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The orthopedic market enjoyed a very healthy 2023 despite remaining pockets of disruption. Public companies that we cover grew in the high single digits for both the fourth quarter and the full year. To augment our revenue analysis for the quarter, we gathered select quotes from top orthopedic executives as they reflected on enabling technology trends, elevated procedure demand and M&A integration progress.
Stating the Case for Enabling Technology
The largest orthopedic companies established the importance of enabling technology in winning and defending implant market share. However, leaders at some of those companies spent time in the fourth quarter highlighting the need for new technologies that will enter a market with relatively low, stagnant technology adoption.
Kevin Lobo, Stryker CEO
A shoulder robot makes a very hard procedure very easy to do. Why was the partial knee so wildly successful? It was a hard procedure to do, and the robot made it easy. The shoulder is harder to do than a partial knee. The robot takes stress off the surgeon and provides very predictable results. There are high-volume knee surgeons who tell me, “At the end of the day, I’m not tired anymore. This robot is taking away my stress.” You can multiply that by 10 for shoulder replacements.
Dan Scavilla, Globus Medical CEO
We’ve got a robot that is superior. We think that even with new competition, which we’ve said would be coming for years, that may arrive over the next 24 months. That’s okay. Part of doing this merger was to create the size and the reach to not only penetrate faster but compete in this fashion. We’re poised to go head-to-head with anybody in this sense. There may be more choices in the long term for our customers. That’s why you must focus on driving innovation and putting products out that make meaningful differences.
Matt Trerotola, Enovis CEO
Ultimately, surgeons are looking for things that will improve how they can take a surgical plan and flow it intraoperatively in surgery, make the decision they want to make, capture data while they’re doing that and have that ability to do efficient, repeatable surgery. They want to be able to market that they’ve got the latest and greatest technologies. At the same time, they’re not looking to add cost and time to the procedures. Augmented reality seems like a perfect solution for that.
Backlogged Procedures and Demographic Tailwinds
The orthopedic market enjoyed a buoyant 2023 with growth rates well above historical averages. While backlogged procedures are a clear driver in the elevated demand, there is a growing sense that key demographic tailwinds could be reaching critical mass. Individual estimates vary but most of the top orthopedic players see elevated demand persisting through at least the first half of 2024. Large joint replacement’s red-hot year sucked the oxygen out of smaller segments. A slowdown there could be a boon for smaller joint surgeons.
Joe Wolk, Johnson & Johnson CFO
Now, certainly, COVID-19 impacts have stabilized globally and while we continue to see macro challenges from the point of view of inflation, hospital staffing and the like, there is a bolus of patients coming out into the market after COVID-19, which has made 2023 market growth faster than historical averages. We see that trend continuing into a good part of 2024 and being a tailwind into 2024. There’s a lot of factors playing into that. But overall, we see the elevated procedures continuing into at least the first half of 2024.
Ivan Tornos, Zimmer Biomet CEO
From a macro perspective, the markets are very healthy. Beyond the backlog, the markets are going to continue to be healthy. You have better patient demographics and younger patients; you have the dynamic of cases moving into an ASC. You have more days of surgery in the U.S. You’ve seen shorter, better rehabilitation processes. I can go on and on, but the markets are very healthy.
Stephen Deitsch, Paragon 28 CFO
This may be somewhat anecdotal, but I think it’s important. I know that hips and knees really did have more of a bolus impact in 2023. The commentary that I’ve read is that that bolus isn’t as strong going into 2024. That bodes well for foot and ankle surgeons because there’s more operating room availability. I don’t know if that will develop into a potential tailwind for these markets that we’re in, but I know that when fewer large joint orthopedic procedures take place, it allows our smaller joint folks time to get in there and take advantage of the OR space.
M&A Integration Results Mixed in 2023
Orthopedic M&A volume rose in 2023 and we learned a great deal about some consequential recent acquisitions. Stryker’s massive, risky acquisition of Wright Medical turned out to be a home run in the long term. CONMED hit growing pains while integrating In2Bones. Globus had just a few months of integration during the year, but its 2024 outlook calls for $150 million in lost sales and low-single-digit revenue growth.
Kevin Lobo, Stryker CEO
We are out hunting, and we are excited to get back to more regular M&A. It’s been a huge part of our offense. We know how to do this. We’ve gotten really good at evaluations and integrations. Early in my tenure, we weren’t so good at integrations. If I look at Wright Medical, it’s just been a role model for how to integrate a complex business, and the results have been stellar.
Curt Hartman, CONMED CEO
There’s far more demand for the product supply out of the gates, and working with that new supplier base and trying to integrate them into our systems slowed us down. We think we’ll get back to full stride in the second quarter. I don’t think it’s anything systemic. It’s all about the integration of a private company, putting it into a public company’s framework and trying to let those processes work the way they should.
Keith Pfeil, Globus Medical CFO
We had very low rep overlap. By the time we were unblinded, it was about 3% in the U.S. So, it wasn’t a major amount of untangling so much as just reorganizing for efficiency. I don’t think it was a density of departures in certain areas that I would call out here. We have a lot of reps and we need all of our reps. We’re looking where we spread out and we will keep our eye focused on competitive recruiting as we have in the past years and use that as a growth mechanism.
The orthopedic market enjoyed a very healthy 2023 despite remaining pockets of disruption. Public companies that we cover grew in the high single digits for both the fourth quarter and the full year. To augment our revenue analysis for the quarter, we gathered select quotes from top orthopedic executives as they reflected on enabling...
