07.24.12
19. Zimmer
$4.5 Billion
KEY EXECUTIVES:
David C. Dvorak, President & CEO
Cheryl R. Blanchard, Ph.D., Sr. VP & Chief Scientific Officer
James T. Crines, Exec. VP of Finance & Chief Financial Officer
Jeffery A. McCaulley, President, Zimmer Reconstructive
Jeffrey B. Paulsen, Group President, Global Businesses
Bruno A. Melzi, Chairman of Europe, Middle East and Africa
Stephen H.L. Ooi, President of Asia Pacific
NO. OF EMPLOYEES: 8,700
GLOBAL HEADQUARTERS: Warsaw, Ind.
When Zimmer Holdings Inc. issued its first annual report 10 years ago, executives used the theme “New Products New Markets New Geographies” to convey their future vision for the newly independent company.
“New products are the lifeblood of any medical device company and our goal is to be a new products machine,’ “ former President and CEO J. Raymond Elliott told shareholders in a letter within the firm’s debut report. (Elliott eventually left Zimmer in 2007 and was hired two years later by Boston Scientific Corp. to revive the fortunes of that device firm after its ill-fated takeover of Guidant Corp. He retired from Boston Scientific on Dec. 31, 2011).
“A key to our future will be our ability to leverage our brand strength, our sales forces, and our heritage of trust for success in new markets,” Elliott’s letter continued. “We intend to enter rapidly growing, adjacent markets such as spine, pain management and blood management. We believe orthobiologics may transform orthopaedic treatments…Finally, we are a global company. With approximately one-third of our revenues from outside the Americas, we have only just begun to focus on new geographies. From the historic strength of our base in Asia and particularly in Japan, Korea and Taiwan, we believe we can continue to take advantage of the increasing sophistication of economies and healthcare systems in this most populous region of the world.”
Elliott’s successor could have used the same theme last year to provide investors with a progress report on those early goals. Since breaking free of global biopharmaceutical giant Bristol-Myers Squibb in August 2001, Zimmer has indeed become a new product “machine”—the Warsaw, Ind.-based firm regularly debuts dozens of new products every year, many of them timed to coincide with industry trade shows like the American Academy of Orthopaedic Surgeons and the North American Spine Society annual meetings.
The company also has entered some of those rapidly growing markets Elliott mentioned in his letter, namely spine and orthobiologics. Zimmer’s spinal portfolio includes thoracolumbar and cervicothoracic products, while its orthobiologics lineup includes the Fortitude Osso Interbody Spacer, the CopiOs bone void filler, the AlloFuse Demineralized bone matrix and the Chondrofix Osteochondral Allograft, a product designed to address osteochondral lesions in a single-stage procedure. The Chondrofix implant is an osteochondral plug comprised of articular cartilage and subchondral bone, according to Zimmer.
The company is collaborating with St. Louis, Mo.-based ISTO Technologies Inc. to develop other chondral grafts for cartilage repair. One of the pair’s creations—the DeNovo NT Natural Tissue Graft—has been used in more than 1,600 cartilage repair procedures in 2011 (the product uses particulated juvenile cartilage tissue to repair articular cartilage defects in the knee, ankle, shoulder, hip, elbow and toe joints). The companies also are working together on a Phase III clinical study to evaluate the DeNovo ET Engineered Tissue Graft, an implant designed to repair knee cartilage damage.
In its relatively brief existence as a publicly listed firm, Zimmer has become a significant player in the global orthopedics market. The firm has operations in more than 25 countries and sells products in more than 100. The emerging markets of Brazil, Russia, India and China (the “BRIC” brethren) have become so essential to long-term growth that executives announced plans last year to build a new research and development center in China to focus on the unique needs of Asian patients and clinicians.
Sales in the Asia Pacific region (which include Australia, China, Hong Kong, India, Korea, Malaysia, New Zealand Singapore, Taiwan and Thailand) posted the best growth in 2011, according to Zimmer’s latest annual report. Revenue spiked 16 percent to $796.5 million, or 18 percent of total net sales. Japan was the largest market in this region, accounting for roughly 52 percent of sales.
North and South American sales remained flat last year at $2.4 billion, though the region captured more than half (55 percent) of the company’s total revenue. The United States accounted for 93 percent of all sales in this area.
