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Home » Stryker CEO Lobo skeptical on ‘repless’ generic sales models

Stryker CEO Lobo skeptical on ‘repless’ generic sales models

January 14, 2015 By Brian Johnson

Stryker CEO Lobo skeptical on 'repless' generic sales models

Stryker (NYSE:SYK) CEO Kevin Lobo is skeptical of so-called "repless" generic sales models for orthopedic procedures, he said today, even as rival (and potential acquisition) Smith & Nephew (FTSE:SN, NYSE:SNN) looks to expand its no-frills Syncera program.

Lobo, speaking at the J.P. Morgan Healthcare Conference in San Francisco, said that he’s aware of programs like Syncera but doesn’t see them as a credible threat.

“I look at a generic model very skeptically, regardless of which company is offering it,” Lobo said. “Until these procedures are de-skilled it’s very hard to imagine [not having] the salesforce and the services that we provide in the hospitals. If you don’t have that, the operating rooms just don’t flow effectively and efficiently. I don’t know when they launched their initially but we are not seeing it in any meaningful way in the market.”

Earlier this week Smith & Nephew CEO Olivier Bohoun touted his company’s Syncera pilot as "disruptive of the commercial model," noting that the British orthopedic maker is seeing profit margins "equivalent with the classic old-style [hip and knee] business."

Syncera is in its pilot phase in limited hospitals in the U.S. Bohuon said the company would look to expand the program into Australia, New Zealand and parts of the European Union. Bohuon declined to give a timeline for the launch but said the company would be making a more formal announcement sometime in 2015 and noted that the program "worked very well."

Hospitals performing 700 procedures a year with the Syncera system will save an average of about $4 million in cash over 3 years, he said. The program aims to cut implant prices in half by removing sales representatives from the operating room and replacing them with an automated technology solution.

Syncera is not the only rep-less model either being piloted or practices in the hip and knee space.

Wright Medical launched a pilot program in 2013 called WrightDirect that eschewed a traditional sales model for a more collaborative, "turn-key" approach with C-level executives at a select number of U.S hospitals.

"In the traditional ortho-recon model, the hip and knee implant products are not purchased by the hospital until they are actually implanted. The instruments are also typically on loan to the hospital," Wright spokeswoman Julie Tracy told MassDevice.com in a 2013 interview. "In the WrightDirect model, the implant inventory and instrumentation would be purchased and held by the hospital."

Wright contracted Bain & Co. to study the U.S. knee and hip market. The study identified the roughly 10% of procedures at hospitals which made purchasing decisions based on institutional preference, rather than physician preference. That number, according to Wright officials, was expected to double to 20% over the next 2 years, as more physician practices are snapped up by hospital systems.

Palmisano said in these "institutionally driven" hospitals, there would not be a Wright Medical sales rep in every case. Instead, the company would negotiate a price "meant to compensate the institution for taking on a lot of additional costs," he said.

Wright sold WrightDirect to China-based MicroPort Scientific (HK:0853) as part of the $290 million sale of its hip and knee business a year ago. MicroPort has since been rebranded WrightDirect as ImplantPartners.

Filed Under: News Well, Orthopedics Tagged With: J.P. Morgan Healthcare Conference, Sales, Smith & Nephew, Stryker, wrightmedical

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