each other in the 2-level cervical disc market for the foreseeable future. 

July 14, 2016 | 3 Takeaways from the EU Medical Device Regulations

The highly-anticipated draft of the European Union’s Medical Device Regulations (MDR), released on June 15, means that orthopaedic device manufacturers can begin to fully prepare for what will ultimately be a more scrutinized process to develop and sell products in EU countries.

The 400-some pages of regulations are broken into ten chapters and 17 annexes, but come with no published guidance documents for implementation. The first reaction from industry experts has been that it will take time for device manufacturers, regulatory consultants and Notified Bodies to truly identify all of the troublesome areas of compliance.

It’s important to note, though, that total and partial joint replacement devices and spinal disc replacement implants and implantable devices—other than screws, plates and instruments—are considered to be Class III and will undergo greater examination than other medical devices. Additionally, the MDR places increased responsibilities on and imposes greater scrutiny of Notified Bodies, which have decreased in number and are expected to continue to do so as organizations are not re-designated under new requirements. Orthopaedic device manufacturers that haven’t begun to consider how the new regulations will impact their business in Europe should begin immediately. Notified Bodies will be more involved in your timeline to market and your ability to stay on the market—and remember, there will be fewer of them with more responsibilities.

As you comb through the regulations, consider that these changes will be important for orthopaedic device companies to navigate.

Clinical Evidence

In recent years, orthopaedic device companies with novel technologies have turned to Europe first to conduct clinical investigations and seek device approval before moving to the U.S. However, changes to the clinical evidence requirements could cause concern about delays to market, obstruction of future innovation and give one pause about entering European markets first.

For Class III devices, clinical investigations will need to be performed except if the device is a modified design of a device already marketed by the same manufacturer, or the modified device has been demonstrated by the manufacturer to be equivalent to the marketed device.

Not only are stricter rules expected in proving equivalency to other products and conducting clinical investigations, but device manufacturers will also need to establish, implement and maintain a postmarket surveillance system for devices.


The addition of Unique Device Identification (UDI) to all medical devices should not come as a surprise to those who have followed the MDR’s evolution. A priority of the EU has been to launch a UDI system comparable to international initiatives.

While multiple labeling changes will need to be considered, here are two points in the final document: The UDI should be placed on the label or the device itself.

Devices that are reusable should bear a UDI on the device itself. Exceptions are made if the direct marking would interfere with the safety or performance of the device or if it’s not technologically feasible for the device to be directly marked.

Supply Chain

As previously reported, liability issues have increased throughout the supply chain. Importers and distributors will no longer be subject to fragmented national law obligations and instead will need to comply with MDR mandates. The main requirement is that parties will need to verify that their partners are in compliance with the MDR.

Device companies not established in the EU will need to designate an authorized representative who will be held jointly liable for things like medical device defects. This could prompt companies to scrutinize non-EU based manufacturers more carefully, and will most likely increase their monitoring of clients’ compliance.

The regulations are expected to go into effect in late 2019 or early 2020. They are expected to be translated for all EU member languages in late 2016 or early 2017, and then formally published. A three-year transition period will follow.

June 30, 2016 | What the Future of Orthopaedics Means for You

To thrive in the healthcare environment of tomorrow, orthopaedic device companies will need to operate within a greater portion of the supply chain, assisting upstream and downstream customers in finding operational value. This will require orthopaedic device companies to forge stronger relationships, focus on internal efficiencies and launch services, not just devices. Ultimately, the business models of orthopaedic device companies must radically change should they want to maintain profitability and increase margins in coming years. This was the message from keynote speaker Bill Tribe, Ph.D., partner at A.T. Kearney’s Health Practice, for OMTEC 2016 attendees.

In order for this to be achieved, it is imperative that you, as a stakeholder in the orthopaedic industry, understand the forces driving these changes so that you can proactively assist your company and, importantly, improve your own chances for success.

Before we get to what the future might hold for you and orthopaedics, let’s start where Tribe began, briefly reviewing how we got to the present day.

The Economic Basics

Margins across the medical device sector have been falling for more than a decade, and will continue to erode by about 5% if unaddressed, Tribe said. Compounding that is the continued negative impact of price pressure, at nearly 3% per year. An average orthopaedic company would need to reduce its cost of goods by 12% or its Selling, General and Administrative expenses by 8%, or some combination of the two, to offset that 3% in price pressure, according to Tribe. The price pressure is consistent; therefore, companies must get leaner each year.

