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7. Biomet

$2.7 Billion

KEY EXECUTIVES:

Jeffrey R. Binder, President and CEO

Daniel P. Florin, Sr. VP and Chief Financial Officer

Glen A. Kashuba, Sr. VP, President of Biomet Trauma andBiomet Spine

Jon C. Serbousek, Sr. VP, President of Biomet Orthopedics, LLC

Maggie Anderson, Sr. VP, President of Biomet 3i, LLC

Renaat Vermeulen, Sr. VP, President of Biomet Europe, Middle East and Africa

Robin T. Barney, Sr. VP, World Wide Operations

NO. OF EMPLOYEES: 7,469

GLOBAL HEADQUARTERS: Warsaw, Ind.

“My predictive powers have been called into question,” Jeffrey R. Binder quipped to Wall Street analysts that day last fall. It was a Tuesday in mid-October, and Binder was on a conference call with analysts to discuss the worst quarterly financial result in his three-and-a-half-year tenure with Biomet Inc. While he had good reason to be in a foul mood that day, Binder’s demeanor was anything but hostile. Quite the contrary: It was cheery, playful, even downright jovial.


Somehow, Binder’s positive mood that day seemed out of place, almost surreal. Even as he reviewed the company’s disastrous FY2011 first-quarter showing, Binder maintained his sanguinity, telling analysts that he remained optimistic about the long-term growth potential of the orthopedic industry.
Such potential, he reasoned, would come from baby boomers as they grow restless from “sitting on the sidelines with pain” and from a lingering unmet need that will lead to the differentiation for new products.


Binder, however, stopped short of predicting the timing of the market’s return to previous growth levels. He only would repeat to analysts his optimism for the future.


Though he might not have been able to (or wanted to) predict future growth, Binder certainly couldn’t deny its existence at his company in fiscal 2010. Thanks to a particularly successful fourth quarter, Biomet achieved an 8 percent increase in net sales to $2.7 billion. Gross profit jumped 12 percent to $1.8 billion and operating income soared to $356.6 million, compared with a loss of $348.3 million in FY2009.


“We made great progress during fiscal 2010,” said Binder,president and CEO. “Our consolidated sales growth accelerated in the fourth quarter, contributing to very healthy sales results for our full fiscal year. Double-digit sales growth for orthopaedic reconstructive products continued to drive our top line performance during the quarter and year, and allowed us to capture additional share gains in this market during fiscal 2010.”


Robust domestic and international sales during the fourth quarter also boosted overall revenue in fiscal 2010 (year ended May 31, 2010), according to Biomet’s latest annual report. U.S. sales increased 8 percent during the fourth quarter to $423.2 million, while International sales (primarily those in Canada, Mexico, South America and the Pacific Rim) skyrocketed 36 percent to $92.9 million.
European sales climbed 4 percent to $186.4 million. Excluding dental and the impact of foreign currency, net sales jumped 9 percent worldwide, 8 percent in the United States, 4 percent for Europe and 29 percent internationally during the fourth quarter.


Fiscal 2010 sales totals were just as strong across most world markets. Domestic sales generated $1.64 billion for the Warsaw, Ind.-based company, an 8 percent increase compared with the $1.52 billion in U.S. transactions reported in fiscal 2009. European sales edged up 2 percent to $728.8 million and international sales mushroomed 23 percent to $325.1 million. Excluding dental and the impact of foreign currency, net sales worldwide rose 8 percent with 8 percent growth in the United States, 4 percent growth in Europe and 17 percent growth internationally.


Executives attributed such robust sales in FY2010 to new product launches and continued market infiltration of the company’s older devices. New sales drivers included the Regenerex Primary Patella and the OptiLock Proximal Humeral Plating System, a device used to fix fractures, osteotomies and non-unions of the humerus (upper arm). Featuring SphereLock technology, the OptiLock product offers physicians an anatomically contoured, low profile plate with optimized bone screw trajectories that allow for minimal soft tissue impingement. Meanwhile, the T.E.S.S. (Total Evolutive Shoulder System)—a device available exclusively overseas for all indications of shoulder arthroplasty—made inroads in Europe.


Reconstructive products generated the most revenue for Biomet in fiscal 2010, boosting worldwide sales 9.3 percent to $2 billion, or 75 percent of the firm’s overall net sales. Analysts estimate the company gained 0.8 percent in reconstructive market share, gaining 1.2 percent share in knees and tying with DePuy Orthopaedics Inc. in hips, gaining 0.5 percent share.


