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A Zimmer executive explains to analysts why his company has so far steered clear of two major trends in orthopedics: robotics and value implants.
Marie Thibault
April 30, 2015
3 Min Read
A Zimmer executive explains to analysts why his company has so far steered clear of two major trends in orthopedics: robotics and value implants.
Marie Thibault
While many of their peers have turned toward technologies like robotics or to cost-saving offerings like value implants, it seems Zimmer plans to stay away from those hot trends, at least for now.
This is notable because some of Zimmer's biggest competitors—Stryker, Smith & Nephew, and Johnson & Johnson—have either entered or announced plans to enter the robotic space. In addition, hospitals are supposedly looking for less expensive orthopedic implants, either as pared-down versions of higher-priced options, or by removing the service component from the purchase.
After prodding from analysts on the company's April 30 earnings call, an executive discussed Zimmer's stance on robotics. According to a Seeking Alpha transcript, James Crines, Zimmer's chief financial officer, said:
"We have been developing technologies that we believe are smaller, cheaper, faster to bring about better clinical solutions and reproducible solutions in a cost efficient way...We don't think that going backwards in procedure time for example for changing the work flow in a fundamental way is going to lead to better patient outcomes..."
A Stryker executive recently called the robotic Rio System, which came to the company through its acquisition of MAKO Surgical, an "investment" that should attract more patients to a hospital.
While most of the discussion on the analyst call revolved around the anticipated May close of the company's Biomet acquisition, another analyst pointed out that he had heard of competitors trying out the value implant trend. Crines responded by pointing out improved pricing stability over the past couple years and warning of a potential risk of the trend:
"The data points that I think are worth emphasizing is the stability of the pricing environment...by way of price experience, we’re continuing to maintain price and retrieve mix opportunities for our premium technologies and all those price points...It’s going to be the case, however, that if one of these so called value implant providers cause harmful effects to patient outcomes that with the movement away from fee for service in jurisdictions like the United States and the cost of re-admissions or complications in those cases being internalized relative to the provider they are going to care deeply about making sure that they get [it] right for the patient as they should. So if someone is out to save a little bit of money in exchange for not delivering the right kind of patient outcome, the economic system is going to penalize that provider in a material way in a much more significant manner than it has historically."
Zimmer's combination with Biomet, initially announced a year ago, is now expected to close in May, instead of April as previously expected. Executives describe the transaction as offering increased scale and filling out the product portfolio.
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Marie Thibault is the associate editor at MD+DI. Reach her at [email protected] and on Twitter @medtechmarie.
[Image courtesy of BOYKUNG/FREEDIGITALPHOTOS.NET]
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