Leading orthopedic medical devices company,
Zimmer Holdings
(
ZMH
) has decided to present at the upcoming J.P. Morgan Health Care
Conference in San Francisco, California, on January 10, 2012.
Although the musculoskeletal market is witnessing several
challenges in the form of reduced procedure volume and pricing
pressure, Zimmer, based in Warsaw, Indiana believes that clinically
relevant and innovative products can still fetch premium pricing
and reimbursement. The company's recent product launches are based
on two principles - the development of customizable implant and
instrumentation systems enabling surgeons to deliver personalized
care to every patient that also includes options for lifestyle
demands, and providing relevant products that deliver long-term
value to patients, hospitals and healthcare systems. Along with the
focus to drive Reconstructive and Emerging businesses, Zimmer is
also exploring opportunities to expand its reach into early
intervention products. We expect the company to share its views on
the uptake of the newly launched products and future plans.
Further, in an effort to streamline its business, Zimmer has
resorted to the restructuring route, which is expected to generate
annualized pre-tax savings of more than $100 million. The various
initiatives include management de-layering, consolidation of
sourcing activities and optimization across global manufacturing
network. To meet this objective the company plans to source
manufactured components to ensure highest quality, lowest cost and
optimal after-tax returns.
With economic uncertainty taking its toll on procedure volume in
both the US and Europe, companies are increasing their focus on
emerging markets and Zimmer is no exception. The company's
investments in these regions over the past several quarters to
improve operational and sales performance are yielding results.
Besides, with stabilization in the global economy, the growth in
procedure rate in the developing or emerging markets is on the
higher side because of lower penetration rates compared to the
developed markets (from low single digits to more mid-single
digits).
However, decline in procedure volume will continue to be a major
overhang for the company. This scenario has impacted the orthopedic
companies across the board including Zimmer's peers such as
Stryker Corporation
(
SYK
) and
Smith & Nephew
(
SNN
). Besides, pricing pressure remains a concern for the company.
With several European countries continuing to adopt austerity
measures, we expect Zimmer to provide an updated outlook at the
conference.
We are currently Neutral on Zimmer, in line with the short-term
Zacks #3 Rank ("Hold").
SMITH & NEPHEW (
SNN
): Free Stock Analysis Report
STRYKER CORP (
SYK
): Free Stock Analysis Report
ZIMMER HOLDINGS (
ZMH
): Free Stock Analysis Report
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