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November 05, 2015 | Market Shifts Facilitate Same-Day Joint Replacement

As demands for joint replacement surgery rise due to an aging population, consumers seek out less invasive and less costly treatments, and hospitals and payors adopt risk-based models like bundled payments, same-day joint replacement surgery stands to experience further growth.

Though traditional joint replacement surgery is known for its effectiveness, the following data suggests that same-day or outpatient joint replacement surgery is on the rise.

A Duke University study showed that from 2007 to 2011, outpatient total knee replacements increased by nearly 20 percent, total hip replacement by almost 40 percent and partial knee replacement almost 70 percent, according to Keith Berend, M.D., an orthopaedic joint replacement surgeon at Joint Implant Surgeons, Inc. in Columbus, Ohio.

The strongest data is currently available for unicompartmental knee replacement which, “given its minimal blood loss and maintenance of intact ligaments, lends itself perfectly to outpatient surgery,” says John Barrington, M.D., an orthopaedic joint replacement surgeon at Plano Orthopedic Sports Medicine and Spine Center in Plano, Texas.

While same-day joint replacement procedures are indeed studied at length and alluded to frequently in the patient information found on the web sites of numerous clinics, data isn’t readily available that indicates the proportion of all total hip and total knee replacements that are presently performed on an outpatient basis, nationwide.

John Wang, M.D., an orthopaedic joint replacement surgeon at Atlantis Orthopaedics in Florida, expects the number of outpatient joint surgeries to rise as the healthcare system addresses a higher demand for joint replacements and discovers how to make these surgeries more effective from outcomes and cost analysis.

“There’s only a certain amount of money we can spend on joint replacement as a nation, so surgeons and scientists have been trying different ways to improve this surgery,” Wang says. “The potential financial implications will come in the form of decreasing overall cost into the system. If you could shorten length of stay down to eight hours, that would obviously cost the insurance companies and/or Medicare less money than if a patient stayed for a week. From that perspective, there are huge implications for decreasing costs in the face of this increased demand for joint replacement over the next decade or two.”

Patients best suited for outpatient joint replacement are typically healthier, but don’t have to be in perfect health, Berend says.

“They have to have manageable medical conditions that can be optimized to reduce their risk,” he says. “It doesn’t mean they have to be young, because we do a huge number of outpatient partial knee replacements even in elderly folks.”

“In my experience only ten to 20 percent of the patients I see are actually good candidates for these," Wang says. "Not because of orthopaedic reasons, but because of medical reasons. Particularly if you have breathing issues or obstructive sleep apnea, for example, it may be harder to get the patient out from anesthesia. Or, if they have cardiac issues or other more serious medical issues indicating that this patient may need closer monitoring, then we’ll just admit them to the hospital. If it goes perfectly, it’s really a huge boon for the patients.”

Read this article in its entirety on ORTHOPRENEUR.

October 20, 2015 | LDR's Christophe Lavigne talks Mobi-C, MIVo and more

During NASS 2015, LDR announced that FDA approved an update to labeling for the Mobi-C® cervical disc to include 5-year clinical results. The updated data remains consistent with the previous findings at 24 months—specifically, that at 60-month follow-up, Mobi-C is statistically non-inferior in overall study success for 1-level use, and statistically superior in overall study success compared to ACDF for 2-level use.

This update is critical because, in the words of Christophe Lavigne, LDR President and CEO, “In addition to bolstering the continued support from surgeons, the statistical superiority in overall success of Mobi-C to ACDF at two levels will serve as additional evidence to further the confidence of insurance payers in cervical disc replacement. This is a win for all patients indicated for the treatment.”

Earlier in October, LDR reported preliminary 3Q15 revenue of $39.3 million, +14% from 3Q14. Exclusive Cervical Technologies revenue of $27.5MM grew +25% year over year. Cervical product revenue continues to garner principal support from sales of Mobi-C. 

Mobi-C is a cobalt chromium alloy and polyethylene mobile-bearing prosthesis designed as a bone-sparing, cervical intervertebral disc replacement, and is the only FDA-approved disc for 1-level and 2-level use.

In response to BONEZONE’s query on LDR’s future focus, Mr. Lavigne expanded upon the lumbar region:

“On the lumbar side, we do not believe the future of degenerative spine fusion surgery will rely on pedicle screw fixation. We view pedicle screws as the last fixation option most appropriate for advanced pathology, significant deformity or revision.

