Top of Their Game

Every year, Orthopedic Design & Technology examines the top 10 performing orthopedic firms. As with issues past, companies are ranked by revenue for the last full fiscal year—in this case, 2007. To provide insight into a company’s performance, we looked at new product launches, research and development activity, mergers and acquisitions, as well as market share gain and loss—business as usual, right?

That was not necessarily true for 2007, as orthopedic firms were judged by more than their financial skills and technological prowess. It was a period of marked transition as US regulators and lawmakers investigated orthopedic manufacturers’ relationships with physicians. While companies continued day to day, Wall Street and other interested observers held their collective breath to see how it all would play out.

As 2007 drew to a close, so did an investigation that started with subpoenas issued in 2005 by the US Department of Justice (DOJ) regarding possible violations of the Federal Healthcare Anti-Kickback Act—basically, allegations that companies paid kickbacks to surgeons to use their products. Biomet, DePuy, Zimmer and Smith & Nephew entered into deferred-prosecution agreements, through which they avoided criminal action if they adopted overhauls and completed 18 months of corporate monitoring. They also agreed to pay a total of $311 million to settle the criminal and civil probes. Stryker did not pay a fine, but voluntarily cooperated with prosecutors and agreed to a non-prosecution pact. None of the companies admitted to any wrongdoing.

The investigation and subsequent fallout have brought with them a change in how the entire medical device industry does business and interacts with a key group of end users. That’s not to say that some improprieties didn’t exist (it’s likely some did and needed to be exposed), but physician input remains critical to R&D and proper training, making it much different than the model used by the pharmaceutical industry. Companies have begun to adopt specific policies on payments for product development activities; education and training; and other physician-related business relationships. The DOJ activity wasn’t the end of the story. Proposed legislation on Capitol Hill—the Physician Payment Sunshine Act—would mandate transparency and fees for noncompliance. Last fall, the Securities and Exchange Commission began its own investigation. Given how long it took the DOJ’s inquiry to unfold, this one, too, could take some time.

Despite the more critical mood, business remained robust. Favorable market demographics continue to fuel large-joint expansion. The spine, biologics and trauma markets represent opportunity and are growing quickly, led by technological breakthroughs not available as recently as a few years ago. And, of course, acquisitions continue as a tool of choice to swiftly grow revenue and product lines.

Input from industry experts, public documents and consultations with company officials helped us compile this report. Space constraints limit our ability to outline every detail, but we hope you, nonetheless, find it comprehensive and informative.

The ODT Staff

Top 10 Orthopedic Device Manufacturers

1.	Stryker Corp.	$6B
2.	DePuy	$4.6B
3.	Zimmer Holdings	$3.9B
4.	Smith & Nephew	$3.4B
5.	Synthes	$2.8B
6.	Medtronic	$2.5B
7.	Biomet	$2.1B
8.	DJO	$492M
9.	Orthofix	$490M
10.	Wright Medical	$387M