#5, Growing Fast and Patient Founded. Who is it?

Answer: Swiss-based Medacta.

When a wounded Alberto Siccardi lay at the bottom of the Bernina mountain range in the Swiss Alps in the early ’90s, he couldn’t have imagined the upward climb that would result from his painful experience…or that his fall would ultimately elevate the lives of millions of people worldwide.

In the aftermath of Dr. Siccardi’s less-than-ideal surgery to repair his hip, the initial seeds of Medacta International began to germinate. But the family’s dedication to patient care dates back to 1958 when Alberto’s father, Dr. Francesco Siccardi, Sr., founded Bieffe Biochimici, a company whose globally offered specialties included dialysis, urology and IV perfusion.

In 1997 Baxter International acquired the medical fluids products unit of the company, and two years later the family decided to enter the orthopedic market with the founding of Medacta International.

Lugano, Switzerland-based Medacta is the 5th largest hip and knee manufacturer in the world, the only orthopedic company founded by a patient and, by virtue of its 1,000 hardworking employees, also the fastest-growing major integrated supplier of orthopedic implants (15% annual sales growth in the last three years).

And, it is officially 20 years young.

To showcase 20 years of innovation and growth, Medacta held its 9th M.O.R.E. (Medacta Orthopaedic Research and Education) International Symposium in Lugano, Switzerland from April 11-13, an event that welcomed approximately 1,500 attendees from around the globe.

And OTW—yours truly—was along for the exciting ride.

Medacta’s April Public Offering of Stock

On April 4, 2019, Medacta became a public company with shares available for purchase on the Swiss Exchange. The opening price for one share of Medacta stock was CHF104 ($106). Given the number of shares outstanding, the implied total market value for the company came to $2.08 billion.

The founding Siccardi family sold about 6.1 million of their shares (about one third of the total stock) ) but will still keep effective ownership control of the company they founded.

Medacta’s sales in 2018 were 273 million euros ($307 million) with earnings before interest, tax, depreciation and amortization about 32% of sales—among the best in all of orthopedics.

Medacta’s debut on the Swiss Exchange is the first IPO of 2019.

Credit Suisse and Morgan Stanley are joint global coordinators for Medacta’s IPO. JP Morgan and UBS Investment Bank are joint bookrunners. Rothschild was the independent financial adviser to Medacta.

The Siccardi family celebrated this landmark event by ringing the traditional Swiss bell at the Swiss Exchange, effectively opening the Swiss IPO season.

Francesco Siccardi assumed the role of CEO on November 1, 2018, taking the helm after his father, who served in that position for nearly 20 years. A biomedical engineer, Francesco served as Executive Vice President of Medacta for eight years. He told OTW, “We are so pleased with the IPO as it will help us continue to augment the patient experience. Our expanded group of investors is helping to position Medacta as the go-to company for surgeons who want meticulously-designed implants and the support and education to back them up.”

Regarding the timing and strategy involved in the company’s stock market debut, Francesco Siccardi stated, “Our goal was to ensure that any type of transaction would not jeopardize the family’s control of the company, meaning that private equity was not a possibility. One year ago, we determined that placing a minority portion of the company into the stock market would be a good solution. While the market was going well at that point, in October 2018 there was the crash. Despite this, we were able to execute on our initial timeline.”

“My dad, sister, brother and I have all seen many family-owned companies fail because of inadequate governance, meaning that they are not well managed, and their goals are poorly defined. Our thinking was that putting a minority portion of Medacta’s shares in the market would force a strong governance with an independent board, as well as a clear separation between shareholders and management.”

“Also, said Siccardi, “we knew that doing an IPO would enhance our visibility and assist us in attracting talented people in a variety of markets. Despite being the 5th largest hip and knee company in the world, the Medacta name is not as recognized worldwide as it could be. We are pleased that the shareholders values are fully aligned with those of the company, and to support that we want to avoid any ‘fast growth’ problems. This would include doing our best to ensure that the individuals we hire are in sync with our culture.”

“To that end, we spend all the time necessary to determine that new hires are on board with, for example, the way we approach the market and the fact that we value direct communication, etc. We know that if our core values are shared among a sufficiently large number of people then that will help ensure that new employees also value our ethics and the way we conduct our business. That is why we prefer organic growth as opposed to acquisition.”

The Symposium

This year’s M.O.R.E. Symposium reflected Medacta’s intense focus on surgeon education and hands-on training. It featured 120 orthopedic surgery experts presenting on a variety of orthopedic disciplines, including knee, hip, spine and shoulder.

And the buzz amongst the attendees? Medacta’s focus on:

• Innovation
• Kinematic alignment
• First-in-class personalized medicine (advanced 3-D pre-operative planning tool and patient-specific surgical instrumentation)
• Superior surgeon training
• In-house technology
• Healthcare sustainability
• Patient Support

Innovation

Medacta’s enduring guiding light? Innovation in the service of surgeons and patients.

The original Latin, “innovare,” means to renew or change. Back to the bottom of that mountain…while it is unlikely that Alberto Siccardi had the word “innovation” on his mind at the time, the fact is that he and his family have dedicated themselves to ensuring an enhanced operative experience that renews patient and surgeon alike.

But, says Medacta, innovation must be done responsibly. “For example,” says Siccardi, “we introduced our total knee solution, the GMK Sphere, to the market in April 2014—only after a three-year controlled release program and over 3,000 monitored cases.”

