Revenue growth in the bone graft substitutes market has continued, despite the global economic downturn and a cooling of the spinal fusion market, which is one of this market’s greatest drivers. Bone graft substitutes reduce the need to harvest healthy bones (autografts) from a patient to facilitate bone fusion or to fill voids left in diseased or surgical bone. These products reduce or eliminate the need for autografting procedures, which reduces surgical time and expense, as well as discomfort for the patient. As such, the increasing use of bone graft substitutes is part of an ongoing trend towards short and more streamlined surgical procedures. Though a mainstay in spinal fusion and deformity correction surgeries, bone grafts are being increasingly used in fracture and extremity treatment.
Continued Product Innovation Offsets Downward Pressures on Pricing
Growth in spinal fusion procedures decelerated in 2009 and 2010, but recovered somewhat in 2011. The market for spinal fusion has been drawing increased scrutiny, and as such, many in the industry consider the heavy growth phase to be nearing an end. However, U.S. bone graft substitute manufacturers have been increasingly pushing their products into the premium space in order to maintain average selling prices. The next-generation products offer better handling properties and clinical effectiveness; manufacturers are thus increasing differentiation and innovation to maintain product margins, making the United States one of the most active markets in the world for bone graft substitutes, as well as one of the most expensive.
Growth Opportunities: Foot and Extremity Reconstruction
The fastest-growing market segment outside of spine is for foot reconstruction, which is an emerging field in its own right. The popularity of bone graft substitutes in foot reconstruction is following growth trends in deformity correction devices, such as the new plate and screw systems that are now part of one of the fastest growing markets in orthopaedics. Foot reconstruction is also a growth area because of the maturity of the large joint market. By comparison, foot treatment is underserved, especially given the population of obese and diabetic patients in the United States. Extremity treatment is an increasingly viable career path for orthopaedic surgeons given the large number of experienced orthopaedists currently serving the needs of hip and knee patients.
However, one of the limiting factors is the availability of trained surgeons, as the number of large joint orthopaedists outnumbers those for small joint and extremity by an order of magnitude. Another limiting factor is the small volumes of bone graft used per procedure, due to the smaller anatomies involved. Spinal deformity correction can require upwards of 30 cc of bone void fillers, whereas foot reconstruction surgery can use as little as 1 cc. An additional area of unfulfilled potential for the foot reconstruction bone graft market is the lack of FDA approval for advanced products such as growth factors that are available for other orthopaedic indications.
|U.S. orthopaedic biomaterials market. Source: iData Research Inc.
Synthes, DePuy, and Stryker Lead the Pack
The competitive landscape for bone graft substitutes is driven primarily by spinal implant manufacturers, with Synthes, DePuy, and Stryker accounting for the majority of sales. The importance of the spinal implant market was highlighted by Stryker’s acquisition of Orthovita
in 2011. The latter company has been a leading manufacturer of synthetic bone graft substitutes for a number of years; the merger of the two creates competitive synergies for both parties. However, the barriers to entry for the synthetic bone graft substitute market are low, with many companies offering a product as an adjunct to their existing spinal hardware sales. The most commercially successful products are the ones that have found broad distribution outside of their companies’ local sales channels.
Competition will likely be the most active outside of traditional bone void fillers. With the cooling off of the bone morphogenetic proteins (BMPs) growth factor market, the market is now looking towards other high end products to compete for the attention that was once solely owned by Medtronic’s InFuse. Osiris Therapeutics first licensed Osteocel in 2005, and it was the first commercially available orthopaedic stem cell product. As of 2011, there were four companies involved in this market. Stem cells offer a premium alternative to traditional bone void fillers, but with less safety concerns compared to BMP growth factor therapy.
Allograft tissue banks are playing and increasing role in the commercial bone graft substitute space. The majority of these organizations operate on a nonprofit basis, but supply the medical companies directly. An example of this is Nuvasive, who is the current holder of Osteocel, which is based on donor material procured by AlloSource.
Emerging competitors are keen to replicate the commercial success experienced by Medtronic, but the production of FDA approved growth factors and other tissue engineering products has been difficult for most companies, with a number of potential products that have since been abandoned during the course of development. However, the market potential is enormous. The revenues generated by InFuse, though declining, exceeded those for all other bone graft substitutes in 2011. However, research and development for comparable growth factor products is many times more expensive than that for traditional bone graft substitutes.
The information contained in this article is taken from a detailed and comprehensive report published by iData Research entitled “U.S. Market for Orthopaedic Biomaterials 2012”. For more information and a free synopsis of the above report, please contact iData Research at: [email protected]
Kamran Zamanian, PhD is president, CEO, and founding partner of iData Research Inc. He has spent more than 20 years working in the market research industry. He received his Bachelor of Science in engineering from the University of Dundee, and received his Master of Science and doctoral degrees from the University of Manchester in market research and technology. Contact him at [email protected].
Douglas Fung is research analyst manager at the firm.