On a positive note, orthopaedics is a $46 billion industry growing in the low-single digits year over year, according to ORTHOWORLD’s ORTHOPAEDIC INDUSTRY ANNUAL REPORT®. Healthy procedural volumes due to a growing and aging population, as well as potential in untapped markets, mean that the industry remains attractive.

On that note, by A.T. Kearney’s estimation, there’s $4 billion to $5 billion in combined operating profit and working capital opportunity up for grabs for orthopaedic companies that are able to respond to the industry’s disrupting factors by restructuring their business models, products, or both.

The Disruptors

Tribe outlined five prevailing industry headwinds: power shift to payors and providers, heightened regulatory scrutiny, unclear sources of innovation, new healthcare delivery models and the need to serve lower socio-economic classes. These disruptors are not new, and because they have presented themselves in various forms in recent years, they are casually mentioned in today’s conversations. Still, these disruptors are acute, they need to be addressed and, importantly for you, they hold strategies for ways to move forward.

How can you help your company adapt?

Tribe asserted that when you consider average operating margins, orthopaedic device company margins (at 20%-30%) are higher than others within the supply chain: contract manufacturers (5%-15%), distributors (1%-2%) and hospitals (3%-5%).

The supply chain is imbalanced. In the future, successful orthopaedic device companies will have business models that help themselves and their partners within the supply chain overcome the aforementioned disruptors to maintain or achieve greater margins. Tribe called out several pilot programs that may or may not prove to be successful, but are demonstrations of this point—Smith & Nephew’s introduction of Syncera, Stryker’s acquisition and subsequent launch of Mako robotic products, Cardinal Health’s expansion into commercializing orthopaedic implants and Millstone Medical Outsourcing’s direct-to-patient and hospital distribution model.

“It’s very clear that these alternative pathways really represent a huge opportunity for those that embrace them, because the companies that sit in the traditional model and provide products are going to fall behind those companies that find alternative ways to operate across the value chain and make their products important to their customers,” Tribe said.

These shifts could mean something different for you than your colleagues, depending upon what you do.

For greater context on the disruptors offered by Tribe, read the full article on BONEZONE.

June 09, 2016 | Tecomet Appoints New President and CEO

Tecomet, reportedly the largest contract manufacturer catering to the orthopaedic industry, has appointed Mark Kemp to the position of President and Chief Executive Officer.

Kemp brings a wealth of medical device experience to this new role. Previously, he spent 16 years with Flextronics in progressively responsible roles, most recently serving as President Flextronics Medical. Kemp has over 20 years of experience with M&A and integration activity and has grown a medical division from $200MM to $1.8BB; this included securing strategic partnerships with 19 of the top 25 medical OEMs.

“Mark has provided a new outlook and a refreshing prospective by providing guidance and overall leadership for our company since joining Tecomet in October 2015. The Board is very pleased to have Mark with Tecomet and now stepping up to the CEO role,” stated Bill Dow, Chairman of the Board.

In 2015, Tecomet reported organic growth at an excess of ten percent over the previous six years. In addition, the company said that it would continue its acquisition activity moving forward, with a plan to specifically target companies offering services that Tecomet currently outsources.

May 19, 2016 | Midwest Orthopaedics at Rush Offers Flat Fee Payment Option, Shares Price Structure Online

Midwest Orthopaedics at Rush (MOR), in Chicago, Illinois, is now offering patients package pricing—a flat fee payment option—for treating some of the most common orthopaedic conditions. MOR has listed the price structure on their website.

At present, there are five surgical procedures that are included in the MOR Package Pricing: 

  • Anterior Cruciate Ligament (ACL) Repair, $10,800
  • Hip Arthroscopy, $13,250
  • Knee Arthroscopy, $5,000
  • Rotator Cuff Repair (Arthroscopic), $11,300 
  • Shoulder Arthroscopy, $10,000 


Services provided in this program are not billed to any third parties or insurance plans. Some expenses not included in the MOR Package Pricing include preoperative diagnostic tests, travel expenses, durable medical equipment and physical therapy. 

“We wanted to create something that was geared towards consumers,” says Dennis Viellieu, CEO, Midwest Orthopaedics at Rush. “This has not really been done. Some states have required that some of this information be put out there, but it doesn’t necessarily help consumers because they don’t understand CPT codes, for example. You can’t expect them to understand that.” 

