07.28.10
$4.1 Billion
KEY EXECUTIVES:
David C. Dvorak, President and CEO
Cheryl R. Blanchard, Ph.D., Sr. VP and Chief Scientific Officer
James T. Crines, Exec. VP, Finance, and Chief Financial Officer
Derek M. Davis, VP, Finance, Corporate Controller and Chief Accounting Officer
Jeffery A. McCaulley, President, Zimmer Reconstructive
Bruno A. Melzi, Chairman, Europe, Middle East and Africa
Stephen H.L. Ooi, President, Asia Pacific
Jeffrey B. Paulsen, Group President, Global Businesses
Chad F. Phipps, Sr. VP, General Counsel and Secretary
NO. OF EMPLOYEES: 8,200
GLOBAL HEADQUARTERS: Warsaw, Ind.
A chance encounter has the potential to change history. Consider the fateful meetings between Anne Boleyn and King Henry VIII, a slave named Sojourner and Quaker Abolitionists, and English author Lewis Carroll and a little girl named Alice.
Each encounter altered the course of history in some way.
Most meetings, however, are not historical turning points. Some, such as the one experienced by Zimmer Holdings Inc. President and CEO David C. Dvorak, act as subtle reminders of the interconnectivity of the modern world.
Dvorak’s chance encounter occurred earlier this year on a flight from Zurich, Switzerland, during a visit to his company’s facility in Winterthur. A woman named Susy Balsiger-Peter sat next to him. During the course of their conversation, Dvorak and Balsiger-Peter discovered they shared an interest in orthopedics: Not only was Balsiger-Peter a nurse, she also had replaced both of her knees and both hips with products from Dvorak’s company. Her first joint replacement surgery took place in 1988.
“It’s an old one, but it still works,” Balsiger-Peter said of her 22-year-old Zimmer hip. She also apparently told Dvorak that her replacement surgeries have made her very happy because she no longer has any pain.
“It is especially rewarding when our day-to-day activities bring reminders of the difference our products make in people’s lives,” Dvorak said in Zimmer’s 2009 annual report. “Hearing [Balsiger-Peter’s] and others’ testimonies reminds us not only why we do what we do but also why we work to expand our musculoskeletal capabilities.”
Expanding its musculoskeletal capabilities—particularly through its Trabecular Metal technology—helped Zimmer maintain solid earnings last year despite a decline in demand for its implants due to the gloomy global economy.
The company’s 2009 net sales were flat at $4.1 billion, and gross profit fell 0.6 percent to $3.1 billion. Various factors contributed to the flat sales, according to Zimmer executives, including a 1 percent decline in global selling prices and a foreign currency exchange impact of 2 percent. The firm also apparently is still paying the price for some recalls and the temporary halt in distribution of its hip socket replacement component, the Durom Cup. Being under the watchful eye of federal prosecutors also hasn’t helped Zimmer’s image, even though an 18-month deferred prosecution agreement with the U.S. Attorney’s Office in New Jersey expired last spring.
Designed to minimize bone removal and bond to the hip bone, the Durom Cup was marketed with a promise of “an increased range of motion with greater stability.” Complaints and lawsuits alleging the opposite effect prompted Zimmer to halt sales of the Cup in the United States in July 2008 so it could update labeling to provide more detailed surgical technique instructions and establish a surgical training program.
Zimmer initiated two recalls in 2008—one related to the packaging of certain surgical products at the company’s facility in Dover, Ohio, and the other for a surgical instrument used in minimally invasive knee surgeries.
Zimmer executives contend the recalls and temporary suspension of U.S. marketing and distribution for the Durom Cup—events they deemed “disruptive factors”—led to a loss of customers that the company could not recoup in 2009. “We estimate that these customer losses reduced our global knee market share by approximately 1.5 percent and hip market share by approximately 2 percent on a cumulative basis through the end of 2008,” the annual report noted. “These share losses affected sales growth in 2009, especially in the first six to nine months of the year…”
While executives have been unable to ignore the slowdown in elective procedures (weak demand has impacted sales, after all), they claimed the market began to recover in the second half of 2009. This “recovery” occurred too late in the year to have a significant impact on the company’s individual sector sales, but it is expected to contribute to growth in 2010.
