The State of Stryker: CEO Kevin Lobo Focuses on Efficacy Rather than Product Innovation

It’s common knowledge that aging populations the world over are fueling growth in many medical device sectors. Orthopedic devices, in particular, enjoy growth when patients get older, and now as baby boomers reach their sixties procedures such as total knee arthroplasty and other total joint replacements are much more in demand. A rise in obesity as well as (conversely) people seeking a more active lifestyle also have contributed to a rise in in the need for orthopedic devices, procedures and surgeries in recent years.

Stryker’s core business has always been orthopedics, reiterated the company’s new CEO and President Kevin Lobo at Cleveland Clinic’s Medical Innovation Summit 2012, but it is now moving away from a “product” focus to a “systems” focus. The future of orthopedics, as had been the theme of the conference’s opening day, is not in innovation, but in value propositions, according to Lobo and others. Key questions that medical technology professionals must ask include: How much value does this device or technology have for the consumer, and how much return on investment will the designer, manufacturer, surgeon et al see from the technology?

“We have a master brand,” said Lobo, “and frankly our customers appreciate it more than we do. We [now] have a brand plan, and will be more assertive in branding ourselves.” The company has launched a direct-to-consumer advertising effort with its Triathlon Custom Fit Knee System. Television and print advertisements have been touting the seven-year-old device unofficially re-named for consumers as the “Get-Around Knee” to better communicate its intended use. “Patients are taking charge of their healthcare,” Lobo continued. “They are better educated and more Internet savvy now.”

Stryker’s marketing strategy for the knee includes tracking online ad clicks, and the company been able to track a significant percentage of those clicks all the way to surgical provider websites.

Branding, systems, efficacy—these strategies are just different ways of saying that Stryker has a good thing going, and is going to keep going with it, according to Lobo. On a “freshness index,” an informal way of gauging companies’ products, the very successful Triathlon knee replacement would score a “big fat duck’s egg,” said Lobo, because it is seven years old. However, it is a proven knee, and with a new marketing focus, it is continuing to do very well in the marketplace. “Newness isn’t as important as it used to be,” Lobo added.

Moderator David Cassak, vice president of content and managing director of medical devices for Elsevier Business Intelligence, asked Lobo what it meant to be at the top of its field. Stryker has consistently been number one or two in the orthopedics industry in terms of revenue and market share.

“I would never be content to be number four—but if you’re smaller, it’s tough,” said Lobo. “For instance, we only have a 10 percent market share in spine, but we as a large company can absorb the body blows because we’re so big. You see it with startups. It’s hard. Two to three years ago, the spine segment was booming, and now it’s going backwards. The metal spine implant business faces a lot of pressure—but biologics is growing strongly.”

Lobo’s advice for smaller companies is to focus on new procedural approaches and accumulating lots of clinical evidence for their product. In fact, it’s companies that fit that description that Stryker has bought over the past several years.

Lobo predicted more orthopedic company consolidations in the years to come. During slow market growth, he said, there tend to be more acquisitions—growth is in a slow period now, so if it sustains, there will be more mergers forthcoming.

Does this mean more acquisitions in Stryker’s future? Lobo hinted that Stryker may be following in Medtronic’s footsteps sooner rather than later. Medtronic recently made two major purchases in China, the first of which was orthopedic company Kanghui.

“Stryker has high growth in premium markets in India and China,” Lobo said. “It’s a smart move to get into value markets. Our best markets are in the United States, but you’ll hear about Stryker making moves like that [of Medtronic] in the future.”

Lobo joined Stryker just last year in April, and has been CEO and president for less than a month. His most recent position was group president of Stryker Orthopedics. He has had a 25-year career in business, including executive positions in general management and finance. His medical industry experience includes time as chief financial officer (CFO) of Johnson & Johnsons’s (JNJ’s) McNeil Consumer Healthcare, CFO of Ortho Women’s Health and Urology, and general manager of McNeil Canada. In 2005, he was named president of JNJ’s medical products business in Canada, and in 2006 he became president of Ethicon Endo-Surgery Inc.

Stryker Corp. is based in Kalamazoo, Mich. While its main business is orthopedics—the company was founded by an orthopedist, Homer Stryker, M.D.—it also provides medical products in the neurovascular and surgical spaces. Many of its recent acquisitions have been of medical/surgical device companies, including neurotechnology company Surpass Medical Ltd.

Photo: Kevin Lobo.