Global knee sales rose 13 percent worldwide and 11 percent in the United States, thanks mostly to strong demand for the Vanguard Complete Knee System, Vanguard SSK Revision Knee System, E1 Antioxidant Infused Technology Tibial Bearings, the Signature Personalized Patient Care system and Regenerex Primary Tibial Trays.


Global hip implant sales rose 7 percent worldwide and 6 percent domestically as the Regenerex RingLoc and Modular Acetabular Systems, the Biolox delta, ceramic femoral heads, and both the Taperloc and Echo Hip systems grew in popularity.


European hip sales, according to executives, were driven by the Bi-Metric and Exceed ABT Advanced Bearing Technologies Acetabular System.


Extremity product sales increased 29 percent worldwide and 44 percent domestically. Primary growth drivers included the Comprehensive Primary and Reverse Shoulder Systems, the Comprehensive Fracture System, the Copeland Shoulder, the Discovery Elbow System and the ExploR Modular Radial Head. European extremity sales received a boost from the anatomical and reverse versions of the T.E.S.S. Shoulder System.


Though they didn’t capture the lion’s share of revenues for the company in FY2010, Biomet’s Spinal and Fixation divisions each garnered nearly an identical amount of cash. Fixation posted $237.8 million in sales, a 1.6 percent increase compared with the $234.1 million the division reported in FY2009. Spinal devicesfollowed closely behind, earning $236.2 million. Executivesattributed the 6.3 percent growth in spinal devices to increased sales volume within Biomet’s three major spine implant segments: spacer, thoracolumbar and cervical.


Spacer product sales increased on the strength in sales of the Solitaire Anterior Spine System, which includes the PEEK-OPTIMA version of the Solitaire Spine System for Anterior Lumbar Interbody Fusions. Thoracolumbar product revenue swelled from a strong market acceptance of the Polaris product line, including the Polaris Deformity System, which features Trivium Derotation instruments. Sales of cervical products increased mostly from healthy demand for the MaxAn Anterior Cervical Plate System.


Fixation product sales reflected double digit growth of craniomaxillofacial fixation devices and high single digit growth of internal fixation systems, though both kinds of products were offset by lower sales of external fixation and electrical stimulation goods. During the year, there was continued strong market demand for the TraumaOne System, TMJ Replacement System and the OnPoint Diagnostic Scope System, according to Biomet’s annual report. Key internal fixation products included the Phoenix Ankle Arthrodesis nail, the Forerunner Plating System and the OptiLock Proximal Humeral Plates.


Double-digit sales growth in Biomet’s sports medicine division helped push sales of “other” products to $199.5 million, a 1.3 percent increase compared with the $196.9 million such devices brought to the company in FY2009. Top sellers in this category in fiscal 2010 included the MicroMax Flex Suture Anchor, the ComposiTCP Interference Screw, the ZipTight Fixation Device, the MaxFire Meniscal Repair Device, and the ToggleLoc Femoral Fixation Device with ZipLoop Technology. European clinicians favored Gentle Threads Interference Screws and the EZLoc Femoral Fixation Device.

Biomet bolstered the product pipeline in its sports medicine franchise during fiscal 2010 with the purchase of Cartilix, a 7-year-old Foster City, Calif.-based cartilage repair company that developed ChonDux, a proprietary cartilage regeneration technology for knee repair. Clinical trials for the ChonDux technology currently are underway (it is not yet commercially available).


Biomet’s Dental division was the only segment to lose money in fiscal 2010. Sales fell 2 percent worldwide and in the United States, though executives claim the market began to stabilize and showed signs of improvement during the last half of the year. To prevent a similar loss in FY2011, Biomet 3i has partnered with Renishaw plc, a United Kingdom-based manufacturer of in-lab dental scanning systems to provide customers with access to the latest digital dentistry technology.


The relationship provides laboratories using Renishaw Contact Scanners and 3i incise computer-aided design (CAD) software broader access to a wide range of dental milling options, including 3i incise Copings and Frameworks in zirconia and cobalt chromium and the ability to scan precision copy milled bar patterns. Biomet bigwigs claim that laboratories utilizing the ProceraForte Scanner also can benefit from the various options by using the 3i incise CAD software.