Overview of Q1/24 Performance
The primary challenges faced by orthopedic companies in Q1/24 were related to selling day headwinds and tough comparable periods (comps) from Q1/23, which was a notably strong quarter. Despite these hurdles, the leading companies still managed to post robust growth, though with varying degrees of success.
Key Findings
Growth Comparisons in Hips and Knees
- Stryker (SYK): Emerged as the clear leader in growth for both knee and hip segments. SYK showed the most consistent and strong performance globally and in the U.S., outpacing competitors in the two-year stacked growth comparison.
- Johnson & Johnson (JNJ): Showed the highest growth in Q1/24 but falls slightly behind SYK when considering the two-year stacked growth rates. JNJ performed well in the U.S., especially in knees, and fell between SYK and Zimmer Biomet (ZBH) in hips.
- Zimmer Biomet (ZBH): Demonstrated growth rates similar to JNJ in both hips and knees globally. In the U.S., ZBH’s growth in knees was on par with JNJ.
- Smith & Nephew (SNN): Continues to face challenges, particularly in the U.S. market for hips and knees, where growth has been muted due to issues like sales force churn and slower revenue recovery impacted by OXINIUM supply shortages.
Robotic Capital Sales
Robotic Sales Influence: SYK also leads in robotic capital sales, which likely contributes significantly to their strong performance in joint growth rates. The adoption of robotic technologies in orthopedic surgeries has been a key driver for market differentiation.
Market Outlook
Future Expectations: While the comparable periods remain challenging, the overall outlook for the remaining quarters of 2024 is cautiously optimistic. Companies expect the impact of selling days to be either neutral or positive, which could support better performance as the year progresses
Strategic Implications
The continued leadership of SYK in both robotic sales and joint growth underscores the strategic importance of investing in innovative technologies in the orthopedic sector. Companies like JNJ and ZBH, while facing stiff competition from SYK, are still significant players due to their comprehensive product lines and global reach. SNN will need to address its internal challenges to regain lost ground and compete effectively in this high-stakes market.
Conclusion
The diversified orthopedic sector is a landscape of intense competition and innovation, with SYK currently leading the way in terms of growth metrics and adoption of surgical robotic technologies. The future quarters of 2024 will be crucial for all players as they navigate the lingering challenges of tough comps and strive to capitalize on favorable selling day impacts. The strategic focus will likely remain on enhancing technological capabilities and optimizing supply chain efficiencies to sustain growth and improve market positioning.
