Trends in Orthopedics

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Trends in Orthopedics. Brady R. Shirley. Introduction. IMDS President/CEO 14 months Stryker Corp 18 yrs Sales/Mktg/R&D/GM Technical Clinical/Electronics. INNOVATIVE MEDICAL DEVICE SOLUTIONS. Me. IMDS. Leader in Orthopedic Design Pre-clinical Testing - PowerPoint PPT Presentation

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  • Trends in OrthopedicsBrady R. Shirley

  • IntroductionIMDS President/CEO 14 monthsStryker Corp 18 yrs Sales/Mktg/R&D/GMTechnical Clinical/Electronics

    IMDSMeLeader in Orthopedic DesignPre-clinical TestingCMO Orthopedic Implants/InstrumentsInstrumentWorks*

  • HistoricalOrthopedic Market*Key 2009 ObservationsTop 5 represents 59% of the market. Top 10 represents 77%.Stryker / Zimmer / Depuy represent 70% of RECONExtremities growth largely outside of Big 5

    2009 Market Share

  • The Current Landscape2010Increased FDA ScrutinyDOJ FocusSegment Trajectory EvolvingPrice PressuresReprocessing of single use devicesMaterialsVC Market DeteriorationOrthopedic Market Trends*

  • The Current Landscape2010Increased FDA Scrutiny*

  • *News

  • The Current Landscape2010Increased Audit Frequency/Intensity4 of Big 5 received warning letters in 2009-10Manufacturing Supplier ConsolidationR&D focus on remediationExpanding 510k Approval Timelines2005=87 days 2008=113 days 2010=130 days510k moving towards PMAIncreased costsIncreased development timeRegistration Requirements EscalatingClinical outcomes trackingIncreased FDA Scrutiny*

  • The Current Landscape2010Big 5 Companies Settlement $350m in 2007Consulting practices challengedanti-kickbackLimited interaction between HCP and OEMMassachusetts Senate Bill No. 2863Code of ConductMealsEntertainmentGrantsCashSunshine ActDocumentationEight states, including Massachusetts, Vermont, Maine, Minnesota, and Washington, DC42 to followDOJ Focus*

  • The Current Landscape2010Segment Trajectory Evolving*Hip & Knee Growth ModeratingExtremities Leading RECON GrowthSpine Market in DeclineProcedures decreasing based on co-payPricing pressures based on overall marketOutcomesTrauma / Sports Medicine unfazed by economic challenges

  • The Current Landscape2010Employee Orthopedic HCPs have opened the door for C Level control of product selectionOUS Market Adjustments/Climates making a US impactJapanChina/IndiaLow cost offerings in Asia are providing opportunity to expand consolidated marketFocus of In China/For China versus low cost country approach based on IP challenges and rising labor costsObama CareStifle innovationExpand ConsolidationExpedite OUS strategiesPrice/Cost Pressures*

  • The Current Landscape2010FDA Approval for SUD (single use devices) reprocessing in 2000The General Accounting Office (GAO) and the Centers for Disease Control and Prevention (CDC) have stated that there is no evidence that reprocessed devices harmed any patients within the last decadeOnly about 2% of SUD's can be reprocessedGenerally 40-50% of the cost of new devices can be saved by reprocessingIf 1-2% of the disposable medical devices in the US today were reprocessed the healthcare system would save One Billion dollars a yearStryker validates the market by acquiring Ascent in Nov 2009Reprocessing of single use devices*

  • The Current Landscape2010Based on combination of lack of innovation, outcomes of current forms and cost opportunitiesTrendsMovement away from science project materialsPowdered metal growth based on porous opportunitiesContinued Peek growthConsiderable focus on Titanium solutions from MIM to Casting.Hard on hard but moving away from CC on CC. Absorbable metals

    Materials*

  • The Current Landscape2010Lack of capital in venture/start up environmentBuyer evolution in med-device spaceRegulatory/Compliance proficiency requiredVC Market Deterioration*

  • What Next?Increased FDA ScrutinySignificant Supplier ConsolidationOEM Facility ReductionsIncreased R&D OutsourcingKeys to success: Expand quality and compliance infrastructure/capabilityEnhance supplier base quality and compliance capabilities through audit/educationManufacturing engineering talent expansion necessary to transfer legacy and manage the growthAMT Footprint / flexibility for manufacturerDOJ FocusReduction in HCP interaction with OEMsKeys to success:Organizational education is criticalOpportunities aboundif you are not an OEM

    Conclusions*

  • What Next?Segment Trajectory EvolvingSpine market trajectory concerning but patient demos/demand will overcomeSports Med growth to continuemore PIMTrauma may surpass Spine by 2012 (more screws, etc) Keys to success:First, dont overreact , the market in total is a high single digit grower even in these tough times and the demographics for volumes are continuing to increase.Understand the clinical aspects of the segments to provide value to the process. The mix alone calls for different technology than what has been deployed for the past 20 years.AMT Expanding segments same/similar to Spine so small products/narrow margin lights out technologies will continue to gain share within the footprint.Price PressuresOUS low cost focus will regain steamInnovation/outcome synergy to strengthenLow cost entrance is US market is likely Keys to success:Larger players need trusted support in the OUS marketsAMT - Strengthen relationship with OUS players with potential entrance plans to USAMT Flexibility in systems similar to Med Device supplier to hospitalConclusions*

  • What Next?Reprocessing of single use devicesGrowth of 40%+ for foreseeable futureOpportunities abound for technology/processOpportunities:Business segment opportunityAMT - Technology to displace largely manual process of todayMaterialsProven materials will largely dominate the landscapeNew approaches to same (PM, MIM, Casting) will be next evolutionary stepDrug eluding options of great interestOpportunities:Win the Ti race in MIM/CastingAMT - Automate powdered metals processes to enable volumeVC Market DeteriorationProceed with caution!

    Conclusions*

  • Projection2011+*2009 Orthopedic Market$38.6B 6.4% Growth2013 Orthopedic Market$50.2B 6.8% CAGRKey ObservationsSports/Trauma growth continue to lead all segmentsSpine projected to rebound to 2nd largest marketGreater than 75% Implants/Implants (Class I & II Devices)Price erosion to continue at 1-2% per year or 5% during period

  • Questions*

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