Recently, leading orthopedic medical device maker Zimmer Holdings (ZMH) launched a complete set of Trabecular Metal material augment shapes and cones to be used in knee revision surgeries.
These new augments will help the surgeons to fill up any small or large cavitary bone defects often detected while performiong any revision surgery. These devices namely Trabecular MetalTibial and Femoral Cone Augments are expected to provide structural replacement of bone with long-term implant fixation in even the most critical knee revision surgeries.
With the launch of this new generation kit of revision knee cones, Zimmer’s NexGen Knee product line, a comprehensive system for knee replacement surgery is expected to be boosted.
During the first quarter of fiscal 2011, Zimmer’s biggest segment, Reconstructive Implant, recorded a 3% increase in revenues to $842 million driven by growth in Asia Pacific (16%), Europe (3%) and Americas (1%). However revenues from Knees (within Reconstructive) remained unchanged at $462 million. While, the NexGen Knee product line contributed to the growth of the segment during the quarter, sales in Americas slipped down by 3%.
In addition, the company witnessed lower-than-normal level of growth in procedure volumes in the musculoskeletal market during the quarter. Recession in the US reduced in declining enrollment in private health plans among people under the age of 65.
Consequently, a number of potential joint replacement patients had to defer their treatment. Moreover, total patient population declined with the rise of uninsured population due to increase in unemployment levels. Despite that, Zimmer expects the growth rate of procedure volume in the US to recover in the second half of 2011.
Zimmer is making continuous effort to strengthen its pipeline with launch of new products under the Knee segment. The new augments along with increasing utilization of Patient Specific Instruments (PSI) and Posterior Referencing Instruments (PRI) should drive revenues of this segment going ahead.
We believe that the company is on its growth trajectory through new product launches, employment of new technologies and expansion into emerging markets. Moreover, the company faces tough competition from players such as Smith & Nephew (SNN), Johnson & Johnson (JNJ) among others. The competitive landscape will become tougher with Johnson & Johnson’s recent decision to acquire Synthes for $21.3 billion. We are currently Neutral on Zimmer.
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