“Our vision for the evolution of 360° lumbar spine fusion surgery is to combine a stable interbody construct with a posterior MIS approach that avoids pedicle screws and rods. This can maximize the opportunity for clinical success while preserving the pedicles for more aggressive intervention that might be necessary in the future. One way to think about this approach is what we are now calling Minimal Implant Volume Surgery, or MIVo™ Surgery.

“Ultimately, this approach to lumbar instrumentation may result in a 45 percent to 60 percent reduction in the volume of implant material used to stabilize one level of the lumbar spine, while still providing adequate stability to both the anterior and posterior spinal columns and avoiding use of the vertebral pedicles.”

Mr. Lavigne offers an outlook on the future in BONEZONE’s Zoning In column.

September 24, 2015 | Ortho Kinematics Expands Leadership Team

Ortho Kinematics‚ Inc. (OKI), a privately-held healthcare diagnostics company focused on spine imaging informatics,  announced the appointment of Tom Anderson as Vice President of Sales and Chris White as Vice President of Finance. With these hires, OKI has in place the management team required to support its current national-scale commercialization efforts. 

Earlier in the year, the company completed a limited-scale launch of its flagship product, the VMA. The VMA is a diagnostic test for the assessment of spinal motion, which includes instability in the cervical and lumbar spine.  Spinal instability is an important consideration for physicians when evaluating candidates for potential spine surgery or spine pain management injections.  The VMA has been shown in studies to increase the sensitivity in detecting spinal motion, including instability, with no decrease in specificity relative to the current standard test.

Mr. Anderson joins OKI with 25 years of experience in medical device sales and sales leadership. Mr. Anderson has held sales leadership positions at a variety of spine surgery-focused companies, ranging from start-ups such as Kyphon, to large multi-nationals, such as Medtronic Spinal & Biologics, where Tom was Regional Vice President of Sales.  Along with Mr. Anderson, OKI has also appointed three highly-experienced Area Vice Presidents of Sales: Mike Isaacson, Jim Courville and Jeff VanRaaphorst.

Mr. White, CPA, joins OKI with over 15 years of experience in accounting and finance for public companies such as BioCryst Pharmaceuticals, large institutional investment funds such as Harbert Management Corp., as well as several start-up companies.

“Tom Anderson has a track record of success, and the right mix of skills, experience and grit to build and lead our sales organization,” notes Paul Gunnoe, CEO,  adding, “With the addition of Tom, his sales team, and an experienced VP of finance, we are well on our way to becoming the global leader in spine diagnostics.”

September 23, 2015 | TranS1 Names John Miller New Vice President of Sales

TranS1, a spinal device company, has restructured under new ownership by Quandary Medical, evidenced by the recent announcement of John Miller as the new Vice President of Sales.

Miller brings more than 18 years of sales and marketing experience with medical and orthopaedic device companies to TranS1. Prior to this position, he served as Vice President of Sales at SpineFrontier in Boston and Sales Director at Baxano Surgical in Raleigh-Durham, N.C.

Miller will lead sales efforts for TranS1’s primary product, the AxiaLIF interbody fusion technology, as well as future product offerings.

According to a company press release, AxiaLIF has been used in over 14,000 procedures in the U.S. and has been featured in close to 100 peer-reviewed publications establishing the product’s safety, efficacy and biomechanics.

The company has also brought on new R&D, sales and education professionals to drive sales and train its surgeon customers.

More spine news:
NASS Preview: Products and Companies to Watch
NASS Preview: A Guide to the Recently-merged in Spine

September 11, 2015 | Leadership Changes at Globus Medical, Medicrea, MicroPort Orthopedics

Globus Medical announced three internal personnel changes:

  • Dave Demski, formerly President and Chief Operating Officer, to become Group President, Emerging Technologies
  • Anthony Williams, formerly Senior Vice President of Business Development and General Counsel, is appointed President
  • Brett Murphy, former Executive Vice President of US Sales, is now Group President, Commercial Operations


Mr. Demski will apply his interest in business-building to Globus’ long-term strategic initiatives in robotics, trauma and related opportunities while continuing to liaise with surgeon and hospital customers.

Mr. Williams’ experience at Globus includes several strategic acquisitions, having risen through various roles in business development and general counsel since the company’s inception in 2003.

Prior to his new position, Mr. Murphy’s roles at Globus included Vice President, US Sales West and Area Director, South. Previously, he served in sales and management at Synthes and Smith & Nephew Richards.

Medicrea recently announced that Greg Rhinehart, formerly Vice President of U.S. Sales Central for Globus, has now joined on to lead sales at Medicrea USA.

At MicroPort Orthopedics (MPO), Aurelio Sahagun is appointed President while Ted Davis has stepped down from the position of Chief Executive Officer.

