Between the subpoenas, mergers and race to roll out the latest-and-greatest technology, you just never know what will happen next.

Therefore, the staff of Orthopedic Design & Technology was kept quite busy poring through volumes of information to compile our first in-depth report of the orthopedic industry’s top 10 companies. This undertaking required countless hours of crunching numbers and researching all the happenings within these companies in 2005 and 2006.

Many of our top companies, ranked by total 2005 net sales, have enjoyed several years of double-digit growth, but is it realistic to think they can keep up this pace? While orthopedic manufacturers have long benefited from pricing power—often increasing prices on artificial knees and hips by an average of 8% annually—reimbursement officials and hospital executives are taking notice and will probably start striking back sooner than later, especially given that insurers are starting to squeeze hospitals.

According to Bruce N. Nudell, an analyst at Sanford C. Bernstein & Company who surveyed 100 hospitals, pricing variations will be unsustainable in times to come and, consequently, orthopedic manufacturers are going to have to change their ways. He went so far as to predict that product prices will flatten—or even decline—in the future.

Regardless, NY-based Healthpoint Capital, a financial firm devoted solely to the orthopedic sector, forecasts that the industry will see 12% growth overall for 2006 and 15% continued long-term growth. If pricing manages to somewhat temper the industry’s success, executives are still banking on the fact that a high volume of people are going to need orthopedic relief in coming years. And advances such as hip resurfacing are sure to keep orthopedic manufacturers in the news.

For more perspective on the pricing war that seems ready to erupt, be sure to read Marty Gold’s and guest columnist Irwin Katz’s column, Orthopedic Insights.

As for our top companies report, it is our hope that this will become one of your most anticipated features in coming years. As you’ll see, the majority of the top 10 are billion-dollar players, but with smaller companies becoming more innovative and aggressive, it will be interesting to see how this list shapes up in the next few years.
 

Jennifer Whitney
Editor