That growth most likely will be given a boost by the launch late last year of the Zimmer MMC Cup, the Continuum Acetabular System and Zimmer Patient Specific instruments. The MMC Cup is an acetabular implant featuring Metasul metal-on-metal technology and a hemispherical design. It is used with Metasul large diameter heads, which are designed to provide an increased range of motion and cut the risk of dislocation.
Zimmer’s Patient Specific Instruments utilize magnetic resonance imaging technology and pre-operative planning tools to create customized cutting guides that are tailored to each patient's unique anatomy.
The company’s Continuum Acetabular System, Trilogy IT Acetabular System and Allofit IT Alloclassic Acetabular System give surgeons a choice of advanced bearing options to meet the clinical and lifestyle needs of each patient. Bearing options include Longevity highly crosslinked polyethylene, Metasul metal-on-metal technology and a Biolox delta ceramic-on-ceramic. The acetabular systems also provide surgeons with a choice of fixation methods.
Acetabular products proved to be sales stalwarts for Zimmer last year, contributing significantly to total revenue in the Reconstructive products category. Though sales were flat at $3.1 billion (technically, sales fell by $38.8 million), executives credit the Trabecular Metal Acetabular Cup with offsetting weaker sales of other products.
Hip and knee implant sales shrank in fiscal 2009 (ended Dec. 31), with knee devices generating practically the same amount of money they did in 2008. The $1.7 billion Zimmer reported in knee implant sales is just $2.5 million lower than its 2008 total. Leading sellers in the knee product category included the NextGen line of devices and Gender Solutions Natural Knee Flex System. Executives said foreign currency exchange rates negatively impacted knee sales by 6 percent.
Hip sales slipped 4 percent to $1.2 billion, but followed a path similar to revenue in the knee product category. The difference between hip implant revenue totals in 2008 and 2009 was only $51 million.
Significant sales contributions came from the increasing use of porous stems, including the Zimmer M/L Taper Stem, the M/L Taper Stem with Kinectiv technology, the CLS Spotorno Stem from the CLS Hip System and the Alloclassic Zweymüller Hip Stem. The sales of these stems, however, partially were offset by weaker sales of cemented stems, executives said. Longevity Highly Crosslinked Polyethylene liners also experienced robust sales. Foreign currency exchange rates in Europe negatively affected sales by 6 percent last year, but the impact was somewhat offset by rates in Asia Pacific that boosted revenue by 4 percent.
Sales of extremities products totaled $135.6 million, a 12 percent jump compared with the $121 million these devices earned for Zimmer in 2008. Top sellers included the Bigliani/Flatow Complete Shoulder Solution and the Zimmer Trabecular Metal Reverse Shoulder System.
Zimmer compensated a 10 percent decline in dental product sales last year with a 10.4 percent increase in spinal device revenue. Dental products netted $204.7 million for Zimmer, while spinal device revenue rose $23.9 million to $253.6 million. Executives attributed the increase in spinal device sales to the $360 million acquisition of Abbott Spine in the fall of 2008. The increase, however, was partially offset by sales losses associated with the acquisition. And while the spinal segment experienced solid sales of fusion devices, legacy interbody devices and bone graft substitutes, it suffered a decline in sales of the Dynesys Dynamic Stabilization System. Executives attributed the decline to reimbursement issues.
Trauma product sales rose 5.6 percent to $234.8 million, driven by demand for Zimmer Periarticular Locking Plates and the ITST Intertrochanteric/Subtrochanteric Fixation System. Femoral and tibial nails within the Zimmer Natural Nail system also contributed to the growth, though sales were tempered by declining demand for compression hip screws.
Orthopedic Surgical Product sales basically were flat, separated by a mere $500,000. The company’s Palacos bone cement proved popular with customers.
Geographically, Zimmer’s products were most popular in Asia Pacific, where sales rose 2.6 percent last year to $603.8 million. Sales in North and South America inched up 0.79 percent to $2.3 billion, while revenue in Europe fell 5 percent to $1.1 billion.
