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The orthopedic market made strides in recovery during its second year amid the COVID pandemic but remains below normal levels. Global orthopedic sales grew $6.1 billion in 2021 or +12.8% vs. the prior year. Using 2019 as a baseline, the market climbed +0.9%. to $53.6 billion in global sales, just ahead of its 2019 total of $53.1 billion.
After the initial shocks of lockdowns in 2020, challenges to the market evolved in 2021. New variants of the virus caused additional waves of infections. The global supply chain remained under significant pressure and shortages of workers, particularly in healthcare, complicated the market’s recovery. We are experiencing a similar environment in 2022.
We’re cautiously optimistic that the orthopedic market will trend toward normalcy in the second half of 2022, as it benefits from a growing procedure backlog.
We say “cautiously” because the pandemic has defied many reasonable predictions thus far. However, we project the industry to surpass $55.3 billion in 2022. The +3.2% growth vs. 2021 almost aligns with pre-pandemic market growth. We’re hopeful that the market will be fully back on track sometime in 2023. Exhibit 1 shows orthopedic sales from 2019 to 2022.
Exhibit 1: Orthopedic Sales – 2019 to 2022 ($Millions)
| Sales | FY19 | FY20 | FY21 | FY22 |
|---|---|---|---|---|
| Total | $53,152.9 | $47,535.9 | $53,638.3 | $55,356.4 |
| $ chg | $1,925.2 | -$5,616.9 | $6,102.3 | $1,718.1 |
| % chg | 3.8% | -10.6% | 12.8% | 3.2% |
Data Source: ORTHOWORLD® Inc.
Our complete market outlook is detailed in THE ORTHOPAEDIC INDUSTRY ANNUAL REPORT. Here, we provide a high-level look at orthopedic sales performance and highlight market forces driving industry growth.
5 Important Market Forces
Hospital Staffing Issues. Hospital workforces are depleted from illness and exhaustion due to a relentless fight against the pandemic. Multiple states deployed the National Guard to assist understaffed hospitals during the worst of the late-2021 surges. CONMED CEO Curt Hartman called hospital staffing the “biggest wildcard” in the industry’s recovery. While the data does not support claims of a mass exodus in the healthcare field, we anticipate that shortages in the overall labor market will impede the rate of recovery in 2022.
Global Supply Chain Challenges. Global supply shortages of resin, titanium, silicone and electronic components will remain a challenge for the industry in 2022. According to former Smith+Nephew CEO Roland Diggelmann, orthopedic companies are relatively small buyers for these materials in the scheme of broader industry, making sourcing even more challenging. Inflation and shipping inefficiencies continue to create significant costs for orthopedic players. Colfax Corporation, owner of DJO and now rebranded as Enovis, reported $3 million in costs from supply constraints in the third quarter of 2021.
Slow-burn Procedure Backlog. Outside the third quarter of 2020, we’ve not seen another significant procedure backlog recovery. Early in 2021, Zimmer Biomet CEO Bryan Hanson estimated the company’s backlog at 18 months or more. Our projections assume a gradual recovery of postponed cases through 2022 and into 2023, slowed by both hospital staffing and supply chain issues.
Robust Enabling and Digital Technology Sales. Orthopedic players are driving the digitization of surgery and the patient experience. Despite disruptions to orthopedic procedure volumes in 2021, companies like Globus Medical, Stryker and Smith+Nephew enjoyed double-digit growth for enabling technologies over a strong 2020. Globus Medical described the “virtuous cycle” created by compelling technology in attracting surgeons and