Regenerative Medicine: Re-Growing Body Parts
MAKOplasty Robotic Knee Surgery
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Zimmer Closes the Gap
Zimmer reported a 3.7% increase in sales to $1.06 billion for the second quarter of 2010.
While the sales number came in shy of analyst's expectations, margins improved and earnings beat expectations.
David Dvorak, Zimmer's President and CEO, said, "Our second quarter performance was characterized by…continued introduction of important new products and instruments. We anticipate accelerated growth through 2010."
|
Zimmer |
2Q10 |
|
|
|
Sales $mm |
% Change |
|
Net Sales |
$1,060 |
up 3.7% |
|
Reconstructive |
$808 |
up 4% |
|
Hips |
$317 |
up 3% |
|
Knees |
$453 |
up 4% |
|
Spine |
$58 |
down 10% |
|
Extremities |
$38 |
up 13% |
On a reported basis, knees were up 4%, hips rose 3% and extremities improved 13%. The stepchild in the group was spine, which declined by 10% due to continued reimbursement issues with the Dynasys system.
Dvorak said the company noticed a procedural "step-down" in hips and knees for the quarter, but cautioned analysts not to focus on just one quarter.
Closing the Hip and Knee Gap
BMO Capitol Markets analyst Joanne Wuensch said that while the company's hip and knee sales continue to lag the market growth rate, the gap appears to be closing. She said new product traction should help close the gap even further.
Some of those new hip products include the recent launches of two new Acetabular Cup systems in the U.S. (approved in November 2009)—the Continuum Acetabular Cup offering surgeons increased flexibility in the form of multiple bearings and a MMC metal-on-metal large head cup system.
For knees, Wuensch said that traction with patient-specific instrument sets (PSI) will more likely be realized in the fourth quarter, contributing to further share gains as physicians are trained and MRI centers are qualified.
China
China was also on Dvorak's mind during the quarter as he announced the acquisition of Beijing Montagne Medical Device Co., a manufacturer and distributor of orthopedic implants.
Given China’s plan to spend $125 billion to create a health insurance system over the next few years, Wuensch said companies are eager to gain a foothold in a market with 1.3 billion people and a rising standard of living. She said Zimmer is one of the first companies (joining Smith & Nephew and Medtronic) to set out a strategy with the acquisition.
Dvorak said the transaction makes Zimmer the largest manufacturer of reconstructive orthopedic products in China. The musculoskeletal market in China, according to Wuensch, is estimated to be ~$1 billion (composed of one-third hips & knees, just over one-third trauma, and the balance in spine). Dvorak expects that market to double within three years.