Increased life expectancy key to success in hip and knee replacement industry

London 04 June 2003As Europe's demographics shift towards an increasingly aged population, the European market for primary and revision hip and knee replacements will benefit from the rising incidence of metabolic diseases inherent in elderly patients. The broad spectrum of severe arthritic conditions necessitating joint replacements includes osteo-arthritis, the primary cause of joint degeneration. Posting revenues of $1,27 billion in 2002, the total European market for primary and revision hip and knee replacements will climb to $1,81 billion by 2009, representing a compound annual growth rate (CAGR) of 5,2 percent.

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This is one of the conclusions drawn in a new study by Frost & Sullivan, the international market consultancy, which puts sales amassed in the more mature hip sector on an equal par with the current value of the more buoyant knee replacement sector.

According to the study, the overall market for knee replacements is forecast to record the highest growth rates, predicted to reach sales worth just under $925 million in 2009. Growth predictions in the hip replacement segment are more conservative, however, Europe's ageing population and the prevalence of chronic degenerative diseases will help this sector maintain its growth momentum.

Significant improvements in the clinical outcomes of both total hip and knee replacements are encouraging surgeons to operate on younger patients seeking to regain full mobility and resume an active and athletic lifestyle after the procedure. The growing proportion of younger hip and knee replacement patients has boosted the number of overall procedures, further injecting vigour into the industry.

Frost & Sullivan's study highlights a number of groundbreaking technological advances, which will influence the development and design of new innovative products. These include medical robotics, computer-assisted surgery such as image-guided technologies, novel joint replacement product designs and minimally-invasive joint replacement surgery.

While sustained pressure to reduce the number of people waiting for joint replacement surgery stimulates growth in the overall market, the growing burden of revision operations following total knee replacement (TKR) and total hip replacement (THR) failure fuels demand for customised components.

"Although primary joint replacement has a ten-year success rate approaching 95 percent, the number of revision total joint replacements (TJR) is increasing as a result of enhanced utilisation of total joint replacement and the improved life expectancy average across Europe", reported Paul Taylor, research analyst at Frost & Sullivan.

"Because of the complications associated with poorer functional outcomes, higher infection and complication rates and longer hospitalisations, orthopaedic surgeons require ranges of products capable of compensating for bone loss and poorer prosthetic fit. This has triggered the development of a glut of revision implants to satisfy greater demand", he continued.

Improved clinical outcomes, product efficacy, increased surgeon experience and better surgical techniques have moved procedures from major joint replacement centres to more general acute hospitals. This has increased the number of operations carried out in this sector and, in turn, led to a progressive push in market value.

The study points to the crucial importance of orthopaedic implants' eligibility for reimbursement through government-sponsored health care payment systems and third-party payers. A substantial part of growth prospects for manufacturers and distributors in the hip and knee replacement market hinge on cost containment initiatives and reimbursement.

"Reimbursement practices vary significantly by country, with certain nations, most notably France, requiring products to undergo a lengthy regulatory review in order to qualify for reimbursement. In addition, cost containment initiatives and measures to control health care expenditure are prevalent throughout Europe and it is anticipated that these efforts will continue throughout the forecast period", explained Mr. Taylor.

In recent years, the orthopaedic industry has undergone profound structural changes, leaving a marked effect on the market share profile and corporate organisational and operational functions in its wake. The structural changes have led to a rationalisation of the operational logistics, including restructuring of manufacturing as well as sales and marketing activities, along with a rationalisation of the product portfolio and product group responsibilities.

In addition, the market has seen a slow but deliberate move away from the use of local distributors, a consolidation of related orthopaedic products and service activities and a greater emphasis on supplying the market directly through subsidiaries. This is being perceived as a method of improving profit margins and retaining greater operational control of distribution and customer service. Furthermore, these developments will support efforts to respond more effectively to customer needs.

Frost & Sullivan's study highlights Depuy (J&J) as the dominant contender in the industry, accounting for a 19,7 percent share of total sales in 2002. Taking second slot is CentrePulse, representing a 17,3 percent share of the overall market. Hot on the heels of CentrePulse follows Stryker (Howmedica Osteonics), commanding 16,8 percent of the market. The report on the European hip and knee replacement industry is available at the price of 5000 euro and can be ordered by contacting Mrs. Katja Feick of Frost & Sullivan.


Leslie Versweyveld

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