The program is geared toward the uninsured and individuals with high deductibles. Viellieu says that as the Affordable Care Act has marched forward, out-of-pocket expenses for plans offered on the exchanges have increased dramatically. For some, it now makes more sense to pay the penalty rather than enroll in an exchange-based plan. Largely, that means MOR’s packaged, transparent pricing is targeting young people and those who may not access the healthcare system frequently.

Package pricing gives those patients an option to go out-of-pocket, without accessing a third-party, and receive one price for the whole surgical episode. The package pricing is also attracting interest from those outside the country. Viellieu specifically mentioned strong interest from Canadians, because they understood the quality of MOR’s physicians and could understand the pricing structure easily.

MOR determined the pricing structure by visiting facilities where these procedures are performed, and asking them to provide what they would consider to be a reasonable reimbursement for each procedure. Then they put the numbers together, created an average and set a price for the whole service. Villieu says that it was a straightforward process that largely involved talking to other providers and partners. 

“We’re going to expect some variation around the average. Some of that you’ll know going in, some of it you won’t,” he says. “We’ll live with the variation that we don’t know and if we do know, and it meets exclusion criteria, then we’ll have a conversation with the patient.” 

While setting those prices, MOR’s team didn’t focus on implant pricing or cost, Villieu says. They figured out the average cost of an implant or medical device for a specific surgery and then set the average. However, now that the program is public, there have been unintended consequences on the implant side. 

“Having the surgeon be more aware of implant cost as a variable element within a price package, over the long term, will have a beneficial impact. It makes sure that we’re being as efficient as possible,” he says. 

He adds that there are cases in which a surgeon might feel more comfortable taking two implants into the OR, but only one implant may be needed. In those cases, it may be more efficient to take only one implant into the OR to avoid the waste. 

“There will be more thought about efficiency as a result of this package. That’s not something that we counted on when we went into this, but it’s a natural extension of seeing how these cases perform versus how we thought they would perform,” Villieu says. 

After being public for only a week, MOR already plans to add more package options to its offerings. The bundles will target other common orthopaedic procedures performed by the physicians at MOR. 

In 2009, the Surgery Center of Oklahoma (SCO) transitioned to a similar model. The hospital provided a complete list of procedures with an accompanying price tag and posted it on their website.

In an interview with ORTHOWORLD, SCO co-Founder and Medical Director Kevin Smith, M.D. said that self-funded companies with 1,500 employees experience health plan savings of about $1 million per year compared to their Preferred Provider Organization allowable amounts. He added that SCO prices are typically 1/6th or 1/10th that of “big box” hospitals for the same procedures. 

By 2015, SCO’s volume had increased 30 percent and its profits had doubled, according to Smith.

April 13, 2016 | OrthoWorx Launches AcceLinx to Fuel Entrepreneurial Environment

Entrepreneurs in Warsaw, Indiana will soon have an additional resource to assist in the development and launch of new medical devices. OrthoWorx, a community-based organization that works with the local Warsaw orthopaedic industry, revealed the new initiative, AcceLinx.

AcceLinx was developed with the understanding that innovation in orthopaedics has become more complex and the timeline from concept to market has extended to six or more years due to regulatory and reimbursement scrutiny. Selected entrepreneurs will have access to strategic resources, guidance and technical and production support from in-house AcceLinx experts, as well as partnering companies. 

The initiative also serves the needs of Warsaw’s established orthopaedic companies. OrthoWorx noted large companies like DePuy Synthes and Zimmer Biomet acquire technologies and companies that are further along in the development cycle and have proved the regulatory pathway, clinical performance and commercial potential. AcceLinx will serve as an engine to get technologies and companies to the desirable acquisition phase and has potential to fuel a product and personnel pipeline for orthopaedic companies of all sizes.  

The Indiana Economic Development Corporation (IEDC) pledged up to $1.2 million over six years in funding to establish and operate AcceLinx. The City of Warsaw committed $500,000 in funding to the initiative. An additional $4.8 million is needed to fund the initiative's operational budget for the six years.  

Though a separate entity of OrthoWorx, AcceLinx will initially be housed within the OrthoWorx office until a team and physical location are established. Future announcements will be made on how entrepreneurs will be selected.

