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Voice of Industry

Orthopedic Players Say Industry is Ripe for Business Model, Supply Chain Disruption

Emerging Implant Technologies (EIT), a German company focused on additive manufacturing of spinal fusion cages, fast tracked from its founding in 2014 to its exit by sale to Johnson & Johnson Medical in 2018.

Several strategic moves made the company an attractive acquisition target. EIT had a distinguished technology in its Cellular Titanium multilevel cervical cage, as well as a burgeoning IP portfolio with its acquisition of 22 patents covering 3D-printed expandable cages. It secured a contract with one of the U.S.’s largest group purchasing organizations (GPO) just months after receiving its first FDA 510(k) clearance.

The purchasing contract was pursued and completed by Ortho Spine Partners (OSP), a firm that describes itself as a turnkey executive management team that enables companies to accelerate their commercialization efforts. OSP contracted as EIT’s national sales strategists and executors in the U.S. Essentially, the partnership provided EIT with access to a network of surgeons, hospitals and sales reps, without acquiring overhead.

OSP’s model is new to us. The leadership team has decades of orthopedic experience on the device company and hospital purchasing sides, with entities like HealthTrust, Medtronic, Smith & Nephew and Stryker. They bring these complementary perspectives as a team approach, serving as hired strategists and executors for commercialization and corporate activities. Orthopedics is a relationship-driven industry, and today’s sales process requires different relationships. OSP’s leadership is betting that its surgeon, hospital, sales rep and device company contacts, as well as its out-of-the-box thinking, can be leveraged to provide its partners with national scale typically not attainable by young companies.

“You often hear the phrase speed to scale. Our underlying focus is moving technology to the market, while helping shareholders retain as much value in the business as possible. How do we speed that process to maximize that value while minimizing their future risk and dilution?” says Josh Sandberg, President of Ortho Spine Partners.

OSP works with myriad companies, such as BONESUPPORT, HD LifeSciences, OrthoGrid, VGI Medical. Each relationship has a different structure—long term contracts, equity stakes, etc. EIT was OSP’s first partner. The spine company’s quick adoption by a GPO and exit to a large strategic was validation that there’s room for disruption in the supply chain, and that OSP’s model works, Sandberg says.

Since launching OSP, Sandberg’s experience has taught him lessons that remain solid reminders to anyone in orthopedics:

One: “Regardless of the challenges that are in front of us, solid relationships are still the key to winning business. People want to work with those who they know, like and trust. You need to demonstrate that.”

Two: “Nothing happens overnight. We talk about speed to value, but it’s still a process.”

Three: Companies are only as innovative as the people driving them. Orthopedic companies, even small nimble ones, seek to copy stale business models that don’t adapt to the industry’s shifts in device purchasing and surgeon engagement, or companies don’t know how to clearly communicate the strategic advantage they bring to the market. “There are so many companies now that being able to articulate what makes you different is tough.”

Four: The market is ready for supply chain disruption between device companies and their provider customers. “Anecdotally, I’ve had presidents from large company divisions down to early stage startups consistently compliment the model that we’ve created. It’s different. A lot of consulting companies are interested in orthopedics. They’re not a team. They’re not vested in the business or trying to grow a business within a business. That sets us apart.”

While every company with which OSP partners will bring its own set of opportunities and challenges, there is a consistent formula that all companies must consider and in which OSP thinks it’s positioned to capitalize upon. Sandberg defines their approach as, “How do you make sure that you’re aligning the surgeon, who is the clinical buyer, the hospital, which is the economic buyer, and support, which provides the sustainability to both?”

Carolyn LaWell is Chief Content Officer for ORTHOWORLD.