Sean Fenske, Editor-in-Chief08.12.22
The orthopedic industry, as a whole, encountered one of its most substantial challenges in the form of the COVID pandemic, which caused the postponement of elective procedures. With these delays, the primary product offerings this segment generates sat on shelves at surgical centers and hospitals. This had a domino effect on sales during companies’ 2020 fiscal as double-digit shortcomings in terms of revenue were seen almost across the board.
Fortunately, a recovery period was almost equally as dramatic as many firms in this year’s Top Company reports saw huge upticks year-over-year in percentage gains. The return of elective procedures deemed safe once more (and overwhelmed healthcare systems saw available capacity) directly translated to increased demand for orthopedic implants, instruments, and related products.
With the positive financials, however, came new concerns to the minds of orthopedic OEM executives. That is, supply chain issues created shortages of certain key supplies that affected not only orthopedics, but the entire healthcare product manufacturing environment (as well as virtually every other industry). Meeting demand was causing new stress and continues to do so. A number of this year’s top 10 firms spoke about this concern in recent fiscal announcements.
“We delivered solid first quarter results in the face of a challenging macroeconomic environment,” said Kevin A. Lobo, chair and CEO of Stryker. “We are encouraged by the steady improvement of surgery volumes and the robust demand for our capital products; however, we expect supply chain challenges to persist for much of the year.” Regarding the company’s second quarter performance, Lobo stated, “Despite supply shortages we delivered solid organic sales growth in Q2.”
In a company release from Smith+Nephew regarding its second quarter fiscal results in 2022, it was explained that Orthopaedics revenue declined 1.1% (-4.9% reported), reflecting execution and supply chain challenges. Deepak Nath, CEO, proclaimed, “Orthopaedics continues to be held back by execution and supply chain challenges. In the last three months, I have reviewed the business and, together with the team, we have developed a comprehensive plan to drive better execution at pace.”
The #5 firm within the ODT Top 10, Medtronic also pointed to the same issue. “Supply chain issues came out fast and hard and especially in the back half of the quarter,” stated CEO Geoffrey Martha on a post-earnings call. “While some of our Q4 challenges will persist in the near term, we expect strong improvement in the back half of our fiscal year.”
In a company statement regarding the financial performance, Martha offered additional commentary. “Global supply chain and COVID-19 controls in China created acute impacts to our results in the fourth quarter. We understand the root causes, we’re addressing them, and we expect them to resolve over the near-term.”
Sveinn Sölvason, Össur president and CEO, shared, “The macro environment remains volatile, with external factors affecting sales and supply chain challenges driving higher cost and delays in delivery of products. However, sales growth continues to be strong in EMEA and APAC with the exception of China.”
“We’re very pleased with our financial and operational performance in the first quarter given the COVID-19 and labor headwinds, ongoing global supply chain disruptions, and macro financial impacts stemming from political instability in Europe. The strategic investments we have made over the last two years, including a focus on new product innovation and the development of our global commercial organization, continue to pay dividends,” said Orthofix president and CEO Jon Serbousek.
While it seems clear the darkest days are past, the struggle is far from over. While the return of elective procedures is a wonderful sight for all involved in the development and manufacture of orthopedic technologies, ongoing supply chain challenges will continue to be a thorn in the greater medtech industry’s side. Whether material shortages or an inability to secure computer chips, the entire healthcare product sector is in the same boat with regard to the issues at hand.
Are you in the process of facing these issues too and willing to share your experience? Share your thoughts, ideas, best practices, and suggestions with me for the benefit of the industry at large. I’d be thrilled to receive and share them.
In the meantime, I hope you gain insight and value from this year’s Top Company reports.
Sean Fenske, Editor-in-Chief
sfenske@rodmanmedia.com
Fortunately, a recovery period was almost equally as dramatic as many firms in this year’s Top Company reports saw huge upticks year-over-year in percentage gains. The return of elective procedures deemed safe once more (and overwhelmed healthcare systems saw available capacity) directly translated to increased demand for orthopedic implants, instruments, and related products.
With the positive financials, however, came new concerns to the minds of orthopedic OEM executives. That is, supply chain issues created shortages of certain key supplies that affected not only orthopedics, but the entire healthcare product manufacturing environment (as well as virtually every other industry). Meeting demand was causing new stress and continues to do so. A number of this year’s top 10 firms spoke about this concern in recent fiscal announcements.
“We delivered solid first quarter results in the face of a challenging macroeconomic environment,” said Kevin A. Lobo, chair and CEO of Stryker. “We are encouraged by the steady improvement of surgery volumes and the robust demand for our capital products; however, we expect supply chain challenges to persist for much of the year.” Regarding the company’s second quarter performance, Lobo stated, “Despite supply shortages we delivered solid organic sales growth in Q2.”
In a company release from Smith+Nephew regarding its second quarter fiscal results in 2022, it was explained that Orthopaedics revenue declined 1.1% (-4.9% reported), reflecting execution and supply chain challenges. Deepak Nath, CEO, proclaimed, “Orthopaedics continues to be held back by execution and supply chain challenges. In the last three months, I have reviewed the business and, together with the team, we have developed a comprehensive plan to drive better execution at pace.”
The #5 firm within the ODT Top 10, Medtronic also pointed to the same issue. “Supply chain issues came out fast and hard and especially in the back half of the quarter,” stated CEO Geoffrey Martha on a post-earnings call. “While some of our Q4 challenges will persist in the near term, we expect strong improvement in the back half of our fiscal year.”
In a company statement regarding the financial performance, Martha offered additional commentary. “Global supply chain and COVID-19 controls in China created acute impacts to our results in the fourth quarter. We understand the root causes, we’re addressing them, and we expect them to resolve over the near-term.”
Sveinn Sölvason, Össur president and CEO, shared, “The macro environment remains volatile, with external factors affecting sales and supply chain challenges driving higher cost and delays in delivery of products. However, sales growth continues to be strong in EMEA and APAC with the exception of China.”
“We’re very pleased with our financial and operational performance in the first quarter given the COVID-19 and labor headwinds, ongoing global supply chain disruptions, and macro financial impacts stemming from political instability in Europe. The strategic investments we have made over the last two years, including a focus on new product innovation and the development of our global commercial organization, continue to pay dividends,” said Orthofix president and CEO Jon Serbousek.
While it seems clear the darkest days are past, the struggle is far from over. While the return of elective procedures is a wonderful sight for all involved in the development and manufacture of orthopedic technologies, ongoing supply chain challenges will continue to be a thorn in the greater medtech industry’s side. Whether material shortages or an inability to secure computer chips, the entire healthcare product sector is in the same boat with regard to the issues at hand.
Are you in the process of facing these issues too and willing to share your experience? Share your thoughts, ideas, best practices, and suggestions with me for the benefit of the industry at large. I’d be thrilled to receive and share them.
In the meantime, I hope you gain insight and value from this year’s Top Company reports.
Sean Fenske, Editor-in-Chief
sfenske@rodmanmedia.com