The market for hip and knee implants is stable but mired in a low-growth stage, according to analysts who attended the American Academy of Orthopedic Surgeons conference in San Francisco last week.
Although the abrupt departure of Stryker CEO Steve MacMillan drew the lion’s share of attention at the AAOS event, analysts from Barclays Capital and Leerink Swann agreed that the sector’s outlook calls for low-single-digit growth.
"Net/net, our discussions with surgeons and ortho companies on the hip and knee market largely confirm our expectations for low growth in 2012 (low-single-digit volume growth offset by slightly negative contribution from price/mix)," the Barclays analysts wrote in a note to investors. "In large joint [reconstruction], there was consensus among several companies that the market will likely grow at a more normalized mid-single-digit rate longer-term, given demographic, obesity, and emerging market tailwinds. Comments around volume and hospital utilization largely echoed recent Q4 reports and we estimate that global hip and knee volumes are currently growing in the low single digits."
"Our conversations with companies and physicians at the recent American Academy of Orthopedic Surgeons did not leave us feeling incrementally better or worse about the hip/knee market growth outlook," the Leerink analysts wrote in their own investors’ note. "’Stability’ was the word of the week with respect to ortho recon volume and pricing trends, and we still think it’s too early to call a procedure volume recovery. …The takeaway from AAOS was one of stability with respect to hip/knee procedure volumes, which is also in line with 4Q:11 industry results/commentary. Anecdotally, several surgeons did indicate to us that their surgery backlogs have increased by 1-2 weeks over the past several months. But there was an equal number of observers who indicated that their procedure volumes were actually lower vs. several months ago."
"In 2012, we continue to anticipate ongoing pricing pressures and a still-weak economy will limit any meaningful rebound in hip/knee market growth rates," they added.
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