Zimmer Boosts Trauma/Extremities Businesses With NORMED Takeover

Espicom View: Bolstering its Extremities business has been a priority for Zimmer for the last few years, and the acquisition of a Europe-based company with a strong and established portfolio of trauma and extremity products is a good way for Zimmer to achieve inorganic growth in this segment. Additionally, the acquisition will surely help Zimmer achieve sales growth in European markets. Although the company's Trauma and Extremities revenues continue to grow in Europe, total sales in the region declined in 2012. Strengthening its Trauma and Extremities offerings in the region further will help offset declines from other businesses.

Zimmer has acquired Tuttlingen, Germany-based NORMED Medizin-Technik, a provider of technologies for the foot and ankle, hand and wrist reconstruction and trauma markets. NORMED develops a broad range of specialised plates, screws and instruments, including systems for bone reconstruction and fracture repair, fusion procedures and external fixation. It is believed that the acquisition will strengthen Zimmer's Extremities and Trauma product portfolios and new product development capabilities in the fast growing foot and ankle and hand and wrist segments. Financial terms of the acquisition were not disclosed.

Zimmer's existing Extremity portfolio, primarily shoulder and elbow products, is designed to treat arthritic conditions, soft tissue injuries and fractures. The company's significant Extremity brands include: the Trabecular Metal reverse shoulder system; the Bigliani/Flatow complete shoulder solution range; the Zimmer Anatomical Shoulder system; the Zimmer Trabecular Metal total ankle; and the Coonrad/Morrey total elbow. The company's significant Trauma brands include: the Zimmer Natural Nail system; the NCB polyaxial locking plate system; the XtraFix external fixation system; the Zimmer periarticular locking plate system; the Zimmer universal locking system; and the Zimmer Cable-Ready system.

NORMED possesses a good sized product portfolio of CE-marked and FDA-cleared devices, which includes fixation devices for the lower and upper extremities, oral and maxillofacial surgery systems, paediatric orthopaedic devices, joint replacement systems and other orthopaedic products. The portfolio will fit well with Zimmer's existing Trauma and Extremities portfolios, allowing the company to regain European market share lost to DePuy Synthes. Zimmer estimates that it holds third position in the global Extremities market, or 12 per cent; and seventh position, or 5 per cent, of the global Trauma market.

The acquisition forms part of Zimmer's global restructuring strategy, part of which is a focus on growth for its Extremities business. In 2012, Extremities accounted for just 4 per cent of the company's total product sales, while the Trauma business accounted for 7 per cent. The European geographic segment accounted for $1,177.4 million, or 26 per cent, of the company's total 2012 net sales, with Germany, along with France, Italy, Spain, Switzerland and the UK collectively accounting for 70 per cent of net sales in the region. Although European Extremities sales grew by 6 per cent in 2012, and European Trauma sales grew by 10 per cent, total sales in the region declined by 3 per cent over 2011.

The NORMED acquisition follows Zimmer's acquisition of the business assets of Knee Creations in May, which will enhance Zimmer's product portfolio of knee treatments through the addition of Knee Creations' Subchondroplasty procedure. Additionally, in 2011, Zimmer purchased ExtraOrtho, including its external fixation line, the 510(k)-cleared XtraFix external fixation system. The acquisition broadened Zimmer's Trauma portfolio and strengthened the company's position in the US$820 million external fixation market.

Throughout 2013, Zimmer expects to continue global restructuring and transformation initiatives designed to streamline business operations and support functions. Savings from these initiatives will enable the company to absorb the medical device excise tax, continue to support investments in innovation and commercialisation of new products and technologies, expand global sales channels and drive sustained growth in earnings and cash flow. Programmes to be completed in 2013 are expected to generate annualised pre-tax savings of more than US$80 million, including US$30 to US$40 million to be realised in 2013.

This article is tagged to:
Sector: Medical Devices
Geography: Germany, Germany, Germany, Germany

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