07.24.08
1. Stryker Corp.
$6 Billion
KEY EXECUTIVES:
John W. Brown, Chairman
Stephen P. MacMillan, President and CEO
J. Patrick Anderson, VP, Corporate Affairs
Dean H. Bergy, VP and CFO
Andrew Fox-Smith, President, International
Michael P. Mogul, President, Orthopedics
Stephen S. Johnson, Group President, MedSurg
Timothy J. Scannell, President, Spine
James E. Kemler, Group President, Biotech, Osteosynthesis and
Development
NO. OF EMPLOYEES:
18,800
HEADQUARTERS:
Kalamazoo, MIJoining an elite few, Stryker has managed to achieve a best-in-class track record for the seventh consecutive year: For 2007, the company recorded double-digit sales growth of 16.6%. Given that the company was one of only 19 Fortune 500 companies to achieve double-digit growth for six consecutive years through 2006, and the number of firms able to continue this heady gain for 2007 most likely dwindled as the US economy tumbled, the latest feat is quite an achievement.
Net sales totaled $6 billion for the fiscal year ended Dec. 31, compared with $5.1 billion for 2006. With such financial strength, the company managed to increase operating cash flow in excess of $1 billion, an 18.6% increase. Double-digit growth was apparent in various areas of Stryker’s financial recordings for the year.
Domestic sales (64% of total revenues) were nearly $3.9 billion, a 17% increase from $3.3 billion in 2006. International sales (36% of total revenues) grew 16%, from $1.8 billion in 2006 to nearly $2.2 billion in 2007.
In terms of product lines, Stryker operates with two major segments including Orthopedic Implants and MedSurg Equipment.
The Orthopedic segment recorded net sales of $3.57 billion, representing 15% growth from $3.11 billion in 2006. Within this segment, sales of hip, knee, trauma, spinal and craniomaxillo-facial (CMF) implant systems grew 9%, 16%, 19%, 25% and 17%, respectively. Hip sales were driven by sales of X3 polyethylene and Accolade cementless hip products in the United States, as well as solid sales for the Exeter, Trident, X3 polyethylene and Accolate products in Europe, the Pacific region and Latin America. Knees had strong growth due to strong sales of the Triathlon Knee System in the United States, Europe, Canada and the Pacific region, along with growth of the Scorpio Knee System in Europe, the Pacific region and Latin America. Trauma saw sales gains with its Gamma3 Hip Fracture System in the United States, Europe, Canada and the Pacific region, as well as sales growth for the T2 Nailing System in the United States and Europe. Spine grew mostly as a result of strong product demand for thoracolumbar implant systems, interbody devices and cervical implants. CMF implant sales were aided by growth of products for neurological indications and CMF implants in the United States, Europe and the Pacific region.
MedSurg Equipment had net sales of $2.43 billion, a 19% increase from $2.04 billion in 2007. Sales of surgical equipment and surgical navigation systems increased 20% due to strong sales in powered surgical and operating room equipment in the United States, Europe and the Pacific region; another contributor was constant currency sales growth of interventional pain products in Europe. Sales of endoscopic, communications and digital imaging systems grew 20% in 2007, aided by strong growth in medical video imaging equipment (particularly the 1188 HD Camera) and complementary products such as the X8000 Lightsource and Vision Elect Monitor; arthroscopy and communication products also achieved strong sales in the United States, Europe and the Pacific region. Finally, sales growth of 16% for patient handling and emergency medical equipment was attributed to increased sales of stretchers and emergency medical equipment in the United States and Europe, as well as hospital beds in the United States and maternity beds in the United States, Canada, Europe and Latin America.
One of the company’s top goals has been to invest in R&D to propel future growth and, as such, Stryker increased its expenditures in this area 16% to $375 million. As a result of increased spending for R&D activities over the years, Stryker was able to introduce several new products in 2007. The Orthopedic Implants segment rolled out the condylar stabilizing ultra-congruent insert for the Triathlon Knee System, the Scorpio NRG with X3 advanced bearing technology and the Omega 3 Compression Hip Screw System. The MedSurg equipment segment also launched InTouch, a high-acuity care bed; the SDC Ultra, an all-in-one medical imaging information management system; the CORE Sumex drill for use in ear/nose/throat procedures; and the 45L PneumoSure insufflator.
One of Stryker’s top achievements, in terms of product approvals, was US clearance for the Cormet Hip Resurfacing System, making the company the second to offer this type of technology in the United States (Smith & Nephew was first with its Birmingham system).
To better hone its core competencies, in 2007 Stryker divested its outpatient physical therapy business, Physiotherapy Associates, to Water Street Healthcare Partners, for $150 million. On the other hand, a celebration was on hand that year for the opening of the Homer Stryker Center, a clinical research and surgeon education center that was the brainchild of former Executive Vice President Ron Lawson, who retired at the end of the year.
Clearly, Stryker’s results for the year showed that it could remain focused on business as usual, even when problems cropped up. The company received two FDA warning letters in 2007 targeting quality systems at its Cork, Ireland facility and its Mahwah, NJ facility.
For 2008, Stryker is looking to carry on as a double-digit gainer in the industry, though its net sales target increase is lower than 2007’s final gain. The company is forecasting net sales growth of 11% to 13%.