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Current & Critical

The Orthobiologics Market

As defined by the American Academy of Orthopaedic Surgeons, orthobiologics are substances that orthopaedic surgeons use to help injuries heal more quickly. Orthobiologic products incorporate biology or biochemistry to repair, replace or regenerate musculoskeletal structures. 
 
Nearly 300 companies market orthobiologic products around the world. In 2012, estimated revenues generated by sales of orthobiologic products reached $4.61 billion, an increase of 2% from 2011. Exhibit 1 displays estimated biologic product sales growth for the past five years, both U.S. and ex-U.S.


EXHIBIT 1
ESTIMATED 2012 WORLDWIDE ORTHOBIOLOGIC PRODUCT SALES: 2008 TO 2012 ($BILLIONS)*
 
   

* Orthobiologic market estimates vary widely by source due to a variety of factors (e.g., products included). Products ORTHOWORLD includes for orthobiologic estimates include allograft and xenograft bone and tissue; synthetic bone graft substitutes; autologous platelet/plasma systems; cell-based products for tissue repair; growth factors and bone proteins; soft tissue repair, replacement and reinforcement products; anti-adhesion technologies and hyaluronic acid viscosupplements.

† Due to disparities in revenue reporting, further geographic delineation is not available.

‡ ORTHOWORLD estimate based upon publicly-announced revenues, actual revenues supplied by private companies, revenue ranges provided by private companies and ORTHOWORLD interpretations.
 
Exhibit 2 shows displays the trajectory of the orthobiologic segment for the past five years.

 
EXHIBIT 2
ESTIMATED ORTHOBIOLOGICS MARKET GROWTH: 2008 TO 2012 ($BILLIONS)

 

Exhibit 3 illustrates estimated market share for the top ten players in the orthobiologic space, and all others.


EXHIBIT 3
ESTIMATED 2012 ORTHOBIOLOGIC MARKET SHARES 
FOR TOP TEN PLAYERS AND ALL OTHERS*
 
 
 

*Orthobiologic revenues for DePuy Synthes, Musculoskeletal Transplant Foundation and Stryker are  ORTHOWORLD estimates.
 
The top ten players offer the orthobiologic product types delineated in Exhibit 4.


EXHIBIT 4
TOP TEN PLAYERS: PRODUCT TYPES OFFERED
 
 
 
The entire orthobiologic space is rich with strategic activity. Exhibit 5 details funding secured during 2012, while Exhibit 6 summarizes mergers, acquisitions and alliances that occurred last year.

 
EXHIBIT 5
FUNDING IN THE ORTHOBIOLOGIC SPACE IN 2012 
 
• Aursos: raised $95,000 of a planned $0.5MM Series A round of funding; developing AUR-84, bear-derived parathyroid hormone peptide
• Bacterin: closed a $25MM financing; net proceeds of ~$10MM will support general working capital; develops bone grafts/antimicrobial coatings for use in spinal fusion, foot/ankle surgery, etc.
• Binder Biomedical: raised $0.68MM of planned $2MM in funding; biologic products include X-GRAFT interspinous allograft
• BONESUPPORT: received SEK 70MM (~$9.9MM) in final tranche of funding; will support research & development, commercial expansion of antibiotic CERAMENT bone substitute in the U.S., Europe and Asia, etc.; >4,000 patients treated to date
• CartiHeal: raised $10MM in venture funding to support product launch in Europe in 2013; developed Agili-C cell-free implant for the treatment of cartilage and osteochondral defects
• Cerapedics: completed a Series C round of private equity financing, totaling $19MM, to support U.S. Investigational Device Exemption clinical trial/commercialization of i-FACTOR peptide enhanced bone graft for cervical spine applications
• Flexion Therapeutics: secured $20MM in a Series B financing round to support late-stage clinical development of intra-articular, sustained release osteoarthritis therapies 
• Histogenics: completed $49MM Series A round of financing, supports ongoing Phase III clinical trial of NeoCart autologous neocartilage tissue, EU regulatory clearance of VeriCart collagen scaffold
• Oss-Q: received SEK 9MM (~US $1.3MM) financing to support launch of a novel implant technology and related bioceramic innovations for orthopaedic applications; initially pursuing applications in cranial surgery (Mosaik), followed by fracture repair
• Regenerative Sciences: secured a $2MM investment to support research of stem cell-based treatments for musculoskeletal injuries
• Regentis Biomaterials: raised $10MM in a Series C financing, will support presence in Europe, clinical study of GelrinC biodegradable treatment for articular cartilage repair 
• SurgaColl Technologies: secured a €2MM (~US $2.5MM) investment fund to support global launch of HydroxyColl bone graft substitute, preclinical trials of ChondroColl cartilage regeneration product

 
EXHIBIT 6
MERGERS/ACQUISITIONS AND STRATEGIC ALLIANCES IN ORTHOBIOLOGICS IN 2012
 
Mergers/Acquisitions
• Baxter acquired Synovis for $325 million in cash for shares transaction; portfolio includes orthopaedic and wound management products used in reconstructive, orthopaedic and sports medicine applications
• Musculoskeletal Transplant Foundation acquired Cascade Medical’s orthopaedic assets (platelet-rich plasma and platelet-rich fibrin matrix technologies), to be distributed globally by ConMed Linvatec
• Wright Medical and BioMimetic Therapeutics entered into definitive agreement to combine businesses in a transaction valued at potentially ~$380MM; will combine Wright’s extremities portfolio with BioMimetic’s biologics platform
 
Strategic Alliances
• aap Implantate signed contract with Dutch Sanquin Bone and Tissue Bank to process human tissue
• Alphatec acquired exclusive U.S. distribution rights to sell under the company’s own label an FDA-cleared synthetic biologic for posterolateral spine fusion
• Amedica commenced distribution of Dynamic Surgical’s Dynamic Bone expandable allograft and BioDlogics’ BioDfence DryFlex flexible amniotic membrane 
• Anika Therapeutics entered into licensing/distribution agreement in Korea for Hyalofast + bone marrow aspirate concentrate 
• Arthrex and Graftys signed an agreement to co-develop calcium phosphate bone void fillers
• Bacterin signed 3-year agreements with Broadlane, Novation and Premier Healthcare Alliance to provide its biologic portfolio to their networks
• BioRestorative Therapies entered into an agreement to obtain exclusive license to use or sublicense certain stem cell related-technology and clinical treatment procedures developed by Regenerative Sciences for use in the treatment of degenerative disc disease
• BONESUPPORT signed a multi-year agreement with Biomet for exclusive U.S. and Canada distribution of CERAMENT bone void filler for orthopaedic, trauma and foot/ankle indications
• ConMed signed an exclusive worldwide marketing agreement for Musculoskeletal Transplant Foundation’s sports medicine allograft tissue and Cascade Platelet-rich Plasma
• Orthofix entered into an agreement with MTF to co-develop a natural biologic solution to complement Trinity Evolution
• Premier awarded contracts to Advanced Biologics to supply OsteoAMP allogeneic growth factor, and to Zimmer to supply bone cement
• Seikagaku entered into an exclusive agreement with Bioventus for U.S. distribution of SUPARTZ injectable treatment for knee osteoarthritis pain
• Seikagaku entered into exclusive agreement with Kaken Pharmaceutical for Japan marketing rights for SI-6603, a condoliase injection indicated for the treatment of lumbar disc herniation
• Summit Medical entered into a distribution agreement with Mosaic International covering products including the Hi-Vac-bone cement mixing system, CellTrans blood transfusion system, etc.
• ThermoGenesis entered into a 5-year collaboration with Arthrex to market Res-Q 60 System technology for the preparation of autologous Platelet Rich Plasma and Bone Marrow Concentrate
• TiGenix and Genpharm signed an exclusive agreement to market ChondroCelect cartilage repair product in the Middle East
 
While determining market size is challenging, due to disparities in reporting across the spectrum of companies playing in the space, it is apparent that the orthobiologic market should continue to experience growth in coming years. Exhibit 7 provides a summary of key dynamics at play in the orthobiologic space in 2012 and beyond.


EXHIBIT 7
THE ORTHOBIOLOGIC MARKET: KEY MARKET DYNAMICS
 
• Estimated revenue $4.61 billion, grew 2% from 2011 to 2012
• Players seek to develop alternates to the gold standard of autograft bone, due to length of hospital stay and increased risk of complication, limited supply, etc.
• Technological advancements include flowable allografts, bone glues and a variety of cell-based treatments
• Demographics will continue to serve the segment well, with an increased incidence in arthritis and osteoporosis, increasing elderly population, growing obesity rates, etc.
• Patients will continue to demand alternatives to joint arthroplasty, such as viscosupplementation, allografts, synthetic grafts, as they seek to extend their physically-active lives while putting off major surgeries as long as possible
• Significant need will remain for soft tissue reinforcement grafts in sports medicine applications (rotator cuff, Achilles tendon, knee ligament and cartilage)