Sahagun’s previous titles at MPO include Chief Operations Officer and Vice President International, as well as various operations, sales and finance leadership positions for the EMEA region at Wright Medical. Before Wright Medical, Mr. Sahagun served as senior-level financial support for Medtronic’s spine business in Europe. 

September 10, 2015 | OIG Monitors Links Between Physician-Owned Hospitals and Physician-Owned Spine Distributors
A report released by the U.S. Office of Inspector General (OIG) found limited transparency with regard to ownership information of physician-owned distributors (PODs) and physician-owned hospitals.
The OIG used publicly available information (websites) and data from the Centers for Medicare & Medicaid Services (CMS) to attempt to determine whether a physician had an ownership interest in both a hospital and a POD that sold spinal devices to that hospital. The research focused on the ownership of 12 PODs from which 12 physician-owned hospitals reported purchasing spinal devices. 
The OIG was able to identify one physician who owned a POD that supplied devices to a hospital in which the physician had ownership interest. The report noted the possibility of additional physicians with identical relationships that could not be detected using the outlined information. 
The report stated that the limited information raises transparency concerns because:
  1. Ownership information may have implications for patient safety and quality of care
  2. PODs face criticism that physician owners could make clinical decisions that lead to unnecessary surgery in order to boost financial gain
The OIG made no future recommendations, but said that it will continue to monitor POD activity through CMS’ Sunshine Act database.
The report follows an October 2013 report on the prevalence and use of spinal devices supplied by PODs.
August 31, 2015 | ConforMIS Initiates Voluntary Recall of Certain PSI for iUni, iDuo and iTotal Knee Systems

ConforMIS (CFMS) initiated a voluntary recall of certain patient-specific instrumentation for iUni, iDuo, iTotal CR and iTotal PS knee systems following three complaints of moisture on the instrumentation. Approximately 950 patient-specific instrumentation sets are affected, of which ~650 sets were used in knee procedures and ~300 sets shipped but not yet used. CFMS does not believe that customized knee implants included with the sets were affected, and has not received reports of related adverse events, to date.

The recalled instrumentation appears to have held excess water before undergoing ethylene oxide sterilization and, as a result, may contain small amounts of ethylene glycol residue. ConforMIS has temporarily suspended use of the ethylene oxide sterilization process, and CFMS will use a validated, alternative sterilization process (hydrogen peroxide-based, per Canaccord Genuity analysts).


  • ~ 950 patient-specific instrumentation sets affected
  •  ~650 sets used in knee implant procedures, ~300 sets shipped but not yet used
  • Affected sets manufactured and distributed from the company’s new manufacturing facility between July 18, 2015 and August 28, 2015


Manufacturing is likely to be substantially reduced in September (possibly into October) in light of investigation and resolution activities. Wells Fargo analysts cite CFMS’ expectation to secure a solution within this timeframe, with a potential resolution by year-end.

Combined, the effect of recalled products that were shipped but not used, lower production capacity and potential commercial disruption will impact sales; CFMS is revising 2015 revenue to a range of $64 million to $66 million (up 39% to 43% in constant currency)—a reduction of $8 million from previous guidance.

In early 3Q15, ConforMIS closed its IPO of 10,350,000 shares of common stock at $15/share (before underwriting discounts), and in mid-3Q, the company announced that interim analysis of 295 total knee replacement patients at seven U.S. centers indicated that patients with iTotal CR (cruciate-retaining) devices were more likely to have an excellent or good objective Knee Society Score and walked statistically significantly faster than patients with standard, off-the-shelf total knees.

Sources: ConforMIS, analyst notes

August 19, 2015 | FDA Extends UDI Deadlines Following Database Security Issues
FDA has extended the upcoming deadline for compliance with labeling and data submission to the Global Unique Device Identification Database (GUDID) due to the Agency pulling the database offline after an undisclosed security vulnerability was detected. 
Manufacturers of implantable, life sustaining and life supporting devices, as well as Class III devices that received extensions expiring between August 7 and the original September 24 deadline, now have until October 24 to submit data. 
In May, FDA launched the database that will house submitted data from medical device companies. The database allows the public to track medical devices from manufacturing through the supply chain to patient use.
UDI compliance best practices and the remaining deadlines can be found in the article, “UDI Implementation: Your Next Steps.”
August 11, 2015 | Senate Legislation Exempts ASC Procedures from Meaningful Use

The Electronic Health Fairness Act of 2015 (S. 1347, H.R. 887) is approved by the U.S. Senate and now proceeds to the president’s desk.

