In this issue, we introduce what we hope will be an ongoing feature (we launched a similar piece in MPO as well). Industry Voices will highlight a member of the orthopedic device community and share their insights on a range of topics. Each interview will be unique and discuss areas of the marketplace most relevant to our guest’s expertise and focus. In its debut, we were pleased to hear from Rebecca Whitney of Highridge Medical regarding her company’s rapid transition to become a stand-alone spine company (among other topics).

I encourage you to read Ms. Whitney’s comments (the interview starts on page 32) for her assessment of the trend taking place where majors are shedding a portion or all of their orthopedic portfolio. Recently, we’ve seen Zimmer Biomet spinout ZimVie, which then split again to create Highridge Medical. More recently, Stryker set off its spine unit for it to become VB Spine. In the case of J&J, the company announced the planned separation from its Orthopaedics business—DePuy Synthes (anticipated to be completed in 2027). Investors have even speculated whether Medtronic should jettison its spine portion and have been saying as much for years. 

With these moves in mind, I was curious to see what others in the industry had to say about this relatively recent occurrence. I avoided comments made by company representatives directly, as they are typically (and as expected) positive toward the move. Generally, the organization’s speaker will anticipate greater success for both firms following the split. And sometimes, that’s how it goes (see J&J and Alcon). For these more recent moves in the orthopedic realm, only time will tell. 

Regarding ZimVie’s sale of its spine business to H.I.G. Capital, analyst Robbie Marcus of J.P. Morgan seemed to be positive regarding the transaction. He noted it was “a step in the right direction for ZimVie as it allows it to double down on what we view as the more attractive of its two end markets while also significantly improving its financial position.” He also mentioned there were “limited synergies” for the former spine and dental divisions of Zimmer Biomet to enjoy under one roof. 

Life Science Intelligence (LSI) shared its own insights regarding the Stryker/VB Spine divestiture. Its analysis stated, “The spine devices market is currently dominated by a few major players, with Medtronic, Globus Medical, and DePuy Synthes controlling over half of the market share. However, the remaining portion is fragmented among a wide range of competitors, including Stryker’s former spine business. Despite the large share controlled by these major players, the market’s growth is modest. According to LSI’s Global Market Analysis and Projections, the global spine devices market is expected to grow at a compound annual growth rate (CAGR) of 3.9% from 2024 to 2029. This is slower than the overall medtech market, which is expected to grow at a CAGR of 6.6% during the same period.” 

Given how aggressive Stryker has been in its M&A activity, it seems clear the company is striving for faster growth than what spine has offered historically (and is expected to going forward). As it likely cannot lead, executives may have decided it best not to bother trying, and would rather focus on other opportunities. 

Reporting on the pending J&J/Orthopaedics divorce, a CNBC article shared, “J.P. Morgan analysts said the orthopedics division represents about 30% of J&J’s MedTech segment, generating growth below the rest of the portfolio, and the planned spin-off ‘should create a faster-growing J&J over time.’”

John Murphy of Bloomberg Intelligence shared his analysis on the deal, stating the split “makes strategic sense.” He also explained, “It removes a major segment that has been dilutive to organic revenue growth, while prioritizing capital at higher-growth segments.”

Following Stryker’s shrinking orthopedic division, the stand-alone DePuy is expected to be the overall orthopedic market leader, generating $9.2 billion in revenue in 2024. And that’s ultimately what these moves are about—the dollars. No surprise there, really, but it does reveal these companies aren’t only seeking growth; they are pursuing rapid growth. If more organizations adopt a similar strategy, will it impact the types of medical devices that experience innovation and, as such, the types of conditions that are treated with the best novel solutions?

On the other hand, going back to the interview with Ms. Whitney, she did make an interesting remark regarding how the formation of a stand-alone spine organization allows for all R&D to be dedicated solely on that area of the body. “The more pure play spine companies there are, the more the entire industry will benefit from increased investment, focus, and, most importantly, innovation.”

As a result, those seeking spinal solutions ultimately win. Hopefully, that’s the outcome.

Sean Fenske, Editor-in-Chief
sfenske@rodmanmedia.com