The top four companies offering knee and hip joint reconstruction products account for over 90% of the U.S. and global reconstruction market. After two years of slow, but steady growth all four companies, DePuy Synthes (JNJ), Smith & Nephew, plc (SNN), Stryker Corporation (SYK), and Zimmer Biomet Holdings, Inc. (ZBH), reported a substantial reversal in Q1-2020 earnings due to the economic impacts of COVID-19. Many countries in Europe and Asia, as well as most states in the U.S. put a moratorium on elective procedures, which include most hip and knee replacement surgeries, during the second half of Q1 and currently into the first half of Q2. Some countries and U.S. states remain under shelter-in-place conditions with plans for a slow return to normalcy. Most plans include resumption of elective procedures early in the phased reopening of economies so surgeons are gearing up to return to the OR in the coming weeks. Dozens of manufacturers and clinics together have already laid-off or furloughed thousands of staff and employees due to significant losses in revenue.
The Global COVID Effect on Recon Sales
Year-over-year, Q1-2020 showed retraction of 7.2% for the global reconstruction market, -7% and -7.4% for global knee and hip, respectively. The U.S. market fared slightly better with a 5.3% decline for the combined reconstruction market, and -5.2% and -5.3% for knee and hip, respectively. Both global knee and hip reconstruction growth fell by over 1,100 basis points (bps) each in Q1-2020 compared with Q4-2019. The quarter-over-quarter drop for U.S. knee and hip reconstruction of 940 and 950 bps, respectively.
The greatest losses were reported by Zimmer Biomet with a greater than 10% decrease in growth in the U.S. and globally for hip reconstruction products knee sales. Zimmer has seen negative growth in domestic knee sales as it has been slowly rolling out the PERSONA knee system and the ROSA robotic surgical assistant. Despite Zimmer’s negative revenue growth, the company retains 34.4% of global reconstruction market share, and 32.3% of the U.S. market.
Stryker suffered the mildest decline of the four with -3.5% revenue growth for global reconstruction. Stryker’s surgical robot, the MAKO, buoyed the company’s U.S. and global knee sales, limiting U.S. revenue growth to only a 0.4% decline. Stryker’s decline in hip sales, both domestic and global, were in line with the other manufacturers.
DePuy Synthes’ year-over-year revenue retraction was below the average decline for each category, but the company had been reporting below-market growth for at least two years. DePuy’s losses were better than the market average, likely due to sales of the ATTUNE knee product family.
