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Current & Critical

Spine Market Growth Expected to Remain at 2%

By Carolyn LaWell

Spine accounts for 18% of the orthopaedic industry’s overall revenue. In 2017, estimated sales of spine products (excluding biologics) exceeded $9 billion worldwide, an increase of 2.2% or $197 million vs. 2016, according to our estimates published in THE ORTHOPAEDIC INDUSTRY ANNUAL REPORT®. The segment remains a story of large, differentiated companies losing market share to the players that derive the majority of their revenue from spine.

Exhibit 1 details the top 10 spine players’ performance in 2017, while Exhibit 2 illustrates market share.


Exhibit 1: Spine Sales Performance: Top 10 Players and All Others ($Millions)

  2017  2016  $ Change  % Change 
 Medtronic $2,445.0  $2,429.0  $16.0  0.7% 
 DePuy Synthes $1,498.4  $1,558.5  -$60.0  -3.9% 
 NuVasive $883.8  $801.9  $81.9  10.2% 
 Stryker $707.1  $712.5  -$5.4  -0.8% 
 Globus Medical $604.8  $537.7  $67.1  12.5% 
 Zimmer Biomet $455.1  $450.8  $4.3  1.0% 
 K2M $249.3  $229.1  $20.2  8.8% 
 Aesculap $173.8  $168.8  $5.0  3.0% 
 Spinal Elements $167.3  $152.5  $14.8  9.7% 
 ulrich medical $132.0  $120.0  $12.0  10.0% 
 ~275 companies with revenue below $125MM $1,764.3  $1,722.9  $41.4  2.4% 
Total  $9,080.9  $8,883.7  $197.2  2.2% 


Of note, Zimmer Biomet acquired LDR in 3Q16. Zimmer Biomet's 2016 revenue includes LDR's 1H16 revenue. Amendia acquired Spinal Elements in 2Q17 and changed its name to Spinal Elements. Spinal Elements' 2016 revenue combines our estimates for Amendia and Spinal Elements in that year. 

 

Exhibit 2: Spine Market Share: Top 10 Players and All Others

Spine Market Share 2017 ORTHOWORLD Estimates


Companies noted that U.S. spine sales were weak in 2017 due to a slowing of procedures in the first nine months of the year, and cited payor pushback and lower inpatient volume. In contrast to the U.S. market, companies such as NuVasive, Globus and K2M commented on acceleration in ex-U.S. growth, particularly in EMEA and Asia Pacific regions due to new investments.

Of companies that primarily derive revenue from spine products, the majority grew at a high-single-digit or low-double-digit rate in 2017. Multiple product launches per year and acquisitions—in robotics (Globus/KB Medical), patient-monitoring software (K2M/e-Fellow) and differentiated products (NuVasive/Vertera)—fueled their growth.

That’s not to say that the diversified players haven’t followed a similar path. From mid-2016 through 2017, DePuy Synthes, Stryker and Zimmer Biomet each made acquisitions and launched new products in an effort to fill portfolio gaps, bolster growth and remain competitive. DePuy Synthes attributed a portion of its 2017 loss to product launch delays, while Stryker faced spine supply chain issues in early 2017.

Acquisitions, collaborations and new product introductions will be crucial for companies to maintain revenue growth. We expect these market conditions to remain, and therefore project a 2.3% to 2.5% increase each year through 2020. We base that projection on the following.

  • The large diversified companies and Medtronic comprise nearly 56% of the market—none of them have demonstrated consistent growth in the last three years.  Medtronic and Stryker posted positive spine revenue in 1H18. Still, our estimates for the large players remain below the overall market rate.
  • Slow to negative growth of the top companies will continue to be offset by more focused mid-tier spine companies.
  • We expect that artificial discs will continue to gain momentum. In 2017, announcements in this space came from AxioMed, Centinel, K2M, Globus and Zimmer Biomet. However, the market remains small. Upon its 1Q18 acquisition of Spinal Kinetics, Orthofix estimated the artificial disc market at $325 million ($200 million U.S. and $125 million ex-U.S.), growing at double-digit rates.
  • Regarding technology, we expect additively manufactured products will be a staple in many spine companies’ portfolios. Additionally, larger companies will continue to invest in surgical planning, navigation and robotic tools.
  • Companies that produce clinical and economic evidence will come out ahead. This is significant not only in the U.S., but in the EU where spinal implants are being upclassified in 2020. Nearly 20% of the market is made up of small companies with fewer resources to collect the clinical and economic data required for significant product adoption. We expect that some will choose to collaborate with bigger companies through licensing agreements and private labeling, or choose to exit spine.


To validate our thoughts on the spine market, we asked Chris Fair, investor, entrepreneur and former CEO and President of Amendia and Spinal Elements to share his take on the spine market. “When thinking about the players to watch in the next five years, look first at the larger companies by revenue (DePuy Synthes, Medtronic, Stryker, Zimmer Biomet) to see how they react. For some, revenue is flat and innovation is slow. We see evidence of some focusing not on growth, but rather on efficiency and cost containment. This provides opportunities for companies in the next tier (K2M, SeaSpine, Spinal Elements) to leverage their full platform and continue to provide innovative products and procedures. Next-tier companies will provide the greatest growth opportunities in spine over the next several years. Finally, niche companies that offer an innovative product or service also bear watching. Spinal Kinetics (M6 cervical disc, acquired by Orthofix), Relievant (Intracept) and Paradigm Spine (coflex) are just a few of the companies that will be interesting to watch.”

Carolyn LaWell is ORTHOWORLD’s Chief Content Officer. She can be reached by email.