Sheryl Conley, OrthoWorx President and CEO, called out the late Dane A. Miller, Ph.D., founder of Biomet, as one community leader who inspired the initiative.   

OEMs and suppliers in Memphis established a local medical device council in 2014 to develop workforce training and education opportunities that would ensure a local talent pool.

April 04, 2016 | Lima Ownership, SNN's REDAPT and FDA Reclassification Activity Top March 2016 News

What ORTHOFLASH news was the most popular during March?

The Ownership of Lima Corporate

EQT, a global private equity group, with Hansjörg Wyss as co-investor, completed acquisition of the majority of shares of Lima Corporate in March 2016. A newly-formed Advisory Board includes Doug Kohrs, former CEO and President of Tornier.

Smith & Nephew Unveils REDAPT Revision 3D-Printed Titanium Hip

The device, debuted at AAOS 2016, is now available on a limited basis in the U.S.

FDA Proposes Classification of Posterior Cervical Screws

Since 2001, FDA has regulated posterior cervical screw systems as unclassified pre-amendments devices requiring premarket notification (510(k)). The Agency FDA will accept comments on Class II assignment through June 8, 2016.

In’Tech Medical Acquires Ortho Solutions in Asia

The contract manufacturer increased its global footprint in this transaction that followed its 2015 acquisition of Turner Medical.

March 29, 2016 | Reimbursement Complexity Centers on Need for Longer-Term Studies

ORTHOWORLD® Members of all stripes—providers, OEMs and suppliers—say that they’ve been impacted by complexities in the reimbursement system. Reimbursement certainly is not a new challenge. The push for longer-term data, though, is no longer a nice-to-have selling tool, but a must-have for coverage.

“The biggest challenges to obtaining reimbursement from a payor come from not establishing a business case or a cost-effectiveness argument. It’s all about establishing medical necessity for that item or service,” says Richard Baer, M.D., a reimbursement consultant. “The literature has to establish improved health outcomes.”

Baer previously served as Medical Director for the Medicare RAC Validation Contractor and as Lead Medical Director for National Government Services, one of the largest Medicare administrative contractors in the U.S. He says that the key to obtaining reimbursement is the quality of the scientific literature. For orthopaedic devices, that may mean robust, double-blinded control studies at academic centers. He says that studies should push for large patient populations, with studies of at least 100 patients looking more credible.

“The thing that payors are looking for, and is new in the landscape as a barrier to coverage, is longer-term evidence. In the past, particularly for a device, a six-month study was sufficient. Now, payors want to see two-, three- or five-year follow-ups to make sure that the item they’re paying for is durable and the benefit is sustainable,” he says. “One thing that payors are now requiring as a product is coming to market is that companies go back and do another study.”

Kelli Hallas, Executive Vice President of Emerson Consultants, notes that many of the studies being conducted are postmarket, undertaken to satisfy the requirements from payors for coverage, frequently at great expense to the device company.

One step that companies should take to ensure coverage is to open channels of communication with their prospective payors. “When a clinical protocol is being developed to support the regulatory strategy, companies need to have communications with the payor community to ensure that the data they’re collecting will fulfill the payor’s requirements for coverage,” she says.

Baer agrees. “When you’re developing your strategy for a new product, the requirements of the payors need to be taken into account. Your strategy has to extend from project startup through payor coverage, not from project startup through FDA clearance,” he says.


The full article appeared in the April issue of ORTHOKNOW.
In recent years ORTHOWORLD interviewed executives on the barriers to data collection and the benefits of strong data.


March 10, 2016 | Revenue, Episealer and Metal-on-Metal Top February News

What ORTHOFLASH news was the most popular during February?

Financial reviews:

Year-end and full-year revenues for CONMED, DePuy Synthes, Smith & Nephew, Stryker and Zimmer Biomet, while primarily published in January, topped the clicks in February. Of these, more users accessed DePuy Synthes than any other revenue recap—but of financials, readers spent the most time absorbing Zimmer Biomet’s results.


Study results: Episealer may stop or significantly slow the process leading to OA

Study results suggest that a permanent bond may form between cartilage and the hydroxyapatite coating of Episurf’s Episealer® device, suggesting that implantation of Episealer may stop or significantly slow the process that leads to osteoarthritis. This is reported to be the first time that such results have been shown, clinically.