Kinematic Alignment

Following the philosophy that the position and fit of implants should be as precise and individualized as possible, Medacta emphasizes the role of kinematic alignment in heightening the patient care experience.

Francesco Siccardi notes, “After 50 years of mechanical alignment, surgeons are beginning to see the merits of kinematic alignment. To be able to customize the positioning of the implant to the native joint line is known to accelerate healing, improve patient satisfaction, and provide better pain relief and function than traditional alignment.”

But, says Siccardi, Medacta understands the vagaries of human nature. “It’s uncomfortable to change the way you’ve been doing something…to go in a completely new direction. But that is where we come in. Medacta provides surgeon-to-surgeon training that extends far beyond the educational sessions. We mean what we say…with Medacta, the surgeon is never alone.”

Personalized Medicine

When this reporter toured the Medacta manufacturing facility outside of Lugano, there were a number of “wow” moments. The most astonishing aspect of the visit, however, was the engineering room.

“Which one of you is my engineer?” asked a pediatric orthopedic surgeon who was on the tour.

“These two people over here,” cried a Medacta employee.

“Let me shake your hands,” said the surgeon. “My implants have always been perfect.”

These Medacta engineers handle the planning and biomechanical modeling for thousands of patients each month. And best of all, a surgeon in Toledo, Los Angeles or Sydney can pick up the phone and call his or her engineer directly and say, “We need to make a couple of adjustments.”

Francesco Siccardi: “It takes 2-3 weeks to print the patient-specific blocks. Robotics/navigation is one way to execute the planning, but it is not cost effective, i.e., the per-case cost is rather high. Our goal is to reduce the intensity of the capital requirements to near zero.”

“This is now possible with our new augmented reality platform as its development has enabled us to transform the hardware and technology into two single-use devices and nothing else. The platform includes a proprietary, single-use camera that requires no capital equipment. At the present time this system is available for knee and spine, with plans to expand into hip and shoulder.”

“The Surgeon Must Never Be Alone”

At the manufacturing facility that day the elder Siccardi—Alberto—reaffirmed the company’s philosophy, saying, “The surgeon must never be alone.”

Medacta’s commitment to education is far beyond the typical “watch a video, do a two-day course” type of experience.

Francesco Siccardi: “When we began training surgeons on the AMIS (anterior minimally invasive surgery) technique several years ago, it was clear that we needed to make the approach more straightforward and enhance its reproducibility.”

“To that end we created the Medacta Orthopaedic Research and Education (M.O.R.E.) Institute to provide ongoing support to medical professionals in order to advance our ultimate goal of superb patient care.”

“Surgeons must often go through the learning curve multiple times,” says Siccardi, “thus Medacta surgeons ‘follow’ their pupils after training. We rely on surgeons to train other surgeons…we only facilitate the training experience.”

And this world-class education isn’t just for surgeons.

Medacta’s Patient Optimized Pathway (POP) app allows physicians to support their patients before, during, and after surgery. The app allows surgeons to better manage patient expectations, increase patient compliance and add value to the overall patient care experience. “What should I do if the scar has become red, painful, swollen or if there is fluid loss? When can I drive?” are part of the informative FAQ section of the POP app.

In-house Technology

There are two neighboring high-end production facilities tucked into the Swiss hills surrounding Lugano, one for Medacta’s orthopedic products and another dedicated to spine. “Because we have direct control over the manufacturing processes, we can ensure that our standards are of the highest order,” says Francesco Siccardi. “It also means that we can more readily drive innovation, as well as ensure continuity and efficiency. In addition, having all of our technology in-house reduces costs and emissions due to a reduction in the transport of goods, which is in line with our commitment to sustainability.”

Healthcare Sustainability

With an eye towards optimizing patient care and resources in a sustainable manner, Medacta has developed its GMK Efficiency single use instruments, tools that have a neutral environmental impact when compared to the average CO₂ equivalent annual emission of a hospital using conventional metal re-usable instrumentation. They have been proven to save up to 435 liters of clean water for each total knee replacement (TKR) by eliminating the need to wash and sterilize traditional metal instrument trays.

Patient Support

Going well above and beyond the norm, Medacta International and Geisinger have piloted a first-of-its-kind program for a lifetime guarantee knee replacement where companies will cover the full cost of care associated with knee replacement surgeries during a patient’s lifetime. This builds on the successful pilot of the lifetime program for hip surgery initiated in 2018.

“These lifetime guarantees mean that Medacta stands behind its products and is raising the bar on the commitment to patient care,” says Francesco Siccardi. “Patients will no longer be forced to take on all the risk after leaving the operating room.”

Going Forward

With a very healthy balance sheet, an unparalleled commitment to surgeon education and development and a steady flow of innovative instruments and implants, Medacta is consistently gaining market share in 31 countries and will soon bring its surgeon-partner model to every corner of the globe.

“Over time,” says Francesco Siccardi, “we have expanded from our initial core offerings—total joints—into shoulder and spine, with the latest being sports medicine. Not only is there a substantial amount of product line expansion, but we are going deeper in many markets. We have $300 million in sales and a 1-2% market share in hip and knee…there is much room for growth, and as always, innovation.”

In a way we must thank the Swiss Alps for this unique company…but clearly, the Medacta family has not yet reached its peak!