September 2, 2018–The Consolidation is the phase in an industry where competitors start to merge. The main objectives for the companies is often to gain a larger portion of overall market share and to take advantage of synergies as Stryker has just done acquiring K2M Inc.Consolidations and mergers are a form of inorganic growth when the organic growth gets more difficult because the company has matured and it is not longer in its growth phase. According to Research and Markets.com, the Global spine market is projected to display a modest growth represented by a CAGR of 4.54% during 2018 – 2023.
Are the main players preparing more acquisitions? Is the Spine market Consolidating?
In the last 12 months we have seen many acquisitions in the spinal market. But since Biomet with LDR and Zimmer with Biomet in the past, we have not seen such an strategic movement as the one of Stryker with K2M. In the list enclosed, you can find that most of the recent acquisitions have been more focused on filling their product portfolios gap´s:
1.-September 2017: Nuvasive acquired Vertera Spine: The acquisition of Vertera Spine reflected the NuVasive’s commitment to complement the Company’s portfolio offering porous interbody technology across both PEEK and titanium materials.
2.-October 2017: K2M acquired PALO ALTO Cervical Static Corpectomy Cage System from Cardinal Spine: K2M objective was to expand their cervical offering by adding the first and only FDA-cleared static cervical vertebral body replacement device.
3.-October 2017: Stryker Corporation acquired VEXIM: Stryker found VEXIM products attractive for the promising the US market taking into account that VEXIM’s US FDA trial was progressing well and is in line with a 510(k) filing in 2018.
4.-December 2017: NuVasive acquired SafePassage:With the addition of SafePassage, NuVasive Clinical Services™ (NCS) solidified its leadership position as the largest provider of outsourced IONM services with more than 550 neurophysiologists and oversight physicians in the U.S., allowing for the delivery of services to over 1,000 customers and 3,000 surgeons.
5.- January 2018: RTI Surgical Announces Acquisition of Zyga Technology, Inc.: The acquisition accentuated the RTI spine portfolio with the addition of the Zyga Technology’s primary product:The SImmetry® Sacroiliac Joint Fusion System.
6.-March 2018:Alphatec Spine Acquired SafeOp Surgical: They had developed patented technology that automates SSEP’s (Somatosensory Evoked Potentials), designed to provide surgeons with unprecedented, objective feedback during surgery.
7.-March 2018: Orthofix Acquired Spinal Kinetics:The Spinal Kinetics M6™ artificial discs filled and strenghthened the Orthofix´s Spine Fixation product line.
8.-June 2018:CoreLink acquired Expanding Orthopedics Inc, including the FLXfit articulating and expanding interbody along with a portfolio of patents and products in development relating to expanding spinal implants.
9.- Aug 2018: Fuse Medical, Inc. Acquired Maxim Surgical:Maxim’s portfolio complete the range of products of Fuse Medical and enhance Fuse’s earnings in the short term.
10.-Aug 2018: Stryker Corporation acquired K2M Group Holdings, Inc: With this acquisition Stryker gain market share as well as a complete product portfolio in complex spine and minimally invasive solutions. Without an doubt this is the main acquisition of the last 12 months.
Conclusion: With a modest market growth represented by a CAGR of 4.54% and more than 300 companies in the spine industry, it is clear that we will see many more acquisitions in the next months and years. Another point is also clear: Big player have moved in the past (Zimmer with Biomet, Depuy with Synthes, Globus Medical agreement with Alphatec, Stryker with K2M) and will try inorganic growth in the near future: What´s next? Will Nuvasive buy or be bought? Will Globus Medical acquire more companies? If you want the answer to these questions, it is easy: Just Wait…and not for too long!