Orthopedic Biomaterials Realities of the Material World

Aarti Shetty, Industry Analyst

Medical Devices, Healthcare

September 25, 2008

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Focus Points

• Introduction

• Segmentation

• Advances in Implant Materials

• Advances in Bone Graft Materials

• Challenges of the Material Market

• Market Future

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Introduction

• While the orthopedic industry has enjoyed double-digit growth over the past few years, the future is expected to be even brighter.

• With this anticipated growth in the orthopedic industry, the demand for raw materials will also increase.

• Our focus today –

Trends and Future of the Biomaterials Market

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Segmentation

Orthopedic Biomaterials

Orthopedic Implants

Bone Grafts

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Biomaterials: Booming Business Opportunity

• The global orthopedic biomaterials market, valued at $4 billion in 2006, is projected to more than double by 2012, to $8.8 billion

• Ageing Population and Lifestyle Changes

• Technology Innovation

• Growth through Partnerships

• Growing Acceptance of Bone Graft Products

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Market Challenges

• Limited Number of Suppliers

• Demonstrating Product Efficacy and Cost Savings

• Costs Involved in R&D

Orthopedic Implants

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Metals

• In the past few years, high demand for titanium by the aerospace industry has driven up the price by a magnitude of four.

• It is estimated that titanium is costing companies approximately 10 times the cost of certain grades of stainless steels.

• A variety of other metals can be used in orthopedic applications, including cobalt-chrome and newer materials such as Nitinol

http://www.indiamart.com/rajorthopaedic/pcat-gifs/homepage/hp2.jpg

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Implantable Plastics

• Biocompatibility and High Performance

• Mechanical Properties/Processing Technologies

• Non-metallic

• UHMWPE, PEEK, Bioabsorbables

• Adoptionhttp://www.ptonline.com/mag_images/200107cu2b.jpg

http://mdtmag.com/images/0712/image2.jpg

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Ceramics

• Ceramic product sales, which made up 25% of the market in 2006, are projected to grow at a steady CAGR of 10% between now and 2012

• Widely used in Europe and Japan than in the United States

• Higher cost

• Bio-ceramic materials

http://www.zimmer-orthopedics.com/

Bone Grafts Market

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Spinal Fusion Using Human Bone

0

20

40

60

80

100

2001 2002 2003 2004 2005 2006 2007

Lumbar Cervical

• Well-publicized events involving the safety and legality of donated tissue and the general hassles involved in obtaining human tissue

• Trend toward increased usage of non-human devices in the spine

% of Interbody Spinal Fusion made of human bone

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Bone Morphogenetic Protein (BMP)

• These products are expected to grow at a CAGR of 25% to $2.9 billion by 2012, accounting for 39% of the ortho biomaterials market.

• The BMP market segment grew 9% YOY in 2007 in contrast to its 39% in 2006.

• Two products commercially available in the U.S. in the BMP sector: Medtronic’s InFuse and Stryker’s OP-1.

0

200

400

600

800

2005 2006 2007

Year

Reven

ue (

$ M

illi

on

)

Source: Frost & Sullivan

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Bone Graft Substitutes

• New technologies will drive U.S. bone graft substitute market to reach almost $1.9 billion by 2012

• Advanced BGS technologies has increased competition within the field

• With the acquisition of Osiris Therapeutics' Osteocel business, NuVasive has obtained the first off-the-shelf bone graft substitute (BGS) product to incorporate viable stem cells

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Companies in Spotlight

Intergra Lifesciences/Isotis

ISTO Technologies

Fziomed

Pegasus

ETEX

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Recent Products

• Pioneer Surgical Technology, Inc. received 510(k) clearance from the U.S. Food and Drug Administration (FDA) to market FortrOss, a novel bone graft substitute utilizing the power of nanotechnology for orthopedic applications in September 2008.

• ETEX Corporation launched an innovative orthobiologic in August 2008, EquivaBone(TM). EquivaBone(TM) is a bone graft substitute that remodels and is replaced with new bone during the healing process.

• Biocomposites received FDA 510(k) clearance for their unique bone graft substitute, geneX putty in July 2008.

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Conclusion – Market Future

• The biomaterials market is expected to be the next big factor incompetitiveness for orthopedic implant manufacturers to differentiate themselves in the market.

• As materials research continues, more options will become available for orthopedic manufacturers. These new materials willnot only help improve products already on the market, but also will enable the creation of products previously thought impossible.

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