Is Orthopedics on the Road to Pandemic Recovery?

The COVID-19 pandemic ravaged those who suffered from the disease, leading to unbelievable numbers in terms of deaths connected to the virus. Further, many who recovered are still suffering effects that include “foggy brain” and breathing problems.

While the healthcare industry shined brightly in its effort to battle the virus and save as many patients as possible, some device areas were hit extremely hard. Few segments were affected as much as orthopedics due to the pause put on elective surgeries. In fact, back in June 2020, GlobalData estimated as much as 83.5 percent of all orthopedic procedures performed in the U.S. would be delayed, postponed, or cancelled due to the pandemic.

With the pause of surgeries came a significant reduction in the need for orthopedic devices and implants. This, of course, was reflected in many organizations’ quarterly reports as many firms announced double digit deficits.

Fortunately, in the era of vaccines, rapid reopenings, and decreasing virus numbers, the portion of healthcare that was paused is quickly returning to normal. Research and Markets predicts a significant increase in global demand for orthopedic devices from 2021 through to 2025, noting a compound annual growth rate of 6.3 percent during those years.

With ODT’s top companies report coming up in the next issue, I figured I’d take the opportunity to get a preview of the data. While the reports will primarily focus on the companies’ financials from the previous fiscal year, it does “set the mood” for the annual presentation.

At the top of 2020’s list was Stryker. While the company does have diverse offerings in a number of healthcare sectors, it’s still primarily centered around orthopedics and related technologies. In its latest financials reporting, the firm announced increased net sales of 10.2 percent compared to 2020. Perhaps more impressive is the 2021 figure represented a 12.4 percent increase over 2019. Better still, the Orthopaedics unit increased 21.4 percent versus 2020 and 18.7 percent against 2019. The company specifically included the 2019 numbers to have a more “normal baseline” comparison figure.

With Depuy Synthes, one would need to dive into the full annual report to gain access to the specific numbers we use to determine the figure for the orthopedic devices upon which we report. The numbers, however, paint what seems to be a positive picture for the firm’s Medical Devices segment. In Q1 2021, the company reported a 10.9 percent gain over 2020—the organization’s largest percentage increase. Further, in the offered commentary, trauma products in Orthopaedics were called out as affecting the positive growth. Unfortunately, challenges still existed with knee products within Orthopaedics, so the final overall gain or loss over last year will have to wait before it’s fully understood.

ODT’s third top company list member—Zimmer Biomet—saw a modest 3.6 percent gain over the prior year’s first quarter, but is predicting a 14 to 17 percent revenue growth for the year. Perhaps more noteworthy, the company made big headlines during its Q1 period with the announcement it was planning a spinoff of its Spine and Dental businesses, enabling a strong focus on knees, hips, extremities and trauma, and craniomaxillofacial and thoracic technologies. The divestiture is anticipated for mid-2022.

Smith+Nephew declared double-digit gains of 11.5 percent over 2020’s Q1. Of its global segments, Sports Medicine & ENT noted the greatest gains, but the spotlight was on international sales. Driven by strong rebounds from the impact of COVID in China, Emerging Markets was up 21.8 percent underlying.

Due to its unusual fiscal year calendar, Medtronic’s latest report was for the organization’s third quarter, which closed Jan. 29, 2021, so the comparison to the other firms is not exactly apples to apples. Overall, the company only increased 0.8 percent, but the Cranial and Spinal Technologies segment of the Restorative Therapies Group saw decreases of 3.2 percent. Like Depuy’s figures, getting the complete picture of this unit will have to wait.

Positivity is reflected throughout the orthopedics industry with other companies showing favorable figures in their first quarter reporting. NuVasive noted a 4.4 percent rise in the first three months of this year. Colfax reported its Medical Technology segment, which is home to DJO, enjoyed sales growth of 7 percent. Globus Medical ballooned 19.3 percent over 2020, setting the stage for a welcome bounce-back of a year. Össur recovered from its previous 2020 losses in Q1 by gaining 5 percent, although the firm did say sales were slow in January and February. Rounding out ODT’s top 10 companies, Integra LifeSciences rose 1.6 percent over 2020.

While these figures certainly show the industry is headed in the right direction, the truly dramatic financials will emerge with the release of the Q2 reports as that time period represented the height of the shutdown the sector faced. 

Sean Fenske, Editor-in-Chief
[email protected]