Total Joint Market: Slowly Recovering

Article preview from Medtech Insight - May 1, 2011

The $13 billion total joint market is facing a number of challenges coming off the recent recession. Although the demographics related to joint replacement remain strong, manufacturers continue to be plagued by downward pressure on implant prices, a slowdown in procedure volumes, and an ongoing shift in hospital purchasing. Many believe that J&J's recent acquisition of Synthes will spark a wave of consolidation in the industry.

Total Joint Market: Slowly Recovering

Article preview from Medtech Insight - May 1, 2011

The $13 billion total joint market is facing a number of challenges coming off the recent recession. Although the demographics related to joint replacement remain strong, manufacturers continue to be plagued by downward pressure on implant prices, a slowdown in procedure volumes, and an ongoing shift in hospital purchasing practices and surgeon-manufacturer relationships. Moreover, the industry is finding it harder to drive growth through innovation and implants are at risk of commoditization.

Recent procedure enhancements, such as hip resurfacing and unicompartmental knee replacement—designed for younger patients—have not broadly caught on ,nor have novel, less ablative approaches for treating early-stage hip and knee osteoarthritis (OA). And the lack of disruptive technologies on the horizon has led many to question whether the total joint industry has seen its best days.

Last month's announcement that Johnson &Johnson (J&J) will acquire Synthes Inc., the leading player in the trauma market, for $21.3 billion is the latest development in an industry that is clearly changing.  The news not only took competitors by surprise but also prompted speculation about the sweeping impact the deal could have on the orthopedic industry in the coming years. While the deal is
J&J's largest ever, the combination of the two orthopedic giants will give J&J and its DePuy orthopedics and spine subsidiaries tremendous clout when contracting with hospitals for total joint, spine, trauma, and craniofacial products, creating a race for market share at a time when far reaching changes are also taking place on the provider front as the health care reform bill takes hold.

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