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U. S. Demand for Orthopedic Implants to Approach $22 Billion in 2012


According to a recent market report, demand for orthopedic implants in the United States is expected to increase 8.9% annually to nearly $22 billion in 2012. Each of the four major orthopedic product segments—reconstructive joint replacements, spinal implants, orthobiologics, and trauma implants—is expected to provide strong growth opportunities (see Table).

Item

Revenue 2002
($ millions)

Revenue 2007
($ millions)

Projected Revenue 2012
($ millions)

Annual Growth 2002-2007
(%)

Annual Growth 2007-2012
(%)

Orthopedic Implant Demand

8,550

14,270

21,900

10.8

8.9

Reconstructive Joint Replacements

4,170

6,150

9,040

8.1

8.0

Spinal Implants

1,810

3,630

6,150

14.9

11.1

Orthobiologics

1,070

2,300

3,550

16.5

9.1

Trauma Implants

1,500

2,190

3,160

7.9

7.6

The ortho sector trends are described in Orthopedic Implants, a study from the Freedonia Group Inc. (Cleveland). According to the report, the market for reconstructive joint replacements will gather momentum from an aging population and the widespread prevalence of physically active lifestyles. The value of joint replacement sales is forecast to reach $9 billion in 2012, according to the study.

Knees and hips, which are highly vulnerable to degeneration caused by arthritic conditions, are expected to account for the vast majority of reconstructive joint replacements. Continuing advances in materials and design will improve the safety and performance features of knee and hip implants and encourage their expanding use in the treatment of severe arthritis, says the report.

Martineau
Martineau: Gathering momentum.

According to Freedonia analyst Bill Martineau, a key advance in joint-replacement materials has been the development and application of highly crosslinked polyethylene, which is used in hip socket components. “Because of the crosslinks in its molecular structure, the polymer causes less friction against the metal ball component, and provides for greater implant durability,” he says.

“One notable advance in design is the mobile-bearing knee—such as Zimmer's NexGen LPS Flex—which provides the patient with greater mobility while reducing pain,” says Martineau. “In mobile-bearing knees, the polyethylene articulating surface component rotates slightly with the patient's natural movement. This provides an enhanced degree of flexion (bending), enabling patients to more easily carry out normal daily activities, such as climbing stairs and standing from a sitting position.”

The joint-replacement segment has also benefited from improvements in minimally invasive surgical techniques. In knee- and hip-replacement procedures, these improvements have shortened patient recovery periods and reduced the incidence of complications such as postoperative pain. “Many knee replacements now only require a three- to five-in. incision for implantation,” notes Martineau. “By contrast, conventional surgery requires an eight- to twelve-in. incision.”

Among other reconstructive joint replacements, shoulder systems will post the strongest demand and realize the best growth opportunities based on advantages over alternative therapies in the reduction of pain and restoration of mobility.

The report projects that the market for spinal implants will also show strong growth, as a result of advances in product technologies and related surgical techniques, coupled with an increasing prevalence of chronic back conditions. Fixation devices and artificial disks used in spinal fusion and motion preservation surgeries—especially procedures for the repair of vertebrae and replacement of degenerative disks—are expected to account for the largest share of the market and best growth opportunities.

Although a number of emerging companies focused on the spine market have become acquisition targets over the past few years, Martineau believes the segment isn't done creating new companies. “The spinal segment still offers growth opportunities to smaller companies, especially in the area of disk and disk nucleus replacement,” he says. “The top six companies hold 87% of the worldwide market, but smaller producers—such as Exactech (through Altiva), Orthofix, Osteotech, Pioneer Surgical Technology, and RTI Biologics—are still able to compete by developing proprietary fixation systems and orthobiologics (especially bone growth factors and substitutes). Over the long term, this segment will consolidate, as advances in artificial disk replacements reduce or slow growth in the number of spinal fusion procedures.”

Orthobiologics will also realize strong growth, as breakthroughs in biotechnology and nanotechnology lead to the commercialization of new and improved products. Growth factors, grafts, and synthetic materials for the replacement and fortification of diseased and damaged bone are among the orthobiologics expected to fare especially well in the marketplace. Ongoing formulation improvements will keep bone cement a leading material used in the placement of reconstructive joint replacements and spinal implants.

Investment in the orthopedics sector is generally believed to be weaker than it was in the recent past, and this could have some effect on the growth of early-stage companies in the sector. “Because the top seven companies dominate sales and lead most product development activities, early-stage companies will continue to experience high barriers to entry and difficulty in attracting investment,” says Martineau. “Moreover, the potentially strong growth areas for smaller firms—such as bioengineered growth factors and tissue replacements—are subject to stringent government regulations that lengthen the commercialization timetable.”

Further information about the report is available from the Freedonia Group Web site at www.freedoniagroup.com.

© 2008 Canon Communications LLC

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