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Year in Review

The Next Look at 2011 Results

ORTHOWORLD’s preliminary estimates place overall 2011 market growth at 5% over 2010, as displayed in
Exhibit 1. Performance highlights follow, and address both 4Q10 and 2011, as indicated.

                                                                       Exhibit 1
                  Orthopaedic Sales1 Increases by Product Segment: 2011 vs. 2010

Notes to Exhibit 1:

1Orthopaedic products except as indicated; constant currency, pro forma growth
2For the quarter ended 11/30/11; Includes Dental. Spine includes Bone Stim and Biologics; Bone Stim reflects all Bone Healing sales.
3For the quarter ended 12/31/11
4Extremities: extremities + fixation combined; Endoscopy: endoscopic + communications, most of which is orthopaedic; Spine: neuro + spine. Total growth excludes Patient Handling.
5ORTHOWORLD estimates
6For the quarter ended 12/31/11

 

ARTIMPLANT
 SEK 18.3MM (~US $2.7MM), -1%
4Q11 revenue: SEK 4MM ($0.6MM), +14%

12/11 represented best performance ever for sales of own products in U.S.
In 1Q, resumed responsibility for sales of Artelon CMC Spacer, previously handled by Small Bone Innovations
Assumed direct sales of own products on Nordic market
Results of study, Artelon tissue reinforcement in treatment of rotator cuff injury, to publish during 2012

BRADSHAW MEDICAL
$20.4MM, +16%

DEPUY
$5,809MM, +1%* (U.S. $3,093MM, -2%%; ex-U.S. $2,716MM, +5%) (Growth by segment not available for full year)

4Q11 revenue: $1,453MM, +0.3% (U.S. $775MM, -4%; ex-U.S. $678MM, +6%)
     Hips +1% (U.S. flat, ex-U.S. +3%)
     Knees -3% (U.S. -5%, ex-U.S. flat)
     Spine -3% (U.S. -7%, ex-U.S. +4%)
*DePuy sales do not reflect purely orthopaedic revenue.

Adjusting business segments: Global Orthopaedic will comprise DePuy and Synthes (following close of
     acquisition)
Low single-digit price erosion, partially offset by positive mix
Ex-U.S. hip growth from heads, cementless stems
Strong sports med sales partially offset by lower knee, spine sales

KENSEY NASH (for 2Q12, ended 12/31/11)
$11.9MM, +148%*
     Spine $5.0MM, +154%
     Sports Medicine $3.2MM, +20%
     Trauma & Craniomaxillofacial $3.7MM, +1,750% (Norian products $3.6MM)
*Growth includes acquisitions.

Excluding sales from Norian acquisition: $7.4MM, +53%
Norian products $4.6MM
Royalties from Stryker, $1.4MM, +7%
Stryker selling Vitoss ex-U.S., primarily through spine group, with plans to sell throughout other segments;
     salesforce integration and training in about the “4th inning”
Orthopaedic customer inventory levels “appropriate”—they have worked through any inventory changes over the
     last year or so
Will continue to combine ceramic and collagen materials to develop future products with current and new
     customers

LIFE SPINE
+29%
Growth driven by increased demand for Centric MIS platform, expansion into 10 ex-U.S. markets, etc.

MEDICREA
€19.1MM (~US $24.7MM), +5%
U.S. subsidiary ~50% of group sales
4Q11 revenue: €4.1MM ($5.4MM)

Strengthening ex-U.S. sales structure, specifically in France

OSSUR
Bracing & Support $211.1MM, +15%
4Q11 revenue: $52MM, +8%

All bracing/support products from U.S. now manufactured at facility in Mexico
Unloader One brace performing well in EMEA region

RSB SPINE
+46%
Growth attributed to efforts of distributor Paradigm BioDevices, growing surgeon acceptance of modular
     standalone fusion offering

RTI BIOLOGICS
$114.1MM, +9%
     Spine $39.7MM, +17%
     Sports Medicine $48.1MM, +7%
     Bone Graft Substitutes/General Orthopaedic (BGS/GO) $26.2MM, +4%

4Q11 orthopaedic revenue: $28.8MM, +5%
     Spine $8.6MM, -8%
     Sports Medicine $13.2MM, +8%
     BGS/GO $6.9MM, +22%

Full year spine growth buoyed by mid-year stocking orders, favorable comps
Spine business is 70%-80% Medtronic
Expects sports med procedure increase and continued pricing pressure
BGS/GO sales supported by U.S. sales growth, uptick in commercial distributor revenue
BGS/GO direct distribution +47% year over year
Expects to begin human implantation of Multipotent Adult Progenitor Cell (MAPC) technology-based implants
     during 2012
Initiating large primate study for xenograft tendon to support premarketing approval application pathway in U.S.

