What could be the consequences of the fusion of Orthofix and Seaspine?

This week we have published about the merger between Orthofix and Seaspine. This information has not surprised us since we knew several weeks ago that Seaspine had decided to leave the European market. It had already alerted us! It was unexpected to see Seaspine give up a relevant part of the world market.

What happens after this merger?

1.- Increase in market share: Orthofix, this first half of the year, has published sales (Global Spine) of 82.6 in Q1 and 90.7 in Q2. That is to say, its semester of 172.6 million represents a market share of 3.4%.Seaspine posted total revenue of $50.7 million in the first three months of the year and $56.3 million in the second. These sales of 107 million in the first half represent a 2.1% market share.Therefore, Orthofix-Seapine obtained a share of 5.6% by merging, placing it sixth in the market, surpassing Zimvie and Alphatec Spine and positioned after only Medtronic, Johnson&Johnson, Nuvasive, Stryker, and Globus Medical (See Market Shares first semester 2022).

2.- More Mergers and Acqusitions in the short term: It has become clear that after the parenthesis of COVID, the consolidation of the spine market continues.How can these movements affect the rest of the companies?

Today, it seems that the top five companies in the market are stable. Nevertheless, things could change at any moment. Let’s speculate on five things that could happen:

1. Medtronic could buy Zimmer now that they have spun off the Spine Business. Now they could enter the Hip and Knee market in a leadership position. This is one of the oldest rumors circulating.
2. Medtronic could acquire Nuvasive and strengthen its leadership in Spine for many years. Considering Nuva’s founders come from Medtronic, it might make sense. The antitrust law could be against it since it would add up to 38% of the spine market.
3. Globus Medical to buy Nuvasive: It was a rumor some months ago. It would make sense since Globus would jump to the second position in the market with a 22% market share. It would be a step towards the leadership of the spine market, only four points behind the leader Medtronic. We see it as complicated since Nuvasive represents such an investment for Globus that they would not probably risk making.
4. Stryker acquires Zimvie: Stryker has always been aggressive in incorporating companies and increasing market share. With this acquisition, they would be placed second in the market, with a share of 16%. It could be the final blow to getting closer to the leadership of the spine market.
5. Globus Medical to acquire Zimvie: If Globus wants to grow quickly and significantly and aspires to lead the spine market, it can only do so through an acquisition. Another option would be the acquisition of Zimvie, with which it would add a 5% market share to its current 10%. With this operation, it would be placed second in the spine market with 15%.Of course, another option is that it decides to grow in another way and acquire a powerful Hip and Knee company to have more presence in the trauma markets where it already competes.

Of course, there are many more options, but these are the most likely. We cannot predict the future, but we can affirm that the market will continue moving and that there will be significant changes soon. What is your opinion?