Presently, Medicare provides incentive payments to hospitals and eligible professionals who become “meaningful users” of certified electronic health record technology (EHR). As of 2015, eligible professionals who are not meaningful users may be subject to a penalty.

The Health Information Technology for Economic and Clinical Health (HITECH) authorized Medicare and Medicaid incentive payments to promote EHR use; however, HITECH didn’t include ambulatory surgical centers (ASCs) in the incentive program. Therefore, development of EHR products tailored to ASCs was not a vendor priority, nor was it included in the certification process. As such, states the bill language, providers in ASC facilities should not be disadvantaged in the program.

The bill would exclude ASC services from being counted toward the 50 percent meaningful use eligibility threshold until certified EHR technology applicable to the ASC setting is available. This exclusion would end three years after the Secretary, by rulemaking, determines that CEHRT applicable to the ASC setting is available.


Senate Report 114-106 is available here.

August 07, 2015 | FDA Announces FY16 User Fee Rates
FDA announced FY16 fee rates and payment procedures for medical device user fees, which apply from 10/1/15 through 9/30/16. Under the user fee system, device companies pay FDA when they register their establishments and list devices with the agency, when they submit an application or a notification to market a new medical device in the U.S. and for certain other submissions. The collected fees are intended to support FDA’s endeavors to conduct efficient, timely and transparent reviews.
For FY16, the fee for establishment registration is $3,845, up from $3,646 for FY15. There is no fee reduction for small businesses, but they do qualify for lower user fees on certain application types. (Per FDA, if your business has gross receipts or sales of no more than $100MM for the most recent tax year, you may qualify. If your business has gross sales or receipts of no more than $30MM, you may also qualify for a waiver of the fee for your first premarket approval application, product development protocol, biologics license application or premarket report.)
The table below summarizes FY16 rates for all medical device fees, compared to rates for FY15. Fees for 510(k) submissions increased by $210 standard and $105 for a small business; PMA fees increased by $10,493 and $2,623, respectively.
Application Fee Type FY 2016 Standard Fee FY 2015 Standard Fee FY 2016 Small Business Fee FY 2015 Small Business Fee

