New Hips Product from Zimmer - Analyst Blog

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Leading orthopedic medical devices company, Zimmer Holdings ( ZMH ) recently announced the launch of CLS Brevius Hip Stemwith Kinectiv Technology in the US. Earlier in 2011, the company introduced CLS Brevius Stem in Europe and received positive clinical feedback.

The CLS Brevius Stem originates from CLS Spotorno Stem of Zimmer. CLS Brevius Stem with Kinectiv Technology is shorter than conventional stems, providing greater bone conservation compared to the original CLS Spotorno Stem. Zimmer strongly expects the integration of Kinectiv Technology in CLS Brevius Hip Stem to enhance the product further by providing intraoperative flexibility to restore patients' anatomies.

Zimmer offers a broad line of reconstructive implant and trauma products, as well as orthopedic surgical instruments and supplies. We believe that the company is treading the growth path with new product launches, employment of new technologies and expansion into emerging markets.

During the third quarter of fiscal 2011, the company's largest segment, Reconstructive Implant, recorded a 6% increase in revenue driven by growth in Asia-Pacific and Europe, partially offset by a decline in the Americas.

Revenues derived from Knees, Hips and Extremities grew 3%, 10% and 7%, respectively, on a year-over-year basis. Several products introduced over the past few quarters have gained significant traction in the international markets, leading to superior growth.

Hips business during the quarter witnessed positive volume/mix of 5.5%, partially offset by pricing pressure of 1.6%. The growth in this segment was mainly on the back of overall robust performance across the international market - Europe (up 18%) and Asia-Pacific (up 23%). However, sales from the US remained flat year over year.

The company's Continuum and Trilogy IT Acetabular Systems and the M/L Taper Stem with Kinectiv Technology witnessed steady adoption across the globe. Negative publicity regarding the use of hip systems that use metal-on-metal technology also contributed to an increase in sales of hip systems with alternative bearing surfaces.

Outside the US, the company recorded strong penetration of hard bearing ceramic products, including the recently launched Maxera Cup, and delta ceramic liners used in conjunction with the Trilogy IT and Continuum Cup Systems.

Zimmer continues to witness challenges in the form of pricing pressure and lower procedure volumes. Moreover, the company faces tough competition from players such as Smith & Nephew ( SNN ), Stryker Corporation ( SYK ). Currently, we have a Neutral recommendation on Zimmer, in line with its peers.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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