In an effort to pave its way through the lateral access
surgeries business, Zimmer Spine, a division of
Zimmer Holdings, Inc.
), recently formed a distribution alliance with Michigan-based
Frontier Medical Devices. Lateral access surgeries constitute a
fast growing segment within the global spine market. As per this
exclusive, long-term deal, Zimmer Spine will market the Lateral
Locking Cage (LLC), a minimally invasive lateral interbody cage,
The LLC by Frontier Medical Devices is the first-in-class
minimally invasive lateral approach to treat degenerative disc
disease and instability that includes grade 1 spondylolisthesis
or retrolisthesis. It fixes the cage to the lumbar vertebra and
offers various implant sizes to suit different patient anatomies
Notably, revenues from spinal products (accounting for
approximately 5% of total revenues) were languishing over several
quarters until growth was witnessed in the last reported quarter.
After several quarters of drag in spine sales, Spine recorded an
increase of 4% (at CER) to $54 million, with significant
performance improvements from all geographic regions. We are
further encouraged by Zimmer's attempt to expand its spinal
portfolio to further cushion its sales.
According to the company, Spine has ultimately returned to
growth with its focus on core fusion solutions such as the
inViZia Track Anterior Cervical Plate Systems and the TM Ardis
and TM-S Interbody Fusion devices. Moreover, early results from
the recently introduced APEX Spine System are expected to expand
the spine portfolio into a broad range of degenerative deformity
and complex spine conditions. Zimmer is optimistic about its plan
to build on this improved performance in the forecoming
Given the challenging macroeconomic conditions, the company's
strategy of new product launches, growth through partnership,
employment of new technologies and expansion into emerging
markets, is likely to pay off well.
However, macroeconomic uncertainties and unfavorable currency
adversely impacted sales during the reported quarter. The
situation is likely to improve gradually as procedural deferrals
reduce with time.
Moreover, the company is working on portfolio expansion and
focusing on emerging markets to benefit from favorable long term
trends. Meanwhile, in order to streamline its business, Zimmer
plans to continue with its global restructuring program. Several
new products are slated for launch that are expected to have a
positive impact on the top line.
Zimmer presently has a Zacks Rank #3 (Hold). Some
better-performing medical stocks are
Boston Scientific Corp.
St. Jude Medical Inc.
Mead Johnson Nutrition Co.
). All these stocks carry a Zacks Rank #2 (Buy).
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