Orthopedic devices major Stryker Corp (SYK) has secured the 510 (k) approval from the U.S. Food and Drug Administration (“FDA”) for its ShapeMatch cutting guides. Manufactured from patient-specific three-dimensional imaging data, the single-use ShapeMatch guides are designed to be exclusively used with the company’s Triathlon knee replacement system.
The ShapeMatch technology uses three-dimensional imaging software to develop customized pre-operative surgical plan for each patient. After review and approval, surgeons can use this plan to develop cutting guides for each patient.
Since its launch in 2004, Stryker’s Triathlon total knee replacement system has been used in more than 750,000 surgeries and is one of the fastest growing knee implants globally. It has been geared to offer patients improved motion and greater longevity.
Demand for total knee replacements in the U.S. has been forecast to jump from 0.5 million procedures in 2005 to 3.48 million procedures in 2030, thanks to an aging population. The ability to control costs and improve non-operative time efficiencies represents key challenges for meeting this surging demand.
According to Stryker, the ShapeMatch technology has the potential to positively impact hospital costs associated with knee procedures and improve surgical and operating room efficiencies.
The U.S approval of the ShapeMatchsurgical cutting guides represents a significant milestone for Stryker’s OtisMed business unit which offers surgical solutions for complex clinical problems in joint replacement. Although the company’s knee franchise is struggling recently, the new cutting guides are expected to offer a rebound in knee demand.
We believe that Stryker is well placed for growth driven by new product launches, acquisitions, investment in emerging markets and an improving hospital capital spending backdrop. However, the company faces stiff challenges from Johnson and Johnson’s (JNJ) DePuy, Biomet, Zimmer Holdings (ZMH) and Smith & Nephew (SNN) in a highly competitive orthopedic industry.
Moreover, Stryker remains exposed to pricing and procedure volume pressure on its hip, knee and spine products. Our long-term Neutral recommendation on the stock is backed by a short-term Zacks #3 Rank (Hold).
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