FDA Issues Final Order on PMAs for Metal-on-Metal Hips

FDA issued a final order requiring OEMs to submit a premarket approval application for certain metal-on-metal total hip replacement devices, believing that there is insufficient evidence to conclude that general and special controls would provide reasonable assurance of the devices’ safety and effectiveness.


Zimmer Biomet Receives FDA 510(k) Clearance for Unite3D Bridge Fixation System

This 3D-printed technology is designed for use in foot and ankle arthrodesis. Unite3D is made from OsseoTi® porous metal technology, which mimics the structure of cancellous bone.


Tyber Medical Launches TyWedge Evans and Cotton Osteotomy Wedge Systems

This represents full market launch for these systems that feature TyPEEK® proprietary titanium plasma-sprayed PEEK coating, which is specifically indicated for fusion. Tyber Medical's portfolio now spans >26,000 product configurations contained across 15 product lines.

February 19, 2016 | Stryker Strengthens Investments in 3D Printing, Robotics

Stryker announced the construction of a state-of-the-art 3D printing manufacturing facility in order to produce new products across multiple divisions and set the company apart from its competitors.

The announcement came during the company’s fourth quarter earnings call, when leadership cited knee and spine as the first markets in which it plans to focus its 3D printing efforts. Stryker’s U.S. knee segment experienced 9.1 percent organic growth in the fourth quarter of 2015, bolstered by the adoption of recent cementless tibia plates, patella and revision cones made of 3D printed titanium. The company plans to launch a 3D printed titanium interbody device for spine in 2016.

“For the foreseeable future, at least the next three, four years or so, our focus is on innovative new products and not replacing our existing products with 3D printed products,” said William R. Jellison, Stryker’s retiring Vice President and Chief Financial Officer, during the call. “The pipeline of innovative new geometries that can’t be made without 3D printing is the area of focus. It’s not about trying to replace our products and drive down cost. Over time, ten years from now, that could be the case, but in the near- to mid-term, it’s really a focus on innovative new products.”

As evidenced by its 3D printing investment and acquisition of MAKO Surgical in 2013, Stryker seeks a differentiated approach, especially in joint reconstruction, from its main competitors DePuy Synthes, Smith & Nephew and Zimmer Biomet.

Robotics and additive manufacturing (3D printing) are two hotly-discussed topics in the orthopaedic industry. Manufacturers believe that both are innovative technologies that may improve patient outcomes via better implant positioning (robotics) and greater bony in-growth (3D printing). The challenge that many face is how to make the technology cost-effective or rationalize the price both internally and for buyers.

Robotics and 3D printing are not expected to be big growth drivers for Stryker in the near term, said Kevin Lobo, Chairman and CEO. Its core joint reconstruction growth will continue to come from the Triathlon knee and Accolade hip systems. However, recent investments will provide incremental growth and set up Stryker’s sales reps for conversations that competitors aren’t having.

“Over time, I expect robotics and 3D printing to take on a more important portion of our overall sales, and they will be sustainable and sticky if we have something that the competition doesn’t have,” Lobo said.

Stryker also announced the acquisitions of Sage Product, a provider of goods for intensive care units and hospital settings, and Synergetics USA's neuro portfolio. The Sage Product's $2.77 billion all-cash transaction, reportedly the company’s biggest-ever acquisition, positions Stryker to respond faster to “Never Events” such as infections. The acquisition is part of Stryker’s MedSurg division, but is expected to play a role in orthopaedics as bundled payments and episode of care receive a heightened focus. The Synergetics neuro portfolio is expected to complement Stryker Instruments' neuro, spine and ENT business. Synergetics achieved revenue of $31 million in 2015. 

A look at Stryker's 2015 year in review can be found here.

February 19, 2016 | FDA Issues Guidance for Ultra High Molecular Weight Polyethylene Devices

In the first of several possible material updates in 2016, FDA released draft guidance outlining new information companies must include when submitting devices with Ultra High Molecular Weight Polyethylene (UHMWPE) for approval.

FDA’s recently-released draft guidance, titled “Characterization of Ultrahigh Molecular Weight Polyethylene (UHMWPE) Used in Orthopedic Devices,” breaks UHMWPE materials into four groups: Conventional UHMWPE, Highly Crosslinked UHMWPE, Vitamin E Highly Crosslinked UHMWPE and Non-Conventional UHMWPE. Each offers individualized recommendations for what to include in submissions. 

