Picture a man or a woman going on a journey beyond sight and sound, they have entered TSB zone. Good day Spine World, you know what the late James Brown sang, "I feel good." It's time to rock it out from Baghdad to Berkeley. It's 0800 and TSB is ready to rock, the "0" stands for OH My God, have any of you read the most recent marketing reports for the spine world? You know the reports that tell you what you already know. Let's see, these reports have been uplinked and downloaded, inputted and outsourced, upsized and downsized, downsided and upgraded, they have been interfaced with a database, and their datebase is from cyberspace, they are interactive and hyperactive and from time to time they are radioactive. With that said the market has been inspected, detected, injected, but not perfected.
So what are the sages of the industry telling us? Well before you consider spending any of those fast depreciating good old U.S. dollars on another insane marketing report that tell you where you are (we know that), where you came from (we know that), let's take a look at what their crystal balls (no pun intended, not) are telling us where they see us going. By the way, if their predications for the future are wrong, do we get a refund with interest? The last few years in spine have been a rude awakening, mercenary to say the least. We have gone from a super sized industry to one that is slowly consolidating itself whether by acquisition or failure. Industry dynamics have been affected by a sagging U.S. economy, leading companies and investors to expand into markets outside the U.S., as well as selectively investing in technologies that are considered innovative. Only a higher authority knows what will happen to our economy if the U.S. Government defaults on the debt ceiling. The failure of our elected officials in both parties to resolute the debt could result in an economic downturn that could be the death knell for some spine companies. So where do we go from here?
TSB would like to share with our bloggers some facts about 2010. Our total market output was slightly over $7 billion dollars. Revenues were a slight increase of 2.2 percent over 2009. Poor growth considering where we came from. Medtronic continues to lead the pack as the market leader with roughly a 35% marketshare. Even with the acquisition of Synthes, J&J/DePuy ( a combined 26%) still takes a back seat to the Boys in Blue, followed by Stryker at 8%, NuVa at 5%, Globus at 3% and Zimmer at 3%. Before anyone gets their panties in a knot, these are rounded figures. The rest of the industry is battling for 20% of the pie. The key players in that bracket are Alphatec and Orthofix. Word on the Street is that this could be the year of Globus, and TSB is not predicting an IPO. Rumor has it that their XLiF device will give NuVA a run for its money, and if it is as good as some clinicians have said, could this be the beginning of the end for NuVasive as the King of the XLiF. This could be trouble for the Billion Dollar Baby.
Fusion continues to dominate, as we witness more entrants into the pedicle screw, cervical plate and PEEK interbody markets and biologic markets. One must ask, but why? A premium is being placed by some companies on simplifying surgical technique with new approaches to old systems. If you already have a viable and competitive system that has MIS capabilities, why does the industry need more fusion products? Simply, because new companies or those in the 20% of the pie, are willing to cut out the middleman and make direct deals with POD's, a new breed of brokers and hospitals. What we are learning in 2011 is that the key to success has been creative and innovative selling techniques, along with attractive/aggressive commission programs to offset the increase in insurance denials and an outright attack by hospitals on driving ASP's to all time lows. Companies that have been able to pick off distributors that were collateral damage in the Apatech/ Baxter, and Stryker/Orthovita acquisitions increased their revenues. These were the outliers in the industry. The pending J&J/Synthes integration will also result in a shift in market share, the question is, who will be the lucky company or companies to capitalize on this integration? It will be impossible to keep everyone in the fold as there will be overlap in the field resulting in more industry related layoffs.
TSB believes that any company that doesn't have some type of motion preservation technology is already behind the eight ball. There are roughly 30-35 companies with a variety of cervical disc devices and 25 companies with lumbar platforms. As far as the Dynamic Stabilization market is concerned, remember that old French expression, "Le Roi est mort, Vive Le Roi." Unfortunately, TSB does not see a successor, resulting in an interregnum for Dynamic Stabilization, along with the fact that the FDA has placed greater scrutiny on this product line. Companies with ISD's could end up being the big winners in 2012 considering that they are playing in a diminishing landscape. The advantages of this procedure are a shorter surgical time, involving a minimally invasive approach that is low-risk that results in patients recovering much needed flexibility and mobility. Products like Axle, Coflex, X-Stop (the grand dame of ISD's), Superion, Flexus, In-Space, Spinos, Gel-Fix, Spinos, ISS, DynaFix, and Primalok are viable treatment modalities when it comes to Grade I spondy's with assoicated spinal stenosis. The market and surgeons will determine who are the winners and who are the losers, as usual it comes down to simplicity and instrumentation. The challenge will be to get those devices in IDE's out quickly, so that hospitals welcome them with open arms. Reimbursement is an invitation to the party.
If the future calls for an estimated annual growth of 3-5% over the next five, the companies with innovation will win the race, but it will be a marathon rather than a sprint? Will the top five companies be able to sustain their positions? Will stem cells rule the biologics marketplace? Will someone be displaced by an up and coming company. Will someone like Zimmer attempt to correct its past indiscretions in spine by making a key acquisition, or, will they be displaced by one of those companies in the 20% part of the pie? Whatever the outcome, strap yourselves in for the ride because 2012 will be the year of the dragon, one with vitality and strength. The only question that remains to be answered is will it be the U.S. market that produces vitality or markets outside the U.S. when it comes to spine? TSB wants to know what our readers think?