Biomet Recon Sales Stall, Extremities and Trauma Rise

Biomet, Inc.’s net sales for the company’s fourth quarter rose 6% to approximately $784 million.

Sports Medicine, Extremities and Trauma

According to a July 11, 2013 company press release, Sports Medicine, Extremities and Trauma (S.E.T.) sales of $160 million were up 62.1% over the previous year. The large increase was due to the acquisition of Johnson & Johnson’s trauma business last year. Excluding the acquisition, S.E.T. sales rose 6.4%.

Extremities sales increased 22.3% on a constant currency basis, including a 28.2% rise in the U.S. BMO Capital Market analyst Joanne Wuensch said Biomet has now had 22 quarters of double-digit extremities growth. She credited the company’s number one market leading shoulder franchise as well as a healthy market.

Reported hip and knee revenue declined during the quarter as knee sales were down 1.4% and hip sales dropped 0.3%. Overall reported large joint sales declined 1%.

Wuensch attributed much of the weakness the company’s knee segment, where sales were up only 0.1% on a constant currency basis, including flat growth in the U.S. She noted that Biomet management citing a stable market, but possible market share losses as physicians trialed several new competitive products. Specifically she pointed to Johnson & Johnson’s Attune Knee System, Zimmer Holdings, Inc.’s Persona Personalized Knee system, and Smith & Nephew’s Journey II BCS Knee System.

PiperJaffray analyst Matt Miksic said knee sales were driven by the Oxford partial knee with Signature. The company also rolled out their DTC (direct-to-consumer) campaign in the U.S., and the company continued the commercial launch of the Vanguard 360 Revision System.

It looks like the company held hip market share during the quarter, according to Wuensch, with a 1.8% revenue increase on a constant currency basis with a 2.2% increase in the U.S. She added that pricing pressure remained at low single-digit declines.

Key growth drivers in the quarter included the Taperloc Complete Systems. The company also continued the early global commercialization of their next generation Acetabular system, the G7 Acetabular cup.

Wells Fargo analyst Larry Biegelsen said he believes that Biomet’s slowing large joint growth was company specific and not a good read through for the other large ortho players like Zimmer and Stryker Corp.