Zimmer can put the spring back in your step or the zing back in your swing. The company designs and markets orthopedic products, including reconstructive implants used in knee or hip replacement surgery, shoulder implants that restore function in arthritic joints, and bone and tissue grafting materials. It also makes dental implant systems, spinal implants to fix aching or injured backs, and trauma products (such as plates, screws, and pins) that help broken bones to heal. Additionally, Zimmer makes surgical products used in orthopedic surgeries, including tourniquets and devices for wound cleansing. Zimmer operates worldwide, with direct operations in more than 25 countries.
Zimmer makes most of its money from sales of knee and hip replacement products (more than 70%). It sells its orthopedic products directly to health care providers (such as hospitals, surgery centers, and surgeons themselves), and to a lesser extent through distributors and health care dealers. Its dental products are sold directly to dental practices and laboratories. The Americas segment (largely consisting of US operations) accounts for more than half of Zimmer's annual revenues, though sales in international markets (especially in the Asia/Pacific region) are rising. Zimmer's products are sold in more than 100 countries worldwide.
Some of Zimmer's lead products are the Alloclassic hip system, Zimmer M/L taper hip prosthesis, and NexGen knee product line. In its smaller segments, top products include the Bigliani/Flatow line for shoulders, the Tapered Screw-Vent dental implant system, the PathFinder minimally invasive pedicle spine screw system, the Zimmer locking plate systems for bone fractures, and the Palacos and Hi-Fatigue bone cement surgical products. Outside of medical products manufacturing, the company has an Accelero Health Partners unit that provides consulting to help surgeons design customized treatment programs.
Zimmer has kept its sales figures on the rise in most operating segments through new product development efforts. For instance, revenues in the hip implant segment increased 7% in 2011, largely due to the introduction of the Continuum acetabular system and the next-generation Zimmer M/L taper stem with Kinectiv technology. The trauma segment's 16% gain was likewise helped along by the 2011 launch of the Zimmer natural nail system. In addition, Zimmer boosts sales by introducing next-generation versions of existing best-sellers that add functionality or ease or use. For instance, it launched the PathFinder NXT spinal pedicle screw system in 2010; however, despite advances in the field, pricing and US sales force challenges have caused sales to shrink in the spinal segment.
The firm also conducts substantial R&D work in the field of orthobiologics, or the implantation of biological materials to help repair and regenerate damaged tissue. Zimmer markets biologic bone and tissue allografts for dental, spinal, and trauma procedures through a partnership with RTI Biologics. The company is also collaborating with ISTO Technologies to develop biologically-derived grafts for cartilage repair; the companies have thus far launched the DeNovo natural tissue graft for cartilage repair and the Chondrofix allograft for lesion (cartilage and bone) repair.
Acquisitions are also a means of expansion for Zimmer. In 2010 it acquired Beijing Montagne Medical Device to widen its hip operations in the Asia/Pacific region; it also purchased trauma products manufacturer Sodem Diffusion that year. Zimmer expanded in the fields of in minimally invasive surgeries and computer-aided surgery technologies through historical acquisitions including ORTHOsoft (computerized navigational systems) in 2007 and Abbott Spine (minimally invasive surgical devices) in 2008.
Along with increasing its sales through new product introductions, acquisitions, and international expansion efforts, Zimmer expects overall industry trends to help keep its sales in the black. The aging US population, chronic obesity, and advances in surgical techniques are all expected to contribute to increased demand for Zimmer's products. While demand is set to surge, the company could continue to see depressed prices in some segments until the economy fully recovers due to government measures meant to control health care costs and hospitals seeking to cut their budgets.
Zimmer has steadily increased its revenues throughout most of its operating history (with the exception of a slight drop in 2009), including a 6% increase to some $4.4 billion in 2011 due to increased and new product sales. However, the company has had more trouble keeping a steady bottom line. It experienced a 15% drop in net income in 2009 and another 17% decrease in 2010 due to operational and restructuring expenses, product litigation costs, and value impairment charges related to the spine segment. As these expenses and charges faded, Zimmer returned to profit growth in 2011 with a 27% increase to about $761 million.
To help reduce operational costs, the company is undergoing restructuring initiatives that aim to streamline business functions and reduce management layers. The program was launched in 2009 and extends through 2012; savings will be reinvested in R&D and sales force expansion efforts.
Formerly part of Bristol Myers Squibb, Zimmer Holdings was spun off into an independent operation in 2001. – less