Thursday, July 29, 2010

Synthes Continues to Grow, but, Spine is Sucking Wind!!!!

The Arbeitsgemeinschaft Fur Osteosynthesfragen (whenever TSB says that, I feel like I'm back in the old country yodeling off Jakob Mountain), reported its second quarter 2010 earnings today, and, like many of their counterparts, it seems the spine division offset a strong performance by Synthes Trauma and Cranio-Maxillo Facial. Of course Michael Orsinger in his infinite wisdom told the Street that this performance was offset by pricing pressures in the spine marketplace. TSB believes this has become the "jump on the bandwagon" excuse within the industry for those legacy companies that are "sucking wind." So, why are so many companies choking on the gas pipe? Could it be that there is nothing new in their portfolios? Could it be that many of these companies have kicked the tires on potential acquisitions and realized that there is nothing new?The former investors and management team at N-Spine and Spinal Solutions must be laughing all the way to the bank. Suckerrrrrrrrrrr!

The Big O (If only he had moves like Oscar Robertson) went on to commend the job that Synthes Trauma and CMF did. When the bastard step-child of the company (CMF) outperforms spine, you know there's trouble in paradise. Synthes is evolving into the second coming of Medtronic. Too big to move fast. In addition, how lame is the excuse that challenging economic and industry conditions continue to impact growth. Yes fellow bloggers, Synthes just like every other slim bucket organization is moving manufacturing over to China to minimize manufacturing cost. But wait until they find out that the Chinese are adept at copying implants and selling knock-offs in the Asian Markets. Surprise! Suprise! Surprise!

27 comments:

  1. synthes spine reps are questionable characters as well. has anyone noticed that too?

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  2. 8:45 - You've met the whole sales force?

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  3. yep. total scum.

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  4. Come on! You just wished you worked for Synthes! Ex-employee who couldn't make quota right.

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  5. Don't hate the playa, hate the game.

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  6. Synthes Spine is like all the other spine companies.....There are no new products that will have a major impact on the market. I/P landscaping by the big boys (MDT and Depuy) make it difficult to home grow a product. Hospitals have cornered the MD's and now RFP the implants like a commodity product. Bottom line, commissions will be cut, hiring profile lowered and most companies will hang on to what they have and hope for better days. Lastly, except for NUVA, no other company is worth purchasing. Flat to negative sales is the future of spine due to price pressure and surgeon apathy.

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  7. Scum? Sounds like an ankle biter trying to vent some steam.

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  8. I think that the larger companies are going to have to pay more attention to their fusion portfolios
    and try to differentiate themselves there in some way, like Nuvasive did with a different approach to the same problem, or biologics, or better biomechanical implants, since artificial discs and dynamic stabilization is not going to be the second coming as predicted due to reimbursement concerns. Fusion is going to be the gold standard for a while. There are some smaller companies with some better mousetraps, even though they may not be giant technological leaps. I would predict we will see some increased M&A activity over the next year as the larger companies try to expand their fusion offerings. Just a guess. Thoughts??

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  9. buy low sell high.

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  10. is synthes spine innovative anymore? why/why not?

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  11. Pricing pressure is a real issue. My asp has been decimated in the last 18 months. Not saying this is the problem with the Swiss, but its a definite kick in the nutz.

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  12. We've been talking m&a in this business for the past two years and in my opinion nobody has anything truly differentiating to buy. everything can be manufactured in house no matter who you are.

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  13. anonymous 9:47 thanks for your enlightenment. Just go done reading Business Acquisition for Dummies?

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  14. There's nothing lucrative in Synthes Spine pipeline for the next couple of years, one of the reasons Murray took over for Emch. MO continues to harp about 'near term acquisitions' to fuel growth (i.e. we need to purchase revenue) and doesn't take an opportunistic approach to acquiring technology outside Synthes. It's bad enough this company suffers from a not-invented-here mentality imposed by HJW but, if the M&A efforts continue to ignore the horizon, the future eventually arrives and the road only gets steeper.
    Biomaterials could go a long way in meeting growth expectations but trials are long and expensive for most product development efforts that will have a substantial impact on any of Synthes Big 3 business units. It also doesn't help that an EG-head was put in charge of that division with little to no record of achievement in product development.

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  15. If Amplify isn't cleared by the FDA, will that cause a shift in interest away from fusion to other unifications industry-wide or will it stimulate interest in generic Infuse products?

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  16. One wonders what effect the war-on-terror and related casualties has had on Synthes sales the last few years? Is the company a big supplier to the military?

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  17. Nothing lucrative in the pipeline? You really have no idea what you are talking about.

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  18. Annonymous 8:46...

    Do you mean unifications or indications?

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  19. I think the underlying cause is the proliferation (dozens? hundreds?) of small spine start-ups. Many use the surgeon-owner or surgeon-distributor model. It's sucking the life out of the "Big 4." (Medtronic, DePuy, Synthes, Stryker)

    What started out to be a few ankle-biters has turned into a school of hungry piranha. They've swallowed up to the mid-thigh and are working north!

    The Bigs either cannot (DOJ watching their every move, eager for a nice fat monetary settlement) or won't (denial) play the game and are getting creamed.

    Meanwhile, the Bigs continue to rearrange the deck chairs, waiting (hoping) for the new paradigm to self-distruct. Anybody got a magic wand?

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  20. TSB, do you really think the Chinese are Capable of developing knock-offs of implants made of specialty metals (Ti, Ti Niride, etc)? Perhaps, if the docs in Asia aren't familiar with their look, feel and performance...

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  21. Unless you are living in an ivory tower, the Chinese have done this to many companies in other industries, been there, done that. How many Korean knock offs have we recently seen. Does anyone think the Chinese will enforce U.S. laws? Specialty metals, you can buy them anywhere in the world, just like one can buy weapons and plutonium.

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  22. MM, though I typically find your blog to be both credible and informative, I do have an issue with you implying that Synthes is shifting their MFG to China. That is simply not true. Yes, a plant was opened in China recently, but that plant is operating to support that specific business unit. No implants manufactured in China will be making their way in the US and with the Synthes salesforce being 100% direct there is really no concern that knock-off implants could slip into the product pipeline.

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  23. I don't think he's implying that knock-off implants will slip into the U.S. pipeline, rather the Asian market may suffer as knock-offs are possible there. On the plutonium front, the analogy was a bit silly.

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  24. Iran = Plutonium = another third world country that becomes a colorectal problem

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  25. where have all the cowboys gone?

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