Europe contributed $1.2 billion in revenue to Zimmer’s bottom line in 2011 (year ended Dec. 31), a 10 percent hike compared with the $1.09 billion this region reported in 2010. France, Germany, Italy, Spain, Switzerland and the United Kingdom accounted for 72 percent of the area’s net sales.
Such robust gains in the Asia Pacific and European markets helped push sales 5.5 percent to $4.5 billion last year and diluted earnings per share to $4.03. Net earnings skyrocketed 27.4 percent to $760 million, a welcome change from the 17 percent plunge the company’s earnings encountered in 2010. Gross profit totaled $3.3 billion and operating profit came in at $1 billion, an 11.7 percent increase compared with the $916.7 million in operating profit the company reported in 2010.
Reconstructive product sales garnered the most revenue for Zimmer last year, comprising roughly three-quarters of the company’s total net sales. Hip, knee and extremities devices generated $3.3 billion in sales, a 4 percent increase compared with the $3.2 billion these products earned for Zimmer in 2010.
Knee implant sales were driven by the popularity of the NexGen Complete Knee Solution product line, including Gender Solutions Knee Femoral implants, the NexGen LPS-Flex Knee and the NexGen CR-Flex Knee, a synthetic device introduced in 2003 that surgeons use to cap the femur to the tibia at the knee. Sales of the Gender Solutions Natural-Knee Flex System, the Gender Solutions Patello Femoral Joint and Zimmer’s patient specific instruments also contributed to the 2 percent growth in this product category (revenue totaled $1.82 billion).
Hip sales performed well for the second consecutive year, growing 7 percent to $1.35 billion. Sales drivers remained unchanged from 2010—they included the M/L Taper Stem, the M/L Taper Stem with Kinective technology, the CLS Spotorno Stem from the CLS Hip System and the Alloclassic Zweymüller Stem, a cementless hip used in more than 325,000 replacement surgeries worldwide. Sales of the Continuum Acetabular System, the Trilogy IT Acetabular System, the Allofit IT Alloclassic Acetabular System, the Trabecular Metal Revision Shell and Augment Cups were strong compared with 2010, as were sales of BIOLOX delta heads and Fitmore Hip Stems.
The Fitmore Hip Stem is a bone-preserving system of implants specifically designed for use with less invasive surgical procedures. The system aims to provide stable reconstruction of patients’ anatomies by matching stem and different medial curvatures. The triple taper design and proximal Ti-Plasma coating enables a secure press-fit, while the trapezoidal cross-section provides for rotational stability.
Sales of extremities products surged 9 percent in 2011 to $163.4 million. The top sellers in this category were the Bigliani/Flatow Complete Shoulder Solution and the Trabecular Metal Reverse Shoulder System, according to the annual report.
Dental product sales experienced an impressive turnaround from a 10 percent loss in 2009, growing 13 percent last year to generate $248 million for Zimmer. Sales were led by the 10-year-old Tapered Screw-Vent implant system, a device that features an internal hex platform which reduces stress on crestal bone and resists abutment screw loosening, helping to create ideal conditions for bone level maintenance.
Trauma product sales jumped 16 percent to $286 million, driven by demand for Zimmer Periarticular Locking Plates, the NCB Plating System and the Natural Nail System, a next generation system of intramedullary nails designed to restore the pre-injury shape of fractured long bones and provide stable fixation during fracture healing. The nails feature a unique screw nail connection that allows a surgeon to create a true fixed angle construct that unites the injured bone to the nail.
Spinal product sales fell 4 percent to $225 million due to “operational challenges” with the company’s American sales force, a difficult reimbursement landscape and a continued decline in Dynesys Stabilization System sales. Those challenges proved too difficult to offset by solid sales of the PathFinder NXT Minimally Invasive and Sequoia Pedicle Screw Systems, the company’s Universal Clamp System and its Trabecular Metal products. Zimmer’s PathFinder screw system allows surgeons to approach the implant site through a miniature opening or percutaneously.
Orthopedic Surgical product sales experienced solid growth last year, ballooning 9 percent to $348.8 million. Sales stalwarts in this category included the company’s Palacos bone cement, wound debridement products and tourniquet devices.
Sales in the Orthopedic Surgical product category also received a boost from the company’s December 2010 acquisition of Sodem Diffusion S.A., the Swiss manufacturer of SoPlus Orthopaedic Surgical Power Tools. Sodem Diffusion’s portfolio includes the SoPlus Universal large bone system and the SoPlus Ultra small bone system with associated consumables.