Premarket application
$261,388 $250,895 $65,347 $62,724

Premarket report 
$261,388 $250,895 $65,347 $62,724

Efficacy supplement
(to an approved BLA)
$261,388 $250,895 $65,347 $62,724

Panel-track supplement
$196,041 $188,171 $49,010 $47,043

180-day supplement
$39,208 $37,634 $9,802 $9,409

Real-time supplement
$18,297 $17,563 $4,574 $4,391

510(k) premarket
notification submission

$5,228 $5,018 $2,614 $2,509

30-day notice
$4,182 $4,014 $2,091 $2,007

513(g) request for classification information
$3,529 $3,387 $1,765 $1,694


August 03, 2015 | Wright Medical Updates Augment's FDA Approval Status
In 1Q15, Wright Medical announced that an Augment® Bone Graft vendor received a Form 483 with 13 observations following an FDA pre-approval facility inspection. Later that quarter, the vendor was notified by FDA that its facility would be reinspected and must be in substantial compliance with the current Good Manufacturing Practice (cGMP) regulation as a condition for approval of the Augment Bone Graft Premarket Approval Application. 
Following reinspection in late 2Q15, the vendor received a Form 483 including seven observations—none specifically related to Augment Bone Graft. 
The vendor has submitted its response to the FDA, and FDA has not informed Wright Medical if a vendor reinspection will be required. Assuming no additional reinspection, Wright anticipates final approval of Augment Bone Graft in 2H15. 
In the 2Q15 earnings call, Wright Medical President & CEO Bob Palmisano stated, “Let me be clear, that based upon the approval letter that we received from the FDA, we continue to believe that Augment will be approved and the product, as well as the PDGF [Platelet-Derived Growth Factor] technology platform, will be important drivers of long-term growth for our business for years to come.” Also, “we’re not changing our previously provided [2015] revenue guidance, given the strength of our first half sales results, our current sales trajectory and currency rate as of today.” He later noted that the timing of the approval will impact where Wright falls within that guidance range.
The PDGF pipeline includes an Augment Injectable format and potential applications for rotator cuff and tennis elbow repair. Augment Injectable presently sells in Australia, with a reportedly strong positive response to its ease of use. 
July 20, 2015 | Why Orthopaedics Will Grow in Asia
Orthopaedics remains an attractive and growing market, especially in Asia. Multiple factors contribute to the growth of the orthopaedic market in this region. 
First, the quickly-growing elderly population increases the prevalence of orthopaedic disorders and thus, has driven the demand for products and procedures. Second, per capita income and national wealth is rising in Asian countries. For example, the per capita income in Singapore is $15,000 higher than in the U.S. This has improved the capability for the general population to afford more orthopaedic procedures and has boosted government investments in healthcare infrastructure. Third, common health conditions such as diabetes and obesity are rising, further heightening the risks of disorders like osteoarthritis. Finally, increased vehicle sales have led to a rise in the number of car accidents and injuries that require orthopaedic treatment.
Market Opportunity: Japan, China and India
The global orthopaedic device market is anticipated to reach about $50 billion by 2017, according to ORTHOWORLD®’s ORTHOPAEDIC INDUSTRY ANNUAL REPORT®. Asia accounts for 60 percent of the world’s population, but the region currently holds about 15 percent of the global orthopaedic device market. Thus, there is significant room for growth in the region, specifically in Japan, Korea, Taiwan and China, which all have rapidly-aging populations.
Japan has the largest share of the Asian orthopaedic market. In 2014, 45 percent of the Asian orthopaedic products market was claimed by Japan. Moderate growth is estimated in the large joint reconstruction device market (which includes hip and knee implants), but in the spine area, growth is still strong. The Japanese orthopaedic market faces some challenges, however, such as a cultural aversion to invasive surgical procedures and the reluctance of doctors to adopt some new Western technologies. 
China’s orthopaedic market is also experiencing high growth, at about 15 to 20 percent per year. More than 200 million Chinese citizens are over the age of 60, and about 10 million people are added to this group every year. With this growing elderly population, urbanization of the country and other factors discussed above, orthopaedic growth is expected to continue in China. Analysts have estimated different values of the Chinese market. Frost and Sullivan estimates that the Chinese orthopaedic implant market will surpass Japan in 2015. According to an estimate by the Boston Consulting Group, the Chinese orthopaedic implant market will grow from $1.3 billion in 2013 to $4.1 billion in 2020. 
India’s orthopaedic market also sees strong growth at about 15 percent per year. The Indian orthopaedic market will continue to grow in coming years due to the country’s demographics, increased health awareness and growing public and private insurance market. India’s population is expected to surpass China by 2040. With a fast-growing population, the incidence of spinal, joint and general bone-related conditions is increasing dramatically. Furthermore, as India’s middle class continues to expand, demand for better healthcare services and orthopaedic devices will also rise. Finally, India has the highest number of diabetic patients in the world; this further heightens the risks of disorders like osteoarthritis.
This complete article "International and Domestic Manufacturers Compete to Serve Growing Asian Population" by Ames Gross of Pacific Bridge Medical can be found in the August issue of ORTHOKNOW®.

ORTHOWORLD’s latest market intelligence report focuses on the Japanese market and is available for complimentary download.

According to the report:
  • Japan’s large joint segment is expected to reach $1.5 billion, with small joints reaching  $0.75 million in 2015.
  • A shrinking yet aging population will support the need for hip and knee replacements; Japanese tend to gravitate toward devices that support high range of flexion and small anatomies.
  • Revisions to the Pharmaceutical Affairs Law (renamed the Pharmaceutical and Medical Device Law), enacted in 2014, should ease long regulatory review times for orthopaedic medical devices. 
June 30, 2015 | Integra Expands Focus on Wound Care with TEI Acquisition

Intergra LifeSciences entered into a definitive agreement to acquire TEI Biosciences and TEI Medical, furthering its Orthopedics and Tissue Technologies division’s focus on regenerative wound care and tissue repair. The acquisition is valued at $312 million cash and expected to close in 3Q15.

TEI manufactures one orthopaedic-related product, TissueMend, which is indicated for tendon repair surgery. In 4Q14, Integra announced it would increase its focus on wound care and extremities and spin off its spine business into the publicly-traded company SeaSpine, which is expected to begin trading on Nasdaq as SPNE July 1.

At the time, ORTHOWORLD interviewed Mark Augusti, Integra’s Corporate Vice President and President, Orthopedics and Tissue Technologies about the company’s three-point growth strategy:

  • Focus on new product introductions in shoulder and foot.
  • Conduct clinical studies that emphasize the diabetic foot segment
  • Grow its distributor and direct rep model

The full BONEZONE® interview with Augusti can be found here.


June 25, 2015 | Zimmer Closes Biomet Acquisition

On Wednesday, June 24, Zimmer completed its acquisition of Biomet in a cash equity transaction valued at ~$14 billion.

