The U.S. market for orthopedic biomaterials will grow at an average of just under 7 percent per year, to total approximately $4 billion by 2016, predicts medical technology market research firm Millennium Research Group (MRG).
In its “US Markets for Orthopedic Biomaterials 2012” report, MRG states that while the number of procedures using orthopedic biomaterials such as allografts and polymer-based bone substitutes will grow significantly through 2016, lower reimbursement rates from insurers will limit average selling prices.
“Larger companies involved in the orthopedic biomaterials space and the U.S. healthcare market at large, have struggled to find ways to extend their growth organically because of the economic challenges,” said MRG analyst Mashkur Reza, in a statement. “As a result, some of these companies, such as Sanofi, have looked at merger and acquisition strategies to enter growing segments, while others, such as Johnson & Johnson, continue to use merger and acquisition strategies to complement its product portfolio in segments it competes in. Both of these are legitimate strategies to foster additional growth.”
A recent example of this trend toward mergers and acquisitions is medical device manufacturer Stryker’s purchase of Orthovita in May 2011 for roughly $316 million, which Stryker confirmed was motivated by a desire to grow their presence in the biomaterials market.
“With this acquisition, Stryker is meaningfully expanding our orthobiological product portfolio and strengthening our position in key segments of the spine, orthopedics and biosurgery markets,” Eric Teutsch, Stryker's vice president, orthobiologics, told Healthcare Finance News in September.
In addition to a continued rise in procedure volumes, the market will see increased demand for premium-priced products seen as having more favorable properties. These include second-generation synthetics, orthopedic stem cell products, therapeutic injection treatments and knee cartilage repairs.
An important factor driving revenue growth is that insurance companies are more likely to approve reimbursement for biomaterials than for standard materials, said Bruce Carlson, publisher at New York City-based healthcare market research firm Kalorama Information.
“Their efficacy in reducing healing time and increasing the chance that an implant surgery will be successful has lead to acceptance among physicians and insurance bodies,” said Carlson.