Biorthex Inc. Files IPO Prospectus Amid $3.8 Billion Orthopedic Market Transformation

The orthopedic industry: A transformation driven by economic, demographic, and technological forces has quietly emerged before the world, prompting some speculative companies to restructure their operations to better capitalize on these changes.

According to the Orthopedic Trends Watch report released by OrthoStreams, the global orthopedic products market, valued at $3.55 billion, is growing at an annual rate of 3.5% and is projected to reach $3.8 billion in 2015. This growth is primarily driven by factors such as population aging, individuals’ expectations for maintaining an active lifestyle, the continuing rise in obesity rates, and expanded health insurance coverage.

Spinal, knee, hip, and trauma products account for more than 65% of the total orthopedic product market. Growing outsourcing and supplier restructuring will drive the expansion of the aforementioned precision manufacturing outsourcing market.

• Precision Manufacturing Outsourcing Becomes Mainstream in the Orthopedics Market

Outsourced precision manufacturing is considered the fastest-growing industry, with companies in this sector typically possessing specialized and comprehensive service capabilities. The outsourced orthopedic precision manufacturing market is projected to grow from $3 billion in 2012 to $4.2 billion in 2017, representing a year-over-year growth rate of 6.9%, which is expected to exceed the growth rate of the general orthopedic products market.

The outsourced precision manufacturing market for orthopedics includes manufacturers’ implants, instruments, and other products. Implants hold the largest market share and are experiencing the fastest growth, with their value projected to increase from $170 million to $240 million, representing a compound annual growth rate (CAGR) of 8%. Instruments rank second in market share and exhibit the next-highest growth rate, with an expected CAGR of 5.6%.

Furthermore, as global collaborative manufacturers of medical device prototypes actively outsource non-core functions, most medical device companies are gradually concentrating their resources on research, product development, and marketing. This outsourcing model enables manufacturers to focus on accelerating the growth of their core competencies.

• Orthopedic Implant Usage Continues to Grow

The usage of orthopedic implants is projected to grow by 3–4% annually, with the steady demand for such products driven by the following factors:
1) Population aging will drive increased demand for orthopedic implants. By 2015, the U.S. population aged 65 and older is projected to reach 48,000,000, representing an increase of more than 18% compared with 2010.
2) The rising incidence of osteoporotic fractures and musculoskeletal diagnoses has driven an increase in orthopedic surgical volume, particularly among individuals aged 65 and older.
3) Medical costs associated with obesity have doubled over the past decade, with current annual expenditures in the United States reaching $150 billion. In the U.S., bariatric surgery has emerged as a specialized field, challenging the approaches of orthopedic surgeons and even influencing the design of specialized implants.
4) An active lifestyle has contributed to an increase in the younger demographic.
5) Technological advancements are enhancing device durability, enabling younger patients to receive “lifetime” implants.

Implant use has begun to become intelligent. In the field of orthopedics, sensors are being applied to grafts and surgical instruments. This trend is driven by three factors: new technological capabilities in embedded sensing, orthopedic manufacturers’ growing understanding of the potential of embedded chips, and the incentives for manufacturers and healthcare providers.

• Future investments will focus on BRIC.

BRIC refers to Brazil, Russia, India, and China. The five major knee brace operating companies, which have already achieved comprehensive coverage of the U.S. and European markets with mature sales and distribution departments, are now looking toward BRIC as their future strategic direction. As sales growth among these five giants has slowed to as low as 5%, they are heavily investing in BRIC countries to secure future development. For example, Medtronic announced that it has expanded its workforce in China to 2,000 employees. Smith & Nephew announced a restructuring plan, strategically focusing on BRIC markets and increasing R&D investment in products tailored for these regions.

This article’s content was provided by Lu Shan of Biorthex Inc. (Founded in 1993 and headquartered in Canada, Biorthex Inc. specializes in the research and development of products for spinal disorders. The company has manufactured cervical and lumbar interbody fusion cages using porous Ni-Ti alloy materials for the treatment of orthopedic spinal injuries.)

Further Reading:

Axcelon Eager to Form Digital Orthopedics Joint Fleet

Editor: Mo Renying