Zimmer announced its plans to acquire its cross-town rival in Warsaw, Indiana in April 2014. The newly-named Zimmer Biomet Holdings Inc. now becomes the world’s second-largest orthopaedic device company, with estimated market share of 17 percent. Combined, the companies’ orthopaedic revenues reached nearly $7.5 billion in 2014.

Zimmer Biomet leaders affirmed that the acquisition enhances the company’s ability to diversify its revenue mix, create cross-selling opportunities and improve global distribution channels.

An estimated 72 percent of the company’s revenue will derive from joint reconstruction, where the combined company will hold 35 percent of segment share, according to ORTHOWORLD’s Orthopaedic Device Company Profiles: Top Performers. (See Exhibit 1.) Specifically, the acquisition gives Zimmer Biomet an edge in the knee and hip markets and accelerates its growth—and market position—in arthroscopy/soft tissue, trauma and spine.

Exhibit 1: Zimmer Biomet Worldwide 2014 Revenue by Market Segment

Updated net annual synergies were provided during the acquisition closing announcement. Zimmer Biomet expects synergies of approximately $350 million by the end of its third year, with approximately $135 million synergies anticipated in the first 12 months. The company’s planned research and development budget is $360 million, nearly double Zimmer’s previous spend.

To satisfy regulators, Zimmer agreed to divest U.S. rights and assets for the ZUK unicondylar knee to Smith & Nephew, and U.S. rights and assets for Biomet’s Discovery® Total Elbow, Cobalt™ Bone Cement and Optivac® Cement Mixing Accessories to DJO Global. Lima Corporate acquired the ZUK and Discovery Elbow within the European Economic Area and Switzerland, as well as the Biomet Vanguard™ Complete Knee for Denmark and Sweden.

Wells Fargo suggested that the divestiture of Biomet’s bone cement may indicate FTC’s treatment of future M&A in the hip and knee arena. With four major players in the bone cement segment representing 98% market share (Stryker 40%, Zimmer 30%, Johnson & Johnson/DePuy Synthes 18% and Biomet 10%, per FTC), FTC viewed the Zimmer Biomet rollup as anti-competitive. In hips/knees, 90% of the market* is led again by four entities (Zimmer Biomet 37%, Stryker 23%, Johnson & Johnson/DePuy Synthes 21%, Smith & Nephew 10%). In light of these numbers, it’s possible that FTC could treat future transactions in that segment in the same way as with bone cement.


For more M&A coverage, read BONEZONE’s articles on Globus Medical and supplier consolidation and leverage ORTHOWORLD’s M&A Activity Tool.

*FTC's 90% is slightly higher than ORTHOWORLD's estimate of 87% hip/knee market share held by these four companies. See our lineup in the ANNUAL REPORT

June 24, 2015 | OMTEC 2015 Highlights: The Paradigm Shift in R&D Spend
Orthopaedic professionals in attendance at OMTEC® 2015 received less of a warning and more of a mandate from surgeon and hospital executive, Wael Barsoum, M.D.: device companies that want to get paid must spend resources to produce transformational devices, or to produce today’s clinically-proven devices at a lower cost. Hospitals will no longer purchase devices with incremental changes at a slight surcharge, due to the reimbursement pressures they face from public and private payors.
“This is a paradigm shift in how we think about spending our R&D dollars,” said Barsoum, President of Cleveland Clinic Florida and Vice Chairman of the hospital system’s Orthopaedic Department. “It requires a completely different thought process than how we’ve done it in the last 30 years.”
Barsoum’s comments offered context to the perspective provided by device company executives in Wednesday’s OMTEC keynote. That panel included:
  • Moderator Doug Kohrs, Managing Director of startup Responsive Orthopedics and Past President and CEO of Tornier
  • B. Sonny Bal, M.D., J.D., Chairman, President and CEO of Amedica and a joint replacement surgeon at the University of Missouri
  • Ken Gall, Ph.D., Founder and Chief Technology Officer of MedShape and Chair of the Mechanical Engineering and Materials Science Department at Duke University
  • Rod Mayer, President of Nextremity Solutions

The panelists agreed that one of today’s major obstacles to commercialization is getting products through value analysis committees—a challenge that will remain for the foreseeable future. 

