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Aug

Can generic orthopedic device start-ups disrupt medtech giants?

Laura Dyrda, Becker’s Spine Review – August 4, 2014

A Portland-based start-up, Implant Medical, aims to disrupt the orthopedic and spine device field with less costly implants and screws, according to a Portland Business Journal report.

The company isn’t the first device start-up to tackle the high-cost of orthopedic and spine implants. Companies like Orthopaedic Implant Company and OrthoDirectUSA have been manufacturing and selling implants directly to surgeons at a lower cost for years. “Generic” or “wholesale” orthopedic and spine implants are often produced at the same manufacturing plants as the big name implants but sold at a fraction of the price because overhead at the smaller companies is so low.

Many of the “value-based” companies also cut out the sales representative, which can significantly drop the price. The implant representative is often in the operating room to aid surgeons if they have questions about the technology and provide supply chain management support. However, for commoditized implants some argue the reps aren’t necessary in the OR, especially for departments on a budget.

The Portland Business Journal reports a significant savings — around 76 percent for a three-millimeter headless compression screw — when surgeons use Impact Medical. Company CEO E.J. Duffy previously worked for Synthes before founding the company, which has customers in several west coast states.

Implant Medical is also taking advantage of the price transparency wave in healthcare, posting their prices online. Mr. Duffy said in the report price transparency is crucial to the company’s strategy because they are able to undercut their larger competitors. This is especially important for other small businesses — ambulatory surgery centers — with steep reimbursement cuts on orthopedic procedures.

One of the Implant Medical’s ASC clients, Slocum Ambulatory Surgery Center, discusses their positive experience with the company’s products, seeing more generic pricing as the way of the future. Mr. Duffy reported Implant Medical reached its 30-day customer goal and at one point gained nine new customers in one day.

But can that make an impact on the device company giants reporting billions in revenues each quarter? In some ways, “generic” implant companies already have. DePuy Synthes, a Johnson & Johnson company, has launched a separate company targeting ambulatory surgery centers with competitive packaging and pricing — DePuy Synthes Select. Smith & Nephew also announced last week a new company model for the United States — a “rep-less” sales strategy designed to lower implant costs where providers are being squeezed most.

Go to the original story on Becker’s Spine Review

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