$4.5 Billion
KEY EXECUTIVES:
David C. Dvorak, President & CEO
Cheryl R. Blanchard, Ph.D., Sr. VP & Chief Scientific Officer
James T. Crines, Exec. VP of Finance & Chief Financial Officer
Jeffery A. McCaulley, President, Zimmer Reconstructive
Jeffrey B. Paulsen, Group President, Global Businesses
Bruno A. Melzi, Chairman of Europe, Middle East and Africa
Stephen H.L. Ooi, President of Asia Pacific
NO. OF EMPLOYEES: 8,700
GLOBAL HEADQUARTERS: Warsaw, Ind.
When Zimmer Holdings Inc. issued its first annual report 10 years ago, executives used the theme “New Products New Markets New Geographies” to convey their future vision for the newly independent company.
“New products are the lifeblood of any medical device company and our goal is to be a new products machine,’ “ former President and CEO J. Raymond Elliott told shareholders in a letter within the firm’s debut report. (Elliott eventually left Zimmer in 2007 and was hired two years later by Boston Scientific Corp. to revive the fortunes of that device firm after its ill-fated takeover of Guidant Corp. He retired from Boston Scientific on Dec. 31, 2011).
“A key to our future will be our ability to leverage our brand strength, our sales forces, and our heritage of trust for success in new markets,” Elliott’s letter continued. “We intend to enter rapidly growing, adjacent markets such as spine, pain management and blood management. We believe orthobiologics may transform orthopaedic treatments…Finally, we are a global company. With approximately one-third of our revenues from outside the Americas, we have only just begun to focus on new geographies. From the historic strength of our base in Asia and particularly in Japan, Korea and Taiwan, we believe we can continue to take advantage of the increasing sophistication of economies and healthcare systems in this most populous region of the world.”
Elliott’s successor could have used the same theme last year to provide investors with a progress report on those early goals. Since breaking free of global biopharmaceutical giant Bristol-Myers Squibb in August 2001, Zimmer has indeed become a new product “machine”—the Warsaw, Ind.-based firm regularly debuts dozens of new products every year, many of them timed to coincide with industry trade shows like the American Academy of Orthopaedic Surgeons and the North American Spine Society annual meetings.
The company also has entered some of those rapidly growing markets Elliott mentioned in his letter, namely spine and orthobiologics. Zimmer’s spinal portfolio includes thoracolumbar and cervicothoracic products, while its orthobiologics lineup includes the Fortitude Osso Interbody Spacer, the CopiOs bone void filler, the AlloFuse Demineralized bone matrix and the Chondrofix Osteochondral Allograft, a product designed to address osteochondral lesions in a single-stage procedure. The Chondrofix implant is an osteochondral plug comprised of articular cartilage and subchondral bone, according to Zimmer.
The company is collaborating with St. Louis, Mo.-based ISTO Technologies Inc. to develop other chondral grafts for cartilage repair. One of the pair’s creations—the DeNovo NT Natural Tissue Graft—has been used in more than 1,600 cartilage repair procedures in 2011 (the product uses particulated juvenile cartilage tissue to repair articular cartilage defects in the knee, ankle, shoulder, hip, elbow and toe joints). The companies also are working together on a Phase III clinical study to evaluate the DeNovo ET Engineered Tissue Graft, an implant designed to repair knee cartilage damage.
In its relatively brief existence as a publicly listed firm, Zimmer has become a significant player in the global orthopedics market. The firm has operations in more than 25 countries and sells products in more than 100. The emerging markets of Brazil, Russia, India and China (the “BRIC” brethren) have become so essential to long-term growth that executives announced plans last year to build a new research and development center in China to focus on the unique needs of Asian patients and clinicians.
Sales in the Asia Pacific region (which include Australia, China, Hong Kong, India, Korea, Malaysia, New Zealand Singapore, Taiwan and Thailand) posted the best growth in 2011, according to Zimmer’s latest annual report. Revenue spiked 16 percent to $796.5 million, or 18 percent of total net sales. Japan was the largest market in this region, accounting for roughly 52 percent of sales.
North and South American sales remained flat last year at $2.4 billion, though the region captured more than half (55 percent) of the company’s total revenue. The United States accounted for 93 percent of all sales in this area.
