Orthopedic giant Wright Medical (NSDQ:WMGI) is back on track, CEO Robert Palmisano told an audience at the J.P. Morgan Healthcare conference in San Francisco yesterday.
Following a rough patch, which included a deferred prosecution agreement over allegations that the company engaged in illegal kickbacks for hip and knee devices, Wright is looking to turn things around.
"In 2012 we began executing a transformational plan with the core focus of accelerating growth and improving our overall performance," Palmisano said yesterday. "We set out some pretty aggressive targets that we think we have actually surpassed."
The company set new benchmarks for progress in reforming its sales force, increasing physician training and spurring growth in its foot & ankle business.
Palmisano reported that Wright had already managed to convert 80% of its foot & ankle sales force to direct sales, 50% more than before.
"As we go forward, we did not think that we would be able to target the growth opportunity that is out there in foot & ankle if we did not get more control over our distribution channel," Palmisano said. "This was a big bet and I think it’s working out extremely well, and we couldn’t be happier."
He added that Wright had trained 1,360 U.S. physicians in the 1st 3 quarters of 2012, beating its own benchmark of 1,200 for the full year. The company had trained just 600 U.S. physicians in 2011.
Palmisano further noted that Wright’s foot & ankle business saw 14% growth in the 3rd quarter of 2012, compared with just 7% in Q4 2011.
Looking forward to 2013, the company plans to push productivity in its foot & ankle sales, aiming to hit a $1-million-in-revenue-per-salesperson benchmark, according to Palmisano.
The orthopedic devices maker also hopes to capture new opportunities in its fledgling ortho reconstruction devices business, sustain a strong cash flow and finally close the books on a $390 million acquisition for regenerative medicine company BioMimetic Therapeutics (NSDQ:BMTI).
Wright in November 2012 began buying up BMTI shares, taking out a 36% stake in the company after having agreed to pay up to $390 million in cash, stock and milestone payments for BioMimetic.
The acquisition ties into Wright’s plan to position itself as 60% extremities and biologics and 40% ortho recon, Palmisano said.
The deal is expected to close in the 1st quarter of fiscal 2013, and BioMimetic’s Augment Bone Graft should have FDA approval before the end of the fiscal year, he added.
The FDA in the past hasn’t always been favorable to BioMimetic’s Augment, a drug/device combination that uses a recombinant human platelet-derived growth factor and a bioresorbable synthetic bone matrix to stimulate bone growth in foot & ankle procedures.
U.S. health regulators in May 2011 published a negative review of the Augment bone graft, saying studies showed that Augment was not as successful as grafts taken from patients’ own bones.
An FDA advisory panel shortly after voted to recommend approval for the Augment treatment. A PMA nod for the product would make it the 1st new recombinant protein product to hit the orthopedics market in nearly 10 years.
