08.02.07
3. Zimmer Holdings
$3.5 Billion
Key Executives:
David C. Dvorak, President & CEO
Cheryl R. Blanchard, PhD, Sr. VP, R&D and Chief Scientific Officer
Sheryl L. Conley, Group President, Americas and Global Marketing and Chief Marketing Officer
James T. Crines, Exec. VP, Finance and CFO
Bruno A. Melzi, Chairman, Europe, Africa and Middle East
Chad F. Phipps, Sr. VP, General Counsel and Secretary
No. of Employees: 6,900
Headquarters: Warsaw, IN
In line with its strategic initiative to “Enable, Innovate and Grow,” Zimmer Holdings cast itself into various endeavors in 2006 that will allow the company to continue on its mission to excel in each of its four core divisions. However, the challenges plaguing the orthopedic industry affected Zimmer, as they did its competitors. This time around, Zimmer failed to grow sales by double digits, as it had in past years.
Zimmer reported sales of $3.5 billion in 2006, a 6% increase from the previous year. With an established presence in more than 100 countries, sales around the world experienced single-digit increases. The Americas contributed $2.1 billion, Europe offered $931 million and the Asia Pacific added $488 million to sales.
Zimmer’s four core divisions also experienced single-digit increases, with the exception of the spinal unit, which rose 11% from 2005. Although the reconstructive and trauma units experienced slight sales increases, the bright spot for the company was its dental segment (part of the Reconstructive unit), which grew by 21%. Orthopedic Surgical Products was the only division in 2006 to experience a slight decrease in sales, which were down 4% from the prior year.
The year brought about a series of new innovations; however, the biggest advancement in Zimmer innovations was the introduction of gender-specific knees for women, which debuted in early 2006 after a five-year effort to develop the product. The Gender Solutions Technology line fueled a 13.5% rise in total earnings in first quarter of 2006. Zimmer has plans for gender-based hips to launch in this year and in 2008. Eventually, the complete line will be designed to address anatomical differences based on gender and, in the future, ethnicity. To help promote its new line, Zimmer launched its first major direct-to-consumer advertising campaign.
For Zimmer, the introduction of new products did not stop with gender-specific implants. In fact, Zimmer introduced a total of 20 new products in 2006. New versions of existing products, such as a coated screw version of the Dynesys spinal system, were part of the lines rolled out. Among other spinal innovations was the Vista-P PEEK VBR Implant.
Zimmer’s trauma division introduced new offerings as well, including the MIS Femoral Nailing Solutions. Meanwhile, the dental unit came out with the One-Piece Implant and Hex-Lock Contour Abutments, as well as Puros Dermis and Pericardium regenerative membrane products.In the restorative unit, Zimmer was granted regulatory approval from the FDA to begin selling ceramic hip replacements, known as the Trilogy AB Cermic-on-Ceramic Acetabular System.
“During the year, we experienced a tremendous flow of new products and reached a Zimmer record 24% of sales coming from new products, including $229 million in the fourth quarter,” said Raymond Elliott, Zimmer’s former president and CEO.
In an effort to boost its line of surgical instruments, Zimmer entered a five-year agreement in July with Brasseler USA, which allows the company to sell and distribute Brasseler’s powered surgical instruments and consumables in the United States.
Zimmer, along with ISTO Technologies, also announced the start of its clinical trial for Neocartilage, a living tissue-engineered graft under investigation as a therapy for knee problems. Zimmer plans to market the product as DeNovo ET Engineered Tissue Graft.
The company increased its product catalog through numerous acquisitions in 2006. The company acquired Musculoskeletal Management Systems LLC, known as Human Motion Institute brand. Additionally, Zimmer acquired the intellectual property rights, inventory and associated assets of the Cyclone Anterior Cervical Plate System, a versatile, low profile ACP system that complements the company’s spine division.
Zimmer got its feet wet in dental implants by opening Zimmer Dental in June 2006. The Zimmer Institute, located in Carlsbad, CA, is a professional training center that specializes in helping clinicians practice contemporary implant dentistry.
In addition, a new 130,000-square-foot R&D manufacturing facility for the Zimmer Trauma division was opened alongside the company’s headquarters in Warsaw, IN.
Zimmer forecasts a positive outlook for 2007 with anticipation that its direct-to-consumer advertising campaign will aid the launch of its new implants.
Zimmer’s recent acquisition of Endius Inc., a private business that develops minimally invasive spine products and techniques, also will contribute to Zimmer’s willingness to stay on top of its game. With net sales up 10% to $950 million in the first quarter (ended March 31) of 2007, the company expects sales growth of 10% to 11% in each of the remaining quarters this year.
But will all the changes occurring at Zimmer allow for that kind of growth? For now, the company is in major transition, as former CEO Ray Elliott retired in May. Elliott served as chairman, president and CEO of Zimmer for its entire run as a public company since its spinoff from Bristol-Myers Squibb in 2001. He was president of Zimmer since 1997.
David C. Dvorak group president, global businesses, and chief legal officer, recently took over the helm.