Europe contributed $1.2 billion in revenue to Zimmer’s bottom line in 2011 (year ended Dec. 31), a 10 percent hike compared with the $1.09 billion this region reported in 2010. France, Germany, Italy, Spain, Switzerland and the United Kingdom accounted for 72 percent of the area’s net sales.
Such robust gains in the Asia Pacific and European markets helped push sales 5.5 percent to $4.5 billion last year and diluted earnings per share to $4.03. Net earnings skyrocketed 27.4 percent to $760 million, a welcome change from the 17 percent plunge the company’s earnings encountered in 2010. Gross profit totaled $3.3 billion and operating profit came in at $1 billion, an 11.7 percent increase compared with the $916.7 million in operating profit the company reported in 2010.
Reconstructive product sales garnered the most revenue for Zimmer last year, comprising roughly three-quarters of the company’s total net sales. Hip, knee and extremities devices generated $3.3 billion in sales, a 4 percent increase compared with the $3.2 billion these products earned for Zimmer in 2010.
Knee implant sales were driven by the popularity of the NexGen Complete Knee Solution product line, including Gender Solutions Knee Femoral implants, the NexGen LPS-Flex Knee and the NexGen CR-Flex Knee, a synthetic device introduced in 2003 that surgeons use to cap the femur to the tibia at the knee. Sales of the Gender Solutions Natural-Knee Flex System, the Gender Solutions Patello Femoral Joint and Zimmer’s patient specific instruments also contributed to the 2 percent growth in this product category (revenue totaled $1.82 billion).
Hip sales performed well for the second consecutive year, growing 7 percent to $1.35 billion. Sales drivers remained unchanged from 2010—they included the M/L Taper Stem, the M/L Taper Stem with Kinective technology, the CLS Spotorno Stem from the CLS Hip System and the Alloclassic Zweymüller Stem, a cementless hip used in more than 325,000 replacement surgeries worldwide. Sales of the Continuum Acetabular System, the Trilogy IT Acetabular System, the Allofit IT Alloclassic Acetabular System, the Trabecular Metal Revision Shell and Augment Cups were strong compared with 2010, as were sales of BIOLOX delta heads and Fitmore Hip Stems.
The Fitmore Hip Stem is a bone-preserving system of implants specifically designed for use with less invasive surgical procedures. The system aims to provide stable reconstruction of patients’ anatomies by matching stem and different medial curvatures. The triple taper design and proximal Ti-Plasma coating enables a secure press-fit, while the trapezoidal cross-section provides for rotational stability.
Sales of extremities products surged 9 percent in 2011 to $163.4 million. The top sellers in this category were the Bigliani/Flatow Complete Shoulder Solution and the Trabecular Metal Reverse Shoulder System, according to the annual report.
Dental product sales experienced an impressive turnaround from a 10 percent loss in 2009, growing 13 percent last year to generate $248 million for Zimmer. Sales were led by the 10-year-old Tapered Screw-Vent implant system, a device that features an internal hex platform which reduces stress on crestal bone and resists abutment screw loosening, helping to create ideal conditions for bone level maintenance.
Trauma product sales jumped 16 percent to $286 million, driven by demand for Zimmer Periarticular Locking Plates, the NCB Plating System and the Natural Nail System, a next generation system of intramedullary nails designed to restore the pre-injury shape of fractured long bones and provide stable fixation during fracture healing. The nails feature a unique screw nail connection that allows a surgeon to create a true fixed angle construct that unites the injured bone to the nail.
Spinal product sales fell 4 percent to $225 million due to “operational challenges” with the company’s American sales force, a difficult reimbursement landscape and a continued decline in Dynesys Stabilization System sales. Those challenges proved too difficult to offset by solid sales of the PathFinder NXT Minimally Invasive and Sequoia Pedicle Screw Systems, the company’s Universal Clamp System and its Trabecular Metal products. Zimmer’s PathFinder screw system allows surgeons to approach the implant site through a miniature opening or percutaneously.
Orthopedic Surgical product sales experienced solid growth last year, ballooning 9 percent to $348.8 million. Sales stalwarts in this category included the company’s Palacos bone cement, wound debridement products and tourniquet devices.
Sales in the Orthopedic Surgical product category also received a boost from the company’s December 2010 acquisition of Sodem Diffusion S.A., the Swiss manufacturer of SoPlus Orthopaedic Surgical Power Tools. Sodem Diffusion’s portfolio includes the SoPlus Universal large bone system and the SoPlus Ultra small bone system with associated consumables.
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