Dr. Gall, who has pushed new biomaterials like NiTiNOL and additively-manufactured devices through regulatory bodies, said FDA has a bad rap for its slow and convoluted processes, but the value analysis committees have been five times worse than FDA. 
Mayer, too, noted that Nextremity has experienced value analysis committee decision-making terms from 30-60 days up to 18 months. Kohrs shed light on the Mayo Clinic’s process, adding that the hospital system’s new product committee has 14 people: one orthopaedic surgeon, one cardiologist and 12 accountants.
As a joint replacement surgeon at the University of Missouri’s orthopaedic hospital, Dr. Bal said that he and his colleagues face procedure-specific price parameters. If he wants to use a knee system that costs more than the set price, he must justify his decision to a committee. He described the uphill climb that is getting new materials and differentiated products through the committees.
What, then, will hospitals pay for? And what is needed to get through committees?
Barsoum, who sits on the new products committee at the Cleveland Clinic, said that if the device is not cheaper or if it’s new, companies must present one or more of the following: existing human data, level 1 studies, reproducible published studies in peer-reviewed literature and cost-benefit studies.
Herein lies the gap: development of differentiated products takes time and money. Collection of data takes time and money. 
“A lot of devices don’t have clinical data,” Bal said. “You introduce a new knee system, and by the time you get clinical data that compares it to its predicate, it’s been a decade. Most of us are dead by that time. 
“What the industry needs—and this is a challenge—is good, validated, short-term proxies for how something will perform over the long run. It’s very important so that we can go to value analysis committees and say, ‘Some clinical data is impossible to obtain because of ethical reasons; some are decades out, but here’s the valid testing we’ve done that shows an advantage.’ ”
Business changes, whether they center upon manufacturing, marketing or organization, take time and money, too. The price squeeze has driven consolidation at the device company and supplier level in order to increase breadth of product and capacity and achieve operational synergies. The price squeeze is expected to continue to drive device company and supplier consolidation, just as it has at the hospital level.
Amidst these market changes, all five keynote participants maintained that orthopaedic innovation is not dead. However, innovation will need to focus on differentiated products, efficient processes and surgeon education. The ability to navigate these pathways will stand as the greatest challenge throughout the next five years.
The challenges and opportunities discussed by these executives was recapped in an article in the latest issue of ORTHOKNOW®, Success in Orthopaedics Lies in Products that Improve Quality, Decrease Costs

Stay tuned for more OMTEC highlights here and at BONEZONE® and ORTHOPRENEUR®.
June 11, 2015 | Globus Medical Completes Acquisition of Branch Medical

Globus Medical closed its acquisition of Branch Medical Group (BMG), a transaction added to a short list of recent OEM purchases of partners. The initial price of $52.9 million was finalized at $57 million in cash, $5.3 million in deferred consideration and an estimated $0.9 million payable upon finalization of closing adjustments. An amount payable to BMG on the date of acquisition of $5.2 million was also settled in connection with the acquisition. The final purchase price was $68.4 million.

Globus and Branch, neighbors in southeast Pennsylvania, have worked together for a decade.

     •   Branch became a Globus supplier in 2005. 
     •   Globus management and insiders owned 49 percent of Branch prior to the acquisition. 
     •   Globus uses Branch to manufacture about 25 percent of its products—a number that management
          expects to double over the next three to four years. 
     •   Branch, which achieved $23.3 million in revenue and $9.1 million in adjusted EBITDA in 2014,
          booked 94 percent of its sales from Globus.

Analysts at Canaccord Genuity noted that the acquisition favorably positions Globus to realize gross profit leverage, and the transaction offered insight on the operating and manufacturing profile between the two. 

“Bearish investors have historically pointed to the BMG related-party relationship as one of the main reasons for Globus’s best-in-class margin profile, i.e. investors speculated that Globus used its relationship with BMG to secure very attractive manufacturing terms (low inventory costs),” Canaccord Genuity wrote in its analysis of the merger. “That said, $9.1M in EBITDA for 2014 equates to a margin profile of 39 percent, which is very high in the contract manufacturing industry, and therefore should put an end to investor speculation.”

The BMG acquisition comes on the heels of Globus’ purchases of Transplant Technologies of Texas and Excelsius Surgical in 2014. Globus achieved 2014 revenue of $474.4 million, an increase of 9 percent over 2013, and has released 2015 guidance of $510 million in revenue.

Overall orthopaedic industry consolidation has kept pace with the first half of 2014, as OEMs buy OEMs, suppliers buy suppliers and partners buy partners. In the first two quarters of 2015, Smith & Nephew acquired EuroCiencia Colombia, its sole Colombian distributor of reconstruction, trauma and sports medicine products since 2006; Exactech acquired BlueOrtho SAS, the company that helped develop the ExactechGPS® Guided Personalized Surgery system and McGinley Orthopaedic Innovation purchased its supplier partner, DS Manufacturing.

