Recapping Your Predictions: Consolidations and Launches as Growth Opportunities

At the dawn of 2017, we published results of an ORTHOWORLD Membership survey in ORTHOKNOW. Among the questions, we asked you to predict: In 2017, where do the opportunities lie for you and your company?

Your responses included new product launches; patient-specific implants and instruments; developments in materials, coatings, robotics and sensors; capability diversification; growth in emerging markets, etc.

Were you right? Yes, companies invested in all manner of these opportunities and more, last year. What did that look like? Here, we recap some the choices made by you and your peers—from the universe of possibilities—to take action and grow your businesses. We’ll touch on two that crossed OEM and supplier lines: company consolidation and single-use product launches.

Consolidation

Survey respondents expected consolidation to be an area of growth and opportunity in 2017, and indeed it was, for both OEMs and suppliers. Among the publicly-announced merger and acquisition activity that we tracked in our database last year were 26 OEM-led transactions and 18 in the supplier arena—the latter primarily contract manufacturers seeking to broaden their capabilities, but with a few testing, packaging, product development, materials and logistics companies getting rolled up, too. ConforMIS and Globus acquired supplier partners within 2017, bringing portions of their manufacturing in-house. (Out of curiosity, I looked at 2016 M&A. In that year, we reported 34 OEM transactions and nine by suppliers. The gap has narrowed, year over year.)

Among OEM deals for which terms were made public in 2017, the largest acquisition was Smith & Nephew’s purchase of Rotation Medical for $210 million, complementing its sports medicine portfolio. Other OEM transactions involved more than broadening implant offerings; purchases were interspersed with neuromonitoring, 3D printing technologies, distributors, data collection systems, surgical navigation software, etc.

Will M&A continue in 2018? Of course, it will. The tables below reflect publicly-announced transactions that we tracked in our M&A database last year, affirming your predictions that companies would take the opportunity to grow by acquisition in 2017.

Exhibit 1: OEM M&A Activity in 2017

Exhibit 2: Supplier M&A Activity in 2017

Single-Use Product Launches

In a push to deal with surgical site infection, strict regulatory standards for cleaning and overall hospital cost-cutting measures, device companies and suppliers have made a considerable push to move from hospital-sterilized products to single-use, disposable devices. The switch is especially strong in the spine and trauma space. Below, we recap launches made in 2017 involving sterile-packed devices and products.

Exhibit 3: Single-Use Technologies Launched in 2017

Sources: Company websites, press releases, information in the public domain