In their recent quarterly earnings updates, orthopedics giants Stryker and Zimmer Biomet showcased distinctly different strategies for fueling their respective growths. Stryker, led by CEO Kevin Lobo, has aggressively pursued acquisitions, highlighting seven recent purchases that span capabilities from virtual hospital workflows with Care.AI, tools for brain surgery and stroke care from Nico Corporation, to treatments for chronic lower back pain by Vertos Medical. These acquisitions, while mostly small in scale, are expected to significantly boost Stryker’s sales by $300 million by 2025. With a strong financial standing bolstered by $1.6 billion already spent on acquisitions this year, Lobo emphasized that mergers and acquisitions will remain Stryker’s primary strategy for deploying its capital in the foreseeable future. Over the past decade, Stryker has completed over 50 deals.
On the other side, Zimmer Biomet has taken a more measured approach to growth. During a Wednesday earnings call, CEO Ivan Tornos conveyed that while the company is open to acquisitions, it has not encountered a compelling enough deal to warrant immediate action. Tornos stated that Zimmer Biomet can sustain its growth without acquisitions, but will consider them if they align strategically and financially with the company’s plans.
In the realm of technological advancements, both companies are making notable progress with surgical robots. Stryker reported record installations of its Mako surgical robot during the quarter, though exact numbers were not disclosed. Additionally, the company is refining its new spine robot and related software, aiming to enhance training protocols before a broader release. A shoulder feature is also set to launch by year-end, expanding the robot’s utility.
Zimmer Biomet is not far behind in the robotic arena, having advanced its own robotic-assisted shoulder replacement feature. Already in limited market release with hundreds of cases performed, feedback suggests significant reductions in operating time. The company anticipates this feature becoming a major growth driver by late 2025 and 2026. Another innovative product, the Persona IQ “smart” knee implant developed by Canary Medical, has recently expanded with a shorter stem version following FDA clearance, with significant adoption expected in upcoming years.
However, Zimmer Biomet has been facing significant operational challenges due to a transition to a new enterprise resource planning (ERP) system made by SAP. The switchover, which occurred in the third quarter across North America, disrupted product shipments and affected various business segments, particularly the types of businesses associated with sports, extremity, trauma, and the Rosa surgical robot. Although corrective measures have been initiated, full normalization of service levels is not expected until the end of 2024.
Both Stryker’s robust acquisition strategy and Zimmer Biomet’s cautious yet steady approach, along with their advancements in surgical technology, underscore their commitment to evolving in the competitive orthopedics market. These strategic decisions will likely shape their operational and financial performances in future quarters, influencing their positions within the industry.
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