Success in an Evolving Industry

Second annual ODT Expo spotlighted the sector's strengths, opportunities and growing pains.

Christopher Delporte
Group Editor

For the second year, the orthopedic industry flocked to Fort Wayne, IN for the Orthopedic Device & Technology Conference and Exhibition. Both attendees and exhibitors experienced a much larger ODT event this year, both in scope of topics covered and the number of participants. Consistent themes during this year’s conference were the orthopedic industry’s opportunity and ability to innovate, but also an awareness of and a need to prepare for an evolving marketplace. The message: Market growth alone isn’t a predictor of success.

To lead off the second annual event, J. Patrick Anderson, vice president of corporate affairs for Stryker, provided a state-of-the-industry report. In addition to impressive industry growth predictions and statistics, Anderson went beyond the numbers to discuss the industry’s motivation and ability to seize the potential opportunities in the coming decades.

The industry has grown at an average rate of 12% over the last decade and, for example, could reach $434 billion by 2030 if that rate of expansion continues. Even at 8% growth during the same period, the industry would be worth $181 billion. Domestic growth, he said, is not expected to soften.

George Grobe III (center), vice president of research for J&J’s DePuy Orthopaedics, addresses the ODT Expo audience during a panel discussion on R&D.

Even an area of the industry that has experienced a slower growth rate recently—large joints—still is expected to make impressive gains while the spine, trauma and biologics sectors grow at more impressive rates. Primary total knee replacement surgeries are expected to grow a staggering 673% between 2005 and 2030 and primary total hip replacements are predicted to increase 174% during the same period.

He called these predictions “exciting, but sobering.” Anderson cautioned the audience that this kind of staggering growth would depend, in large part, on how orthopedic companies respond to numerous challenges from a variety of sources.

“What are we going to do to be prepared for long-term success in orthopedics? Are we ready? It’s up to us. We need to build trust and keep it at a high level in this industry,” he said.

A group of industry experts during a panel discussion on research and development discussed many of the industry’s challenges and opportunities. Panelists agreed that all areas within an organization have responsibility in the success of launching new products. To illustrate this point, a significant portion of the R&D panel was spent discussing reimbursement issues and how R&D decision-making is affected by a company’s ability to get paid for its new and existing products.

The ODT Expo showcased the products and services of more than 75 exhibitors.

According to George Grobe III, PhD, vice president of research for Johnson & Johnson’s DePuy Orthopaedics division, it’s no longer about departments working in isolation. So many factors affect the development and launch of new products that people can no longer say “this isn’t my job.”

“Not only do you have to make sure a product is clinically sound, but you also must ensure that it’s fiscally sound,” Grobe said. “The academic and research side need to be aware and involved in the regulatory and reimbursement side.”

Frank Chan, PhD, director of research for Medtronic’s Memphis, TN-based spinal and biologics business, agreed. “There are many challenges when it comes to reimbursement. There may be new breakthroughs, but what will really drive adoption is whether or not these new technologies will be paid for,” Chan said.

Grobe also said that the industry often is “shy of major earth-shaking platform changes.” He explained that the industry—particularly large companies—often can be more comfortable with incremental change than sweeping breakthroughs.

“New products take tremendous amount of dollar input, are difficult to start up and can be difficult to get reimbursement for. So you tend to see [breakthrough products] from smaller start-ups. Very often they tend to see the world a little differently and see the possibilities and are willing to tackle some of those challenges and risks,” he said. He added, however, that doesn’t mean companies rest on their laurels, saying that patients continually benefit from “new levels of implant performance.”

To reach new levels of performance—and the ever-important speed to market—device manufacturers turn to suppliers to help them with a variety of services—in some cases even complete start-to-finish manufacturing services.     

But no matter what supplier mix a device OEM may choose, it’s critical to maintain tight and vigilant relationships, cautioned Bill Fliotsos, purchasing director for Zimmer in Warsaw, IN. “We hold suppliers to high standards because they are an extension of our manufacturing operation,” Fliotsos said.

Ehab Esmail, director of regulatory affairs for Arlington, TN-based Wright Medical Technology, agreed, noting that Wright continually audits its suppliers to ensure compliance with quality standards and regulations. “You can’t risk not doing it, because ultimately the manufacturer is responsible to regulatory authorities and the patient for the performance of the products,” he said.         

But no matter what the risks, most speakers focused on the benefits and rewards of being in the orthopedics business.

“I can’t imagine a better industry or better opportunity for growth,” said Andy Miclot, global senior vice president of orthopedic marketing for Orthofix.