Orthopedic Giants' Performance Showdown: Who Comes Out on Top?

Feb 14, 2024 20:48 CST Updated 20:48

Stryker

Medical Device R&D, Production, and Sales Company

Johnson & Johnson

Medical Device R&D and Manufacturer

Figure | Paixin Creative

Source | CPhI Medical Devices

Writing| Alyosha

How Do Foreign Giants Respond to the Ever-Changing Orthopedic Market in China?

Orthopedic Foreign Giant, Latest Performance Announced

Recently, the three giants in the orthopedic field, Stryker, Zimmer Biomet, and Johnson & Johnson, have all announced their 2023 full-year and fourth-quarter results.Performance Report.

Stryker

Stryker's net sales in the fiscal year 2023 were $20.498 billion, an increase of 11.11% year-over-year; net profit was $3.165 billion, an increase of 34.22% year-over-year; the gross margin and operating profit margin for the full year were 63.7% and 19.0%, respectively.

In various细分business segments,Net sales of medical devices and neurotechnology business amounted to $11.8 billion, with organic net sales growth of 11.8%; net sales of orthopedics and spine business reached $8.7 billion, with organic net sales growth of 11.1%.

Stryker stated that, in view of the strong momentum of its own business in 2023, the significant growth in infrastructure investment demand in the healthcare sector, and the gradually stabilizing macroeconomic environment, among other favorable factors,Full-year 2024 sales revenue organic growth is still expected to remain in the high range of 7.5%-9.0%, with adjusted net earnings per share reaching up to $11.70-$12.00.

Zimmer Biomet

Zimmer Biomet's net sales for the full year 2023 were $7.394 billion, an increase of 6.5% compared to the same period last year; the net income for the year was $1.024 billion, adjusted to $1.584 billion.

Net sales in the fourth quarter were $1.940 billion, an increase of 6.3% over the same period last year; net income in the fourth quarter was $419.2 million, adjusted to $458.1 million.

The financial report announced the regional and product sales performance for the fourth quarter and the entire year of 2023:

Johnson & Johnson

Johnson & Johnson Medical Technologies' annual sales reached $30.4 billion, representing a year-on-year increase of 10.8%.Among them,Johnson & Johnson Medical Technologies' Q4 2023 sales reached $7.673 billion, a year-on-year increase of 13.3%.

Sales in the fourth quarter were $21.4 billion, representing a year-over-year increase of 7.3%.Sales reached $21.4 billion, representing a year-on-year increase of 7.3%.

In various细分 business segments:Surgical business sales were $10.37 billion, a year-on-year increase of 3.6%; orthopedic business sales were $8.942 billion, a year-on-year increase of 4.1%; interventional solutions sales were $6.35 billion, a year-on-year increase of 47.70%; vision business sales were $5.072 billion, a year-on-year increase of 4.6%.

Johnson & Johnson stated that it expects sales performance across quarters to remain relatively stable in the coming year. The impact of volume-based procurement for surgical and sports products is expected to continue into 2024, following its effects seen in 2023.

Orthopedic Market in "Flux"

Under the叠加影响of various factors, the orthopedic market is undergoing a全新的变化, and the moves of giants are particularly worth paying attention to.

Stryker noted in a recent conference call that, despite supply constraints in some regions, the orthopedic market is expected to remain strong in 2024, driven by factors such as demographics, a favorable pricing environment, and robotic-assisted surgeries.

Looking back at Stryker's development, acquiring foreign technologies and enriching business operations through mergers and acquisitions has been one of the key strategies.December 18, 2023Stryker Announces Plan to Acquire French Joint Replacement Hardware Manufacturer SERF SAS

It is reported that Stryker has made a legally binding offer to acquire SERF SAS's parent company, Menix Group. International orthopedic sales account for approximately 65% of the company’s revenue. Financial details of the transaction have not been disclosed at present, but Stryker stated in a press release that the acquisition is expected to be completed in the first quarter of 2024.

As a "longtime rival," Johnson & Johnson has also been making frequent moves in the orthopedics field. During its third-quarter investor meeting, Johnson & Johnson stated that its medical technology division is restructuring the DePuy Synthes orthopedic business.

It is reported that,Johnson & Johnson's orthopedics business restructuring is expected to be completed by the end of 2025, at a cost of $700 million to $800 million.A relevant Johnson & Johnson executive previously stated that the two-year restructuring plan will allow the company's orthopedics division to exit "low-profit markets and product lines." Considering the withdrawal from certain markets and product lines, DePuy Synthes' total revenue will decrease by approximately $250 million over the next two years. However, these actions will enhance Johnson & Johnson’s ability to meet demand, accelerate growth, and improve profitability.

In the orthopedics field, as mentioned in Johnson & Johnson's financial report, the impact of bulk procurement continues.

Last year,ZimVie, originally part of Zimmer Biomet, announced plans to fully withdraw its spinal business from the Chinese market due to the impact of the national spinal implant procurement policy.

Stryker previously revealed in its financial report,Due to the failure in the spinal bidding process, it is exiting the spinal business in China.

Focusing solely on the Chinese market, the production environment of foreign giants is changing under the impact of centralized procurement. Chinese brands, with advantages in cost and distribution channels, are gaining an opportunity to overtake competitors.

ButBased on the overall scale and growth expectations of China's medical market, foreign orthopedic giants remain highly focused on the Chinese market, with related layouts and collaborations accelerating.

Given high attention, the investment layout and cooperation in China are also advancing.

Song Weiqun, Global Senior Vice President of Johnson & Johnson and Chairman of the China Region, stated:"Each department of Johnson & Johnson China has end-to-end R&D capabilities. China is the only market outside the United States where Johnson & Johnson has established R&D centers or R&D departments across all major businesses."

Zimmer Biomet China President Li Yongming mentioned in an interview:"The current localization is not deep enough. For example, we need to transform Zimmer Biomet China into a Chinese company with Zimmer Biomet's heritage, achieving full localization by using Chinese funds, technology, and raw materials, and becoming a Chinese company with foreign origins as much as possible, so that we can continue to develop in China."

In addition to the high-end field, orthopedic giants are also showing a trend of expanding into lower-tier markets in China.

Stryker China General Manager Zhang Shaobin said in an interview:"The Chinese market is an important component of Stryker's global strategic layout. Currently, with the increasing healthcare demands of the public, how to promote the widespread application of innovative medical devices and technologies at the grassroots level and optimize patients' medical experience remains an urgent issue to address."

As competition reaches a fever pitch, the orthopedic device market is facing more challenges. However, new changes often hide new growth opportunities, and in the wave of industry iteration, new ways of survival are quietly emerging.

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Author: Alyosha

WeChatID: zcxujingmin

Editor: Qin Jiu

WeChat ID: nrzx0321