The orthopedic market enjoyed a very healthy 2023 despite remaining pockets of disruption. Public companies that we cover grew in the high single digits for both the fourth quarter and the full year. To augment our revenue analysis for the quarter, we gathered select quotes from top orthopedic executives as they reflected on enabling technology trends, elevated procedure demand and M&A integration progress.
Stating the Case for Enabling Technology
The largest orthopedic companies established the importance of enabling technology in winning and defending implant market share. However, leaders at some of those companies spent time in the fourth quarter highlighting the need for new technologies that will enter a market with relatively low, stagnant technology adoption.
Kevin Lobo, Stryker CEO
A shoulder robot makes a very hard procedure very easy to do. Why was the partial knee so wildly successful? It was a hard procedure to do, and the robot made it easy. The shoulder is harder to do than a partial knee. The robot takes stress off the surgeon and provides very predictable results. There are high-volume knee surgeons who tell me, “At the end of the day, I’m not tired anymore. This robot is taking away my stress.” You can multiply that by 10 for shoulder replacements.
Dan Scavilla, Globus Medical CEO
We’ve got a robot that is superior. We think that even with new competition, which we’ve said would be coming for years, that may arrive over the next 24 months. That’s okay. Part of doing this merger was to create the size and the reach to not only penetrate faster but compete in this fashion. We’re poised to go head-to-head with anybody in this sense. There may be more choices in the long term for our customers. That’s why you must focus on driving innovation and putting products out that make meaningful differences.
Matt Trerotola, Enovis CEO
Ultimately, surgeons are looking for things that will improve how they can take a surgical plan and flow it intraoperatively in surgery, make the decision they want to make, capture data while they’re doing that and have that ability to do efficient, repeatable surgery. They want to be able to market that they’ve got the latest and greatest technologies. At the same time, they’re not looking to add cost and time to the procedures. Augmented reality seems like a perfect solution for that.
Backlogged Procedures and Demographic Tailwinds
The orthopedic market enjoyed a buoyant 2023 with growth rates well above historical averages. While backlogged procedures are a clear driver in the elevated demand, there is a growing sense that key demographic tailwinds could be reaching critical mass. Individual estimates vary but most of the top orthopedic players see elevated demand persisting through at least the first half of 2024. Large joint replacement’s red-hot year sucked the oxygen out of smaller segments. A slowdown there could be a boon for smaller joint surgeons.
Joe Wolk, Johnson & Johnson CFO
Now, certainly, COVID-19 impacts have stabilized globally and while we continue to see macro challenges from the point of view of inflation, hospital staffing and the like, there is a bolus of patients coming out into the market after COVID-19, which has made 2023 market growth faster than historical averages. We see that trend continuing into a good part of 2024 and being a tailwind into 2024. There’s a lot of factors playing into that. But overall, we see the elevated procedures continuing into at least the first half of 2024.
Ivan Tornos, Zimmer Biomet CEO
From a macro perspective, the markets are very healthy. Beyond the backlog, the markets are going to continue to be healthy. You have better patient demographics and younger patients; you have the dynamic of cases moving into an ASC. You have more days of surgery in the U.S. You’ve seen shorter, better rehabilitation processes. I can go on and on, but the markets are very healthy.
Stephen Deitsch, Paragon 28 CFO
This may be somewhat anecdotal, but I think it’s important. I know that hips and knees really did have more of a bolus impact in 2023. The commentary that I’ve read is that that bolus isn’t as strong going into 2024. That bodes well for foot and ankle surgeons because there’s more operating room availability. I don’t know if that will develop into a potential tailwind for these markets that we’re in, but I know that when fewer large joint orthopedic procedures take place, it allows our smaller joint folks time to get in there and take advantage of the OR space.
M&A Integration Results Mixed in 2023
Orthopedic M&A volume rose in 2023 and we learned a great deal about some consequential recent acquisitions. Stryker’s massive, risky acquisition of Wright Medical turned out to be a home run in the long term. CONMED hit growing pains while integrating In2Bones. Globus had just a few months of integration during the year, but its 2024 outlook calls for $150 million in lost sales and low-single-digit revenue growth.
Kevin Lobo, Stryker CEO
We are out hunting, and we are excited to get back to more regular M&A. It’s been a huge part of our offense. We know how to do this. We’ve gotten really good at evaluations and integrations. Early in my tenure, we weren’t so good at integrations. If I look at Wright Medical, it’s just been a role model for how to integrate a complex business, and the results have been stellar.
Curt Hartman, CONMED CEO
There’s far more demand for the product supply out of the gates, and working with that new supplier base and trying to integrate them into our systems slowed us down. We think we’ll get back to full stride in the second quarter. I don’t think it’s anything systemic. It’s all about the integration of a private company, putting it into a public company’s framework and trying to let those processes work the way they should.
Keith Pfeil, Globus Medical CFO
We had very low rep overlap. By the time we were unblinded, it was about 3% in the U.S. So, it wasn’t a major amount of untangling so much as just reorganizing for efficiency. I don’t think it was a density of departures in certain areas that I would call out here. We have a lot of reps and we need all of our reps. We’re looking where we spread out and we will keep our eye focused on competitive recruiting as we have in the past years and use that as a growth mechanism.
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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.