FDA provided a list of general information that should be included with any submission, regardless of UHMWPE type. That list includes: 

  • Starting resin (e.g., GUR 1020, GUR 1050, HiMont 1900) 
  • Concentration and identification of antioxidant or other additives (in weight percent and parts per million) 
  • Resin consolidation method (e.g., ram extrusion, compression molding, etc.) 
  • Radiation dose and type (e.g., gamma, electron beam, etc.)  
  • Time and temperature of all post-consolidation thermal anneals (e.g., to reduce free radicals, relieve internal stresses, homogenize dopant concentration, etc.)  
  • Compression ratio of all mechanical anneals 
  • Terminal sterilization method

The draft document also provided the specific suggestions for information to include with each UHMWPE grouping. 

For Conventional UHMWPE, FDA recommends including: 

  • Tensile properties (e.g., yield strength, ultimate tensile strength, elongation at break) 
  • Impact resistance (either Charpy or Izod)  
  • Density 

For Highly Crosslinked UHMWPE/XLPE:

  • Comparison of the total absorbed radiation dose to the dose of a legally marketed device 263 with the same intended use
  • Percent crystallinity
  • Melting temperature
  • Biaxial mechanical properties (ultimate load, ultimate displacement, work to failure)
  • Post-accelerated aging oxidation index throughout the sample
  • Trans-vinylene index throughout the sample
  • Crosslink density
  • Fatigue resistance crack propagation testing (ΔKinception, Paris exponent, Paris 271 coefficient) 
  • Free radical concentration

For Vitamin E, Highly Crosslinked UHMWPE/VEPE, submissions should include the information provided for Conventional UHMWPE and Highly Crosslinked UHMWPE, in addition to these specific requirements:

  • Stability of antioxidant in the material
  • Effect of antioxidant on the wear mechanism
  • Effect of antioxidant on material consolidation

For Non-Conventional UHMWPE, FDA did not provide specific recommendations. 

Orthopaedic device companies can expect a greater focus on materials from FDA in the coming year. Two of FDA’s 2016 scientific priorities relate to materials: 1) modernize biocompatibility/biologic risk evaluation of device materials, and 2) advance methods to predict clinical performance of medical devices and their materials. Both priorities relate to improving methodologies and tools for material testing to ensure the quality and safety of the material, and ultimately the device. 

Also, FDA has issued a final order requiring OEMs to submit a premarket approval application for certain metal-on-metal total hip replacement devices. The PMA must report all nonclinical and clinical information from investigations on the safety and effectiveness of the device. 

February 03, 2016 | Surgeons Offer Device Companies Wish List of New Technologies

Despite the myriad top-down pressures that surgeons face, many believe there is room for new advancements to improve current industry conditions. In our annual ORTHOPRENEUR Editorial Board query, surgeons discuss the technologies they seek and potential areas for exploration to move orthopaedic care forward in the coming year.

Surgeon participants included:

Alejandro Badia, M.D., Orthopaedic hand and upper limb surgeon, Founder of OrthoNOW, an orthopaedic urgent care center franchise
C. Scott Humphrey, M.D., Orthopaedic shoulder and upper extremity specialist, Founder and Chief Innovation Officer of Shoulder Options, Founder and Director of Humphrey Shoulder Clinic
Blair Rhode, M.D., Orthopaedic sports medicine surgeon, Founder of Rhode Orthopedic Group (RōG) and Orland Park Orthopedics Center for Sports Medicine
Blaine Warkentine, M.D., Healthcare Innovations Architect, Founder of Vimty and SurgeryTrack

ORTHOPRENEUR: What technologies would you like to see emerge in 2016 and beyond? 

Badia: The concept of telemedicine is a good one that’s long overdue. For a lot of the patients we see, particularly in follow-up, there is no reason for them to actually come in and see us. A patient could sit in front of the computer screen and show us her arm or motion and ask relevant questions. A lot could be done with telemedicine to scale down costs and actually decrease some of our aggravation in the office, because we’d be able to see some of the patients whom we just need to quickly see. We’re working to incorporate this concept in our OrthoNOW approach.