KEY EXECUTIVES:
David C. Dvorak, President and CEO
Cheryl R. Blanchard, Ph.D., Sr. VP and Chief Scientific Officer
James T. Crines, Exec. VP, Finance, and Chief Financial Officer
Derek M. Davis, VP, Finance, Corporate Controller and Chief Accounting Officer
Jeffery A. McCaulley, President, Zimmer Reconstructive
Bruno A. Melzi, Chairman, Europe, Middle East and Africa
Stephen H.L. Ooi, President, Asia Pacific
Jeffrey B. Paulsen, Group President, Global Businesses
Chad F. Phipps, Sr. VP, General Counsel and Secretary
NO. OF EMPLOYEES: 8,200
GLOBAL HEADQUARTERS: Warsaw, Ind.
A chance encounter has the potential to change history. Consider the fateful meetings between Anne Boleyn and King Henry VIII, a slave named Sojourner and Quaker Abolitionists, and English author Lewis Carroll and a little girl named Alice.
Each encounter altered the course of history in some way.
Most meetings, however, are not historical turning points. Some, such as the one experienced by Zimmer Holdings Inc. President and CEO David C. Dvorak, act as subtle reminders of the interconnectivity of the modern world.
Dvorak’s chance encounter occurred earlier this year on a flight from Zurich, Switzerland, during a visit to his company’s facility in Winterthur. A woman named Susy Balsiger-Peter sat next to him. During the course of their conversation, Dvorak and Balsiger-Peter discovered they shared an interest in orthopedics: Not only was Balsiger-Peter a nurse, she also had replaced both of her knees and both hips with products from Dvorak’s company. Her first joint replacement surgery took place in 1988.
“It’s an old one, but it still works,” Balsiger-Peter said of her 22-year-old Zimmer hip. She also apparently told Dvorak that her replacement surgeries have made her very happy because she no longer has any pain.
“It is especially rewarding when our day-to-day activities bring reminders of the difference our products make in people’s lives,” Dvorak said in Zimmer’s 2009 annual report. “Hearing [Balsiger-Peter’s] and others’ testimonies reminds us not only why we do what we do but also why we work to expand our musculoskeletal capabilities.”
Expanding its musculoskeletal capabilities—particularly through its Trabecular Metal technology—helped Zimmer maintain solid earnings last year despite a decline in demand for its implants due to the gloomy global economy.
The company’s 2009 net sales were flat at $4.1 billion, and gross profit fell 0.6 percent to $3.1 billion. Various factors contributed to the flat sales, according to Zimmer executives, including a 1 percent decline in global selling prices and a foreign currency exchange impact of 2 percent. The firm also apparently is still paying the price for some recalls and the temporary halt in distribution of its hip socket replacement component, the Durom Cup. Being under the watchful eye of federal prosecutors also hasn’t helped Zimmer’s image, even though an 18-month deferred prosecution agreement with the U.S. Attorney’s Office in New Jersey expired last spring.
Designed to minimize bone removal and bond to the hip bone, the Durom Cup was marketed with a promise of “an increased range of motion with greater stability.” Complaints and lawsuits alleging the opposite effect prompted Zimmer to halt sales of the Cup in the United States in July 2008 so it could update labeling to provide more detailed surgical technique instructions and establish a surgical training program.
Zimmer initiated two recalls in 2008—one related to the packaging of certain surgical products at the company’s facility in Dover, Ohio, and the other for a surgical instrument used in minimally invasive knee surgeries.
Zimmer executives contend the recalls and temporary suspension of U.S. marketing and distribution for the Durom Cup—events they deemed “disruptive factors”—led to a loss of customers that the company could not recoup in 2009. “We estimate that these customer losses reduced our global knee market share by approximately 1.5 percent and hip market share by approximately 2 percent on a cumulative basis through the end of 2008,” the annual report noted. “These share losses affected sales growth in 2009, especially in the first six to nine months of the year…”
While executives have been unable to ignore the slowdown in elective procedures (weak demand has impacted sales, after all), they claimed the market began to recover in the second half of 2009. This “recovery” occurred too late in the year to have a significant impact on the company’s individual sector sales, but it is expected to contribute to growth in 2010.