Read more about industry consolidation in ORTHOKNOW®:
Suppliers Consolidate in Response to OEM M&A Activity
The Seven Phases of M&A
Business Development Execs Speak on M&A and Innovation

May 27, 2015 | NuVasive Names Lucier as CEO
NuVasive appointed Gregory T. Lucier as CEO. Mr. Lucier had served as Interim CEO since April 1, when it was announced that Alex Lukianov resigned after results from an independent investigation found a failure to comply with expense reimbursement and personnel policies.
Mr. Lucier has served as a member of NuVasive’s Board of Directors since December 2013 and will continue his role as its Chairman. 
Mr. Lucier previously led the small startup, Invitrogen, through its merger with Applied Biosystems and transformation of that entity, renamed Life Technologies, into a global biotechnology firm with 50,000 products, 12,000 employees and ~$4 billion in sales in more than 180 countries.
NuVasive reported first quarter sales of $192.4 million, up 10 percent vs. 2014. The company’s spinal surgery division achieved sales of $159 million and its biologics division, $13 million. In early May, the company launched the Integrated Global Alignment Platform (iGA™) plus, a suite of alignment-focused products.
DePuy Synthes also recently named new leadership during a reorganization at Johnson & Johnson.
May 07, 2015 | Build a Supply Base that Supports the Corporate Vision
Achieving strategic alignment throughout the entire organization isn’t easy, and can be especially difficult for purchasing departments. Jeoff Burris addresses this in a recent article about the benefits of building a supply chain that supports the corporate vision. 
The difficulty lies in the fact that:
  • Corporate visions can provide conflicting messages—a company may strive to be a technology leader while experiencing pressures from low-cost producers.
  • Economics and competitive pressures change—visions should be static, but plans to achieve them need to be flexible. 
  • Suppliers’ visions for their businesses may not align with your company’s vision.

Mr. Burris continues: 
“A strategically aligned supply base efficiently leverages the resources of suppliers that can best help your company achieve its vision, and provides extended benefits to those suppliers. A strategically aligned supply base can also help lower the cost of products and reduce investments required to develop new products or expand into geographic regions.” 
How can this be achieved? 
Step 1: Purchasing Must Understand Company Strategy
Step 2: Purchasing Must Assess and Identify Commodities with the Highest Impact on the Strategy
Learn how to execute these steps. Read the full article and attend Mr. Burris’s OMTEC session.
April 13, 2015 | OMTEC 2015 Preview: Meet 25 Longtime Exhibitors

Of the ~130 companies set to exhibit at OMTEC® 2015, 25 have attended since OMTEC’s early days. Many are full-service providers, while some maintain a specialized focus in areas such as surgical instrumentation, sterilization, raw materials, etc. How can they assist with your initiatives? Read on.


Meet the newcomers! Here are 25 first-time OMTEC exhibitors.

Returning OMTEC speaker, John Gagliardi, is sharing even more solutions than ever at a pre-OMTEC CAPA workshop.

April 01, 2015 | NuVasive, Self-claimed #3 Spine Company, Under New Interim Leadership

On Wednesday, April 1, NuVasive (NUVA) announced the appointment of Gregory Lucier as Chairman and Interim CEO following the resignation of Alex Lukianov. Mr. Lukianov stepped down after results from an independent investigation found that he failed to comply with expense reimbursement and personnel policies. Mr. Lukianov will reportedly remain as a consultant to NUVA for 18 months.

NUVA achieved 2014 sales over $760 million, growing 12% over 2013 on its path to the $1 billion mark. The company has proposed 2015 revenue guidance of $810 million, and just announced 1Q15 anticipated revenue of over $190 million. It claims the No. 3 position in the global spine market, though ORTHOWORLD estimates place it at No. 4, excluding NUVA’s biologic and neuromonitoring revenue. Matters related to the aforementioned investigation are said to be immaterial to financial results.

Analysts weighing in on the announcement suggest that this change at the helm may pave the way for NUVA’s acquisition, or at the very least, a re-evaluation of all strategic options, noting also the upcoming (and unrelated) departure of Keith Valentine as Chief Operating Officer and recent appointments of Pat Miles as President/COO and Matt Link as President, U.S. Sales and Services.

Mr. Lucier’s experience includes leadership of the small startup, Invitrogen, through its merger with Applied Biosystems and transformation of that entity, renamed Life Technologies, into a global biotechnology firm with 50,000 products, 12,000 employees and ~$4 billion in sales in more than 180 countries.


More can be learned about players in the spine segment in the newly-released ORTHOPAEDIC INDUSTRY ANNUAL REPORT®. Details on this yearly overview are available online.