Humphrey: I’d like to be able to perform more complex surgeries on an outpatient basis rather than having to admit patients to a hospital. Keeping people out of the hospitals would save them a lot of money, and it would allow me to maintain an independent practice. A nerve block that lasts three to four days and doesn’t require a catheter would be welcome.

Rhode: A continued roll-out of stable technology offerings. I would like to see more offerings for disposable physician preference devices. Shaver blades and thermal devices are two examples that need stable market-based competition. The movement toward stable technology in the device arena continues. At RōG, we have continued to acquire more, and more surgery centers begin to use our stable shoulder anchors. 

Warkentine: I’d like to see more about at-home rehabilitation, outcome management and tracking and sensor data.

ORTHOPRENEUR: How do the shifts in patient demographics impact your view on and use of new technologies and techniques?

Badia: The aging population is going to impact healthcare costs in orthopaedics, obviously more with joints.

I want to emphasize proven stem cell technologies. The problem with stem cells is that they are this buzzword and are being abused. People who don’t know much about stem cells are injecting peoples’ joints and charging a heck of a lot of money. I think we’re going to see refinement and clarification of the indications in the next one to two years. We’re not going to be able to do total joint replacements on everybody who ages. It’s just not sustainable, nor desirable. 

Humphrey: Hospitals have become tight when it comes to allowing new technologies in the OR due to cost concerns.

Gone are the days when hospitals would pay a premium because something is “new and improved.” Similarly, physician-owned surgery centers are really watching their costs. Going forward, new technologies will need to be priced in the same range as existing technologies or they won’t gain traction.

There needs to be a continued focus on improving outcomes and making procedures more efficient, but going forward, cost containment will be more important than ever.

ORTHOPRENEUR: What one thing would you like to share with device companies?

Badia: The days of companies charging exorbitant fees are past us. Companies that are sensitive to that, they’ll stay in the game.

Humphrey: There needs to be a continued focus on improving outcomes and making procedures more efficient, but going forward, cost containment will be more important than ever.

Warkentine: Companies should be aggressive to move to eCommerce systems for hospitals.

The full article can be read here.

January 04, 2016 | Congress Suspends Medical Device Tax
The medical device tax, fought by industry since its inception, was suspended as part of the $1.8 trillion spending and tax bill passed by Congress and signed by President Obama in the waning days of 2015.
The 2.3 percent tax on medical device sales received a suspension for 2016 and 2017, and is expected to cost the U.S. $3.4 billion during those two years, according to the Joint Committee on Taxation.
Associations like AdvaMed and MDMA quickly applauded the news, noting that the tax had cost the medical device industry jobs and pinched research and development resources.
  • An MDMA survey of 109 medical device executives conducted during November and December 2014 found that 72 percent of companies had slowed or halted job creation as a result of the tax. Survey respondents said that if the tax were repealed, 85 percent would hire new employees in the U.S.
  • Further, 80 percent of respondents indicated that they would increase R&D investments following a repeal.

On the other hand, a 2015 Emergo Group survey found that most U.S. companies did not make major changes in 2014 in response to the levy, suggesting that the tax has become part of daily business.  
Based upon responses from 685 medical device executives in the U.S., the Emergo Group survey found that:
  • 57% of companies made no significant changes
  • 29% raised prices
  • 18% invested less in R&D
  • 14% reduced staff
  • 8% lowered production costs without reducing staff

The medical device tax was expected to provide the government with varying revenues of $20 billion to $30 billion between 2013 and 2019—numbers that did not pan out. In the first half of 2013 a collection of $913.4 million was reported, prompting the Treasury Inspector General for Tax Administration to issue a report on needed IRS improvements to ensure accurate reporting and payment of the tax. The report found discrepancies of $117.8 million in overstated and understated taxes for that period. 
In the next two years, companies with a higher percentage of U.S. sales stand to benefit the most from the suspension. Of the 17 largest orthopaedic companies, those with a higher proportion of U.S. sales include Globus Medical, Integra LifeSciences, Medtronic, NuVasive, Orthofix, Stryker and Wright Medical.
A two-year suspension of the tax is a positive step that offers potential for future delays or an overall repeal. Still, delay and not repeal leaves companies with uncertainty. Concerns over the device tax have seemed to decrease since its implementation in 2013, but everyone remembers the frenzied climate when the tax was enacted in 2010 and levied in January 2013. Without a full repeal, companies may remain limited in their strategic actions.  
December 11, 2015 | NuVasive Takes Steps toward Insourcing Goal with Acquisition of New Site
NuVasive advanced its effort to move 100 percent of its manufacturing in-house with the acquisition of a site in West Carrollton, Ohio. 
NuVasive executives announced the insourcing goal in August, stating that vertical integration of its manufacturing offers the greatest opportunity to hit NuVasive’s goal of a 20 percent operating margin ratio as it drives to $1 billion in revenue. The company expects 400 bps of gross margin improvement with ~100 bps improvements in 2016 and ~150 bps in both 2018 and 2019, according to Wells Fargo analysts.*
NuVasive plans to invest ~$45 million over the next 24 months to build out and equip the 160,000-square-foot facility, which is located ~30 miles from the site acquired through a $4.5 million purchase of ANC in 2013.
Commercial scale production is expected to begin by the end of 2016. When at full scale, the facility is expected to employ 300 full-time staff and house approximately 100 CNC machine tools, CMM inspection equipment and a clean room.  
NuVasive competitors Alphatec Spine and Globus Medical also recently announced strategic manufacturing initiatives. 
*100 bps = 1%
We realize that basis point (bps) is rarely found in our reporting. Analysts use it as a more stable number to demonstrate percentage growth/decline, and here we found the context to be appropriate.


November 30, 2015 | Trauma Market Trends Focus on New Solutions, Shifts in Care Delivery
Trends in the trauma market, the third largest segment in the orthopaedic industry, center on new technologies and treatment methods such as minimally invasive techniques and the use of orthobiologics. Advancements in product offerings aside, shifts in the healthcare delivery system, characterized by changes in decision-making power at healthcare facilities and the growing popularity of outpatient care, also impact this segment. 
To take a closer look at these trends, ORTHOWORLD asked several device manufacturers: What trends do you see in the trauma market?
Manny Avila, President & CEO, IlluminOss: What I hear from surgeons and what we’re trying to fulfill is the need to be more minimally invasive with procedures for patients, and find a way to minimize the additional time that patients are spending in the hospital after surgery. They [surgeons] talk about wanting new materials and innovation to support that. They’re always looking at decreasing the cost of technology and improving patient outcomes. 
Eric J. Dickson, Global Director of Business Development, Extremities, Tyber Medical: We continue to see advancement in anatomical implants (3D manufacturing) that can really -- in high-energy trauma – put the patient back to their exact anatomical figure for alignment. I see several companies coming out with more radiolucent and expanding implants, and distal targeting systems for nails – everybody’s trying to perfect that, to advance in the ease of use and care for the patient and the surgeon. I don’t believe I’ve seen robotics as of yet, but I think that will be coming in the future, like nailing systems. 
EJ Duffy, Founder & CEO, Impact Medical: One of the biggest trends right now is that insurance companies are moving to bundled reimbursements. This changing marketplace is helping to assist doctors/hospitals and surgery centers to hold their vendors and suppliers more economically accountable, ultimately benefiting the patients and their co-pays. This supersedes all the other reimbursement trends that we are seeing at this time. 
Another large trend that we are witnessing is the number of surgeries performed at ASCs. Doctors are moving away from hospitals because of the reduction in annual patient reimbursement. Doctors have to perform more surgeries at an ASC to keep existing profit margins. Ten years ago, you would never have heard of having a total joint replacement or spinal procedure at a surgery center.
Amir Matityahu, M.D., Founder & CEO, Epix Orthopaedic: The trends we’re seeing in hardware are implants that are giving doctors more options to do their jobs better. Some people are playing with material changes, like carbon fiber versus titanium, and different kinds of configurations of screws. 
One of the biggest issues is that, some of the big companies are not innovating. They’re just making incremental changes and the risk is upon the smaller companies and start-ups to create innovative changes. If it pans out, the bigger companies are either investing in or buying them. 
The major unmet needs are actually helping the doctor do his job, in straightening the fracture before insertion of implants. What companies do is they give you an implant and some reduction tools, but they’re not addressing the hardest part of the surgery, which is, How do I straighten out the bone so I can put the implant on an anatomically straightened bone? Companies are not focused on that because that doesn’t sell. They’re selling an implant, which helps the bottom line. If they make the reduction tool to straighten out the bone, that’s part of the instrument set, and it costs money.
Read the full article at ORTHOPRENEURpub.com.