08.02.07
1. Stryker Corp.
$5.4 Billion
Key Executives:
John W. Brown, Chairman
Stephen P. MacMillan, President and CEO
Dean H. Bergy, VP and CFO
Luciano Cattani, VP and Group President, International
Michael P. Mogul, President, Orthopedics
Stephen S. Johnson, VP and Group President, MedSurg
James E. Kemler, VP and Group President, Biotech, Spine,
Osteosynthesis and Development
Katherine A. Owen, VP of Regulatory Affairs and Quality Assurance
No. of Employees: 18,800
Headquarters: Kalamazoo, Michigan
Stryker experienced double-digit increases in earnings and sales for fiscal 2006, which ended on Dec. 31, leading the company to its No. 1 spot (by sales for 2006) in a market worth almost $30 billion.
The double-digit climb is nothing new for this company; Stryker has grown its sales in this range for six consecutive years. Net sales increased by 11% to $5.4 billion in fiscal 2006, while net earnings increased almost 21% to $778 million, up from $644 million in 2005.
At the beginning of 2006, Stryker changed its business segment reporting to include the financial results of certain products within its MedSurg equipment segment rather than within its Orthopedic implants category because, according to the company, the products “are better aggregated with its other MedSurg equipment products based on similarities in manufacturing and marketing practices and customer base.”
Many products within the MedSurg category—such as implant-specific surgical instruments—serve the orthopedic industry. According to the company’s Web site, approximately 82% of its total sales come from the orthopedic implant and equipment market, making for roughly $4.4 billion in orthopedic-related revenue, though that’s not official. A precise breakdown of individual product sales and the sectors served was not available.
Domestic sales were $3.6 billion for the year, increasing 12.4%, while international sales hit $1.8 billion, increasing 8.4%. Worldwide sales of orthopedic implants were $3.1 billion, an increase of 9.1%, based on higher shipments of reconstructive implants (hip, knee and shoulder), trauma, spinal and craniomaxillofacial implant systems; bone cement; and the bone growth factor OP-1, the company said. Roughly 66% of Stryker’s total sales are based in the United States.
MedSurg equipment also experienced significant growth—15.8%—reaching $2 billion for the year, driven by strong sales of surgical equipment; surgical navigation systems; endoscopic, communications and digital imaging systems; as well as patient handling and emergency medical equipment, according to Stryker.
One bleak spot in the company’s otherwise positive financial picture was its Physical Therapy Services division, which reported revenues of $258.4 million for the year, a 1.6% decrease. Net earnings were only $6.3 million for the year, a 43% drop. In June this year, Stryker announced that it was selling its outpatient physical therapy business, Physiotherapy Associates, to Water Street Healthcare Partners, a Chicago, IL-based private equity firm, for $150 million in cash. Stryker said the business, ultimately, wasn’t close enough to its core device business.
New product rollouts continue to play a role in the company’s ongoing success. For example, in August 2006, the company received FDA 510(k) clearance for its advanced hip bearing system, LFIT Anatomic Femoral Heads with X3 Polyethylene liners. The system combines Stryker’s Low Friction Ion Treatment technology with X3 advanced bearing technology and is anatomically sized for more natural hip performance, according to the company. The result is total hip replacement designed to help minimize dislocation and its associated healthcare costs, while providing an attractive alternative to metal-on-metal bearings, Stryker said.
Despite pricing pressures in certain orthopedic sectors, company officials remain optimistic about 2007 due to underlying growth rates in orthopedic procedures and the company’s broad range of products in orthopedics and other specialties. Stryker expects a net sales increase in the range of 11% to 13%. Positive currency gains also are expected to have minimal impact. For the first quarter of 2007 (ended March 31), Stryker reported net sales of $1.5 billion, up 12.7%. Net earnings jumped 65% to $243 million. The majority of the company’s sectors experienced double-digit growth.