SEIKAGAKU (for fiscal 3Q11, ended 12/31/11)
¥7,225MM (~US $94.3MM), flat
(Performance details pertain to preceding 9 months)
U.S. sales of Supartz rose as impact of tightening of reimbursements ran its course, increase in sales at
     specialty pharmacies where Supartz can be sold at comparatively high prices
U.S. sales rose due to increased volume
Export sales to China continue to rise, sales to Europe increased

SMITH & NEPHEW
$3,251MM, +3%
Orthopaedics $2,312MM, +2%* (U.S. $1,204MM, +2%, Europe $622MM, -1%; Rest of World $486MM, +7%)
     Hips $705MM, -1%
     Knees $869MM, +5%
     Trauma $457MM, +3%
     Clinical Therapies $237MM, +6%
Endoscopy $939MM, +6% (U.S. $363MM, +3%; Europe $294MM, +5%; Rest of World $282MM, +12%)
     Arthroscopy $806MM, +7% (Repair %, Resection +4%)
     Visualization $108MM, -7%

4Q11 orthopaedic revenue: $835MM, +2%
Orthopaedics $586MM, flat* (U.S. $311MM, flat; Europe $149MM, -7%; Rest of World $126MM, +10%)
     Hips -2% (U.S. -5%, ex-U.S. -1%)
     Knees +2% (U.S. flat, ex-U.S. +4%)
     Trauma -2% (U.S. +1%, ex-U.S. -6%)
     Clinical Therapies $61MM, +8%
Endoscopy $249MM, +7% (U.S. $97MM, +3%; Europe $79MM, +8%; Rest of World $73MM, +10%)
     Arthroscopy $MM, +9% (Repair +12%, Resection +5%)
*Revenue excludes Wound Management.

General
In settlements with the U.S. Securities and Exchange Commission and the Department of Justice relative to a
     Foreign Corrupt Practices Act investigation, agreed to pay $22.2MM in fines/profit disgorgement, maintain
     enhanced compliance program and submit to independent review of compliance for at least 18 months
As of 1Q12, will report in 2 divisions: Advanced Surgical Designs/ASD (Orthopaedics + Endoscopy) and
     Advanced Wound Management; ASD will include Other, including Gynecology
Eliminated ~150 positions in ASD division at end of 4Q

Like-for-like price pressure in orthopaedics remains at ~3%
Ortho sales in Europe impacted by smaller orders from large distributors vs. last year
China and India recon performing well
Declining sales of Birmingham Hip (BHR) still offsetting good sales from other hips
BHR sales at ~12% of hip business
Notes that BHR, per independent data, has the best survival rate for 8 years at ~98.5%
Oxinium Oxidized Zirconium hips continue selling well
Full U.S. launches of VERILAST, VISIONAIRE now annualizing
U.S. trauma sales continue to reflect expiration of royalty agreement
Ex-fix limb restoration performed well
Announced Bioventus entity to further develop Biologics and Clinical Therapies businesses
Strong growth in Endoscopy from new products: Bioraptor Curved suture anchors, Fast-Fix 360 Meniscal Repair,
     Dyonics Platinum specialty blades

STRYKER (includes acquisitions)
$8,307MM, +11% (U.S. $5,269MM, +10%; ex-U.S. $3,038MM, +13%)
Reconstructive $3,710MM, +2% (U.S. +0.9%, ex-U.S. +2%)
     Hips $1,228MM, +3% (U.S. +2%, ex-U.S. +4%)
     Knees $1,306MM, -2% (U.S. -2%, ex-U.S. +<1%)
     Trauma/Extremities $931MM, +7% (U.S. +10%, ex-U.S. +3%)
MedSurg $3,160MM, +11%* (U.S. +13%, ex-U.S. +7%)
Neurotechnology & Spine $1,437MM, +46% (U.S. +28%, ex-U.S. +92%)
     Neurotechnology $750MM, +132% (U.S. +79%, ex-U.S. +276%)
     Spine $687MM, +4% (U.S. +3%, ex-U.S. +8%)