That growth most likely will be given a boost by the launch late last year of the Zimmer MMC Cup, the Continuum Acetabular System and Zimmer Patient Specific instruments. The MMC Cup is an acetabular implant featuring Metasul metal-on-metal technology and a hemispherical design. It is used with Metasul large diameter heads, which are designed to provide an increased range of motion and cut the risk of dislocation.
Zimmer’s Patient Specific Instruments utilize magnetic resonance imaging technology and pre-operative planning tools to create customized cutting guides that are tailored to each patient's unique anatomy.
The company’s Continuum Acetabular System, Trilogy IT Acetabular System and Allofit IT Alloclassic Acetabular System give surgeons a choice of advanced bearing options to meet the clinical and lifestyle needs of each patient. Bearing options include Longevity highly crosslinked polyethylene, Metasul metal-on-metal technology and a Biolox delta ceramic-on-ceramic. The acetabular systems also provide surgeons with a choice of fixation methods.
Acetabular products proved to be sales stalwarts for Zimmer last year, contributing significantly to total revenue in the Reconstructive products category. Though sales were flat at $3.1 billion (technically, sales fell by $38.8 million), executives credit the Trabecular Metal Acetabular Cup with offsetting weaker sales of other products.
Hip and knee implant sales shrank in fiscal 2009 (ended Dec. 31), with knee devices generating practically the same amount of money they did in 2008. The $1.7 billion Zimmer reported in knee implant sales is just $2.5 million lower than its 2008 total. Leading sellers in the knee product category included the NextGen line of devices and Gender Solutions Natural Knee Flex System. Executives said foreign currency exchange rates negatively impacted knee sales by 6 percent.
Hip sales slipped 4 percent to $1.2 billion, but followed a path similar to revenue in the knee product category. The difference between hip implant revenue totals in 2008 and 2009 was only $51 million.
Significant sales contributions came from the increasing use of porous stems, including the Zimmer M/L Taper Stem, the M/L Taper Stem with Kinectiv technology, the CLS Spotorno Stem from the CLS Hip System and the Alloclassic Zweymüller Hip Stem. The sales of these stems, however, partially were offset by weaker sales of cemented stems, executives said. Longevity Highly Crosslinked Polyethylene liners also experienced robust sales. Foreign currency exchange rates in Europe negatively affected sales by 6 percent last year, but the impact was somewhat offset by rates in Asia Pacific that boosted revenue by 4 percent.
Sales of extremities products totaled $135.6 million, a 12 percent jump compared with the $121 million these devices earned for Zimmer in 2008. Top sellers included the Bigliani/Flatow Complete Shoulder Solution and the Zimmer Trabecular Metal Reverse Shoulder System.
Zimmer compensated a 10 percent decline in dental product sales last year with a 10.4 percent increase in spinal device revenue. Dental products netted $204.7 million for Zimmer, while spinal device revenue rose $23.9 million to $253.6 million. Executives attributed the increase in spinal device sales to the $360 million acquisition of Abbott Spine in the fall of 2008. The increase, however, was partially offset by sales losses associated with the acquisition. And while the spinal segment experienced solid sales of fusion devices, legacy interbody devices and bone graft substitutes, it suffered a decline in sales of the Dynesys Dynamic Stabilization System. Executives attributed the decline to reimbursement issues.
Trauma product sales rose 5.6 percent to $234.8 million, driven by demand for Zimmer Periarticular Locking Plates and the ITST Intertrochanteric/Subtrochanteric Fixation System. Femoral and tibial nails within the Zimmer Natural Nail system also contributed to the growth, though sales were tempered by declining demand for compression hip screws.
Orthopedic Surgical Product sales basically were flat, separated by a mere $500,000. The company’s Palacos bone cement proved popular with customers.
Geographically, Zimmer’s products were most popular in Asia Pacific, where sales rose 2.6 percent last year to $603.8 million. Sales in North and South America inched up 0.79 percent to $2.3 billion, while revenue in Europe fell 5 percent to $1.1 billion.