Hip Replacement Manufacturers
Characteristics of the Main Players

Introduction

Hip replacement manufacturers are typically large, private sector companies, operating on a global basis.

The purpose of this page is to provide an overview of the characteristics of these companies as context for better understanding how hip implant products are designed, manufactured and distributed… and recalled.

Also, I provide some indicative numbers to give a general idea of the financial scale & profitability of the hip replacement manufacturing industry.

Overview of the Hip Replacement Manufacturing Business

The majority of hip replacement manufacturers are headquartered either in the United States or Europe, with a few exceptions.

It is important to understand broadly how these large corporate entities are structured and how they operate. The following considerations apply to most global corporations and are not unique to hip replacement manufacturers.

Often the Global headquarters and registered office of a company will be in one country, with a range of subsidiary companies operating in different countries around the World.

The subsidiary companies will undertake a range of activities including: research; product development; product testing; management of intellectual property; manufacturing; marketing and distribution.

The group structure and its allocation of activities to different countries and / or states will be influenced by multiple factors including but not limited to:

  • Target markets and population / demographic trends;
  • Corporate tax rates;
  • The extent and nature of regulation of hip replacement products & procedures in each country;
  • The availability of highly skilled labour & technology;
  • Design and patent laws

Some hip replacement manufacturers are in turn just one division of a much larger medical technology or health care organization. The wider group operations may extend for example to include a vast array of other prosthetics (knee, wrist, shoulder etc); pharmaceutical products; health care consumables; medical equipment; monitoring equipment; surgical equipment and infrastructure.

The roots of some of these companies extend back over 100 years when pioneers in orthopaedic care developed the first rudimentary implants and other prosthetics. Some companies have remained fiercely independent whilst others have been acquired by competitors, or by larger, diversified health care companies.

Other hip replacement manufacturers are relatively new companies - perhaps only decades old; sometimes started as spinoff subsidiaries by large established medical technology companies as part of a strategy to gain a foothold in the (large and growing) hip replacement industry.

Manufacturers' Objectives

Most hip replacement manufacturers share a number of basic objectives in common including to:

  1. Design and develop safe medical and surgical products that will maintain or enhance the lives of patients who are suffering from diseased or damaged hip joints
  2. Help orthopaedic healthcare professionals carry out their work more efficiently (more quickly and at lower average cost per patient) in order to make the very best use of health care resources right the way through from clinics, to hospitals, to whole economies
  3. Establish and develop centres of technical expertise and excellence in the design and manufacture of hip implants and related products
  4. Collaborate with third parties including governments, regulators and universities to extend the boundaries of orthopaedic practice to the overall benefit of society
  5. Develop and enhance a strong corporate reputation for safe, high performance and good value products - all prerequisites for brand value and recognition, which in turn feed into stock market valuations
  6. Generate an attractive, sustainable long-run financial return on investment for the (equity) owners of the company, comprised of dividends and capital appreciation of share price

The essential elements distilled from the above list are:

  • Reputation;
  • Trust;
  • Brand recognition;
  • Sustainable profitability.

Hip Implant Recall - Bad News for any Manufacturer

It almost goes without saying that no hip replacement manufacturer ever sets out with the objective of taking a product to market knowing that it will ultimately need to be recalled. To do so would be illogical and would conflict with the six objectives summarized above.

The recall from the market of any medical product in any geography will, all things being equal, have a negative impact on people's trust in the company, brand strength, profitability and stock market valuation.

In simple terms, the long run objectives of the hip replacement manufacturers are almost perfectly aligned with the objectives of orthopaedic surgeons and the wider healthcare communities in all states and countries:

To provide the very best possible hip replacement outcomes;

For as many patients as possible;

In the most cost-efficient manner achievable.

Innovation is Key - but it is not without Risk

Hip replacement manufacturers strive to innovate - to create new products to serve new markets, or treat hip conditions that are prevalent in existing markets in a more effective and efficient manner.

All hip replacement surgery carries some risk. In addition, hip replacement implants of different designs, and those made of different materials also have different risk profiles.

The critical requirement is that the risks that are inherent to any particular hip implant are:

  • Identified and fully evaluated by the hip replacement manufacturer;
  • Disclosed to the appropriate regulators as products are approved and brought to market;
  • Explained clearly in marketing, warning and instruction leaflets & literature;
  • Explained clearly to orthopaedic surgeons and other appropriate professionals as they are briefed and trained in the use of the new hip implant products;
  • Explained clearly by orthopaedic surgeons to their patients prior to surgery (informed consent) as part of a balanced and open discussion of the relative risks and benefits of different hip treatments and different hip implant products

Some Numbers

The major hip replacement manufacturers together employ hundreds of thousands of dedicated specialists Worldwide, and operate in hundreds of countries.

The absolute level of demand for hip replacement surgery is already very high and forecast to grow significantly in coming decades.

Remember also, often these companies manufacture implants for other joints including knees, elbows, wrists and fingers.

It is estimated that in excess of 700,000 implanted devices are used in joint replacement procedures each year in the U.S. alone.

Sales and Profitability

Most hip implant manufacturers are either listed companies in their own right or divisions within larger diversified listed companies. Consequently, the financial performance of these companies is published and available in the public domain.

Suffice to say the global industry in hip and other joint replacement products is immense, with most participants enjoying: high annual turnover; substantial asset bases; strong balance sheets; high cash generation; high profit.

However… the substantial cost of investment of research & development should not be overlooked. The development of hip prosthetics is a specialized, high-investment and potentially high risk business to be in.

Conclusion

Hip replacement manufacturers exist first and foremost to enhance the quality of life of patients around the World by providing safe, reliable and high performance hip implants. In so doing they create profit and value for their shareholders and sustainable business models to fund research, education, social good and innovation.

A hip implant recall represents a very bad outcome for any one of these organizations and each company invests heavily in controls and sophisticated risk management capabilities in order to minimize the possibility of any product reaching the market which might cause harm to a patient, or put a patient at undue risk of harm.

Thankfully, the incidence of hip implant recall is low relative to the large number of hip replacement products and variants available around the World, and relative to the aggregate volume of hip replacement procedures carried out on a global basis.