4Q11 revenue: $2,215MM, +11% (U.S. $1,407MM, +9%; ex-U.S. $808MM, +13%)
Reconstructive $981MM, +0.7% (U.S. -0.2%, ex-U.S. +2%)
     Hips $314MM, +0.4% (U.S. -0.7%, ex-U.S. +2%)
     Knees $341MM, -2% (U.S. -4%, ex-U.S. -0.4%)
     Trauma/Extremities $253MM, +8% (U.S. +10%, ex-U.S. +7%)
MedSurg $857MM, +11%* (U.S. +12%, ex-U.S. +9%)
Neurotechnology & Spine $377MM, +47% (U.S. +31%, ex-U.S. +85%)
     Neurotechnology $199MM, +126% (U.S. +86%, ex-U.S. +223%)
          Spine $178MM, +6% (U.S. +2%, ex-U.S. +14%)
*MedSurg includes patient handling and emergency medical equipment.

Overall corporate-wide pricing -1.7%; recon pricing “consistent with prior quarters”
Encouraging ramp in ADM and MDM large head hips, traction in shape-fitting customized cutting guides for knee
Will launch next-generation 1488 camera in 2H12
Next-generation System 7 Power Tool, introduced in limited launch in late 2011, fully launched in 1Q12; features
     smaller, lighter design, improved shape/grip, corrosion-resistant coating, etc.

ZIMMER
$4,451.8MM, +3% (Americas $2,441MM, flat; Europe $1,214MM, +5%; Asia Pacific $797MM, +6%)
Reconstructive $3,344.1MM, +1% (Americas -1%, Europe +5%, Asia Pacific +6%)
     Hips $1,355.6MM, +4% (Americas +2%, Europe +3%, Asia Pacific +9%)
     Knees $1,825.1MM, -1% (Americas -4%, Europe +6%, Asia Pacific +4%)
     Extremities $163.4MM, +7%
Dental $248.1MM, +12%
Trauma $285.8MM, +13%
Spine $225.0MM, -6%
Surgical and Other $348.8MM, +9%

4Q11 revenue: $1,167.3MM, +2% (Americas $620MM, flat; Europe $338MM, +6%; Asia Pacific $209MM, +5%)
Reconstructive $876.8MM, +2% (Americas -2%, Europe +6%, Asia Pacific +6%)
     Hips $357.7MM, +4% (Americas flat, Europe +6%, Asia Pacific +7%)
     Knees $475.3MM, flat (Americas -4%, Europe +6%, Asia Pacific +6%)
     Extremities $43.8MM, +9%
Dental $63.5MM, +2%
Trauma $77.3MM, +11%
Spine $56.5MM, -6%
Surgical and Other $93.2MM, +7%

General
Completed acquisition of ExtraOrtho (includes XtraFix external fixation system)
Acquisition of Synvasive will support further intelligent instrumentation offerings, surgical cutting technologies
     (e.g. STABLECUT blades)
New product introductions contributed substantial growth in 4Q
Emerging markets continue to generate “impressive growth”
Expects to fully offset medical device tax in 2013 through savings in cost of goods and Selling, General &
     Administrative Expense

Recon: Hips
Reflected positive volume and mix of 5.8% and negative price of -2.2%
“Customizable” product lines contributing to hip growth: Maxera large-head ceramic-on-ceramic cup, CLS
     Brevius with Kinectiv technology, etc.

Recon: Knees
Reflected positive volume and mix of 2.2% and negative price of -2%
4Q showed no further deterioration in knee procedure rates
Patient Specific Instrument sales increasing globally
Mobile Bearing Knee, Trabecular Metal Revision Shapes and Augments generating strong sales

Recon: Extremities
Positive clinical feedback on new Anatomical Combined Shoulder Adapter
2012 product launches will include additional upper extremity offerings

Spine
Pricing pressure is less than the negative mid-single-digits: not to same extent as larger players in spine space
Introduced inViZia Anterior Cervical Plate in 4Q
PathFinder NXT percutaneous MIS pedicle screw and TMS Trabecular Metal Cervical Interbody Fusion devices
     growing at attractive rates

Biologics
Completed >1,600 procedures using DeNovo NT Natural Tissue Graft during 2011
Introduced Chondrofix Osteochondral Allograft at AAOS


Sources: Company press releases, earnings calls, filings with the Securities and Exchange Commission

Julie A. Vetalice is Editor, Information Products for ORTHOWORLD Inc. She can be reached at 440.543.2101 or julie@orthoworld.com.