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Starting with 1Q23 earnings, we’ll add a new reporting segment called Enabling Technology to our existing orthopedic market coverage. Here is what you need to know.
We define orthopedic enabling technology as robotics, navigation, surgical planning and other software. In this context, we’re excluding sports medicine capital equipment.
For the overall market, our orthopedic sales totals will remain the same. We currently report enabling technology sales within our knee, hip and spine segments. Totals for those three categories will change as we redistribute revenue into Enabling Technology.
Why? Clean Numbers and a Focus on Technology
We learned during the height of the pandemic that enabling technology sales had a masking effect on the underlying dynamics of the knee and spine markets in our reporting structure. Surgical restrictions led to drastically reduced elective procedure volumes and implant sales. However, hospitals remained in a solid financial position leading to a bonanza of technology sales.
Pulling enabling technology sales into a dedicated segment gives greater clarity to our knee, hip and spine market data.
Additionally, this change aligns our segment reporting with the priorities of the companies we cover. Orthopedics is moving toward “technology in every case,” and the largest players are highly focused on enabling technology.
Skip Kiil, head of Medtronic’s Cranial and Spinal Technologies division, said the company’s R&D efforts are disproportionately slanted toward technology. At the beginning of 2021, Zimmer Biomet CEO Bryan Hanson said, “Think of us as a high-tech company that happens to be in med tech. More than 70% of our product development dollars are spent on ZBEdge, our ecosystem of connected technologies. This technology shift is coming not only for us, but for the entire market.”
Orthopedic Enabling Technology Sales and Players
Note: we’ve updated our estimates and revised this article in late 2022. We estimate orthopedic enabling technology sales totaled $1.1 billion in 2021, representing just over 2.1% of the global orthopedic market.
Exhibit 1: Market Share by Product Segment 2021
The segment has a four-year CAGR of over 22%, but the pandemic and changing models for purchasing capital equipment make the growth metrics somewhat challenging to unravel.
Exhibit 2: Enabling Technology Sales FY18 to FY21
There are few surprises among the top ten largest players in enabling technology. The list closely mirrors the top orthopedic players overall. Large, strategic companies with over $1 billion in annual orthopedic sales control 77% of the enabling technology market.
Exhibit 3: Top Ten Enabling Technology Players and All Others
As a reminder, we’ll officially launch the Enabling Technology segment when we begin reporting public company earnings for the first quarter of 2023. In the meantime, we’ll continue to bring you increased coverage and data around the enabling technology segment. If you have a question or comment, please feel free to reach out to me.
Starting with 1Q23 earnings, we’ll add a new reporting segment called Enabling Technology to our existing orthopedic market coverage. Here is what you need to know.
We define orthopedic enabling technology as robotics, navigation, surgical planning and other software. In this context, we’re excluding sports medicine capital equipment.
For...
Starting with 1Q23 earnings, we’ll add a new reporting segment called Enabling Technology to our existing orthopedic market coverage. Here is what you need to know.
We define orthopedic enabling technology as robotics, navigation, surgical planning and other software. In this context, we’re excluding sports medicine capital equipment.
For the overall market, our orthopedic sales totals will remain the same. We currently report enabling technology sales within our knee, hip and spine segments. Totals for those three categories will change as we redistribute revenue into Enabling Technology.
Why? Clean Numbers and a Focus on Technology
We learned during the height of the pandemic that enabling technology sales had a masking effect on the underlying dynamics of the knee and spine markets in our reporting structure. Surgical restrictions led to drastically reduced elective procedure volumes and implant sales. However, hospitals remained in a solid financial position leading to a bonanza of technology sales.
Pulling enabling technology sales into a dedicated segment gives greater clarity to our knee, hip and spine market data.
Additionally, this change aligns our segment reporting with the priorities of the companies we cover. Orthopedics is moving toward “technology in every case,” and the largest players are highly focused on enabling technology.
Skip Kiil, head of Medtronic’s Cranial and Spinal Technologies division, said the company’s R&D efforts are disproportionately slanted toward technology. At the beginning of 2021, Zimmer Biomet CEO Bryan Hanson said, “Think of us as a high-tech company that happens to be in med tech. More than 70% of our product development dollars are spent on ZBEdge, our ecosystem of connected technologies. This technology shift is coming not only for us, but for the entire market.”
Orthopedic Enabling Technology Sales and Players
Note: we’ve updated our estimates and revised this article in late 2022. We estimate orthopedic enabling technology sales totaled $1.1 billion in 2021, representing just over 2.1% of the global orthopedic market.
Exhibit 1: Market Share by Product Segment 2021
The segment has a four-year CAGR of over 22%, but the pandemic and changing models for purchasing capital equipment make the growth metrics somewhat challenging to unravel.
Exhibit 2: Enabling Technology Sales FY18 to FY21
There are few surprises among the top ten largest players in enabling technology. The list closely mirrors the top orthopedic players overall. Large, strategic companies with over $1 billion in annual orthopedic sales control 77% of the enabling technology market.
Exhibit 3: Top Ten Enabling Technology Players and All Others
As a reminder, we’ll officially launch the Enabling Technology segment when we begin reporting public company earnings for the first quarter of 2023. In the meantime, we’ll continue to bring you increased coverage and data around the enabling technology segment. If you have a question or comment, please feel free to reach out to me.
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ME
Mike Evers is a Senior Market Analyst and writer with over 15 years of experience in the medical industry, spanning cardiac rhythm management, ER coding and billing, and orthopedics. He joined ORTHOWORLD in 2018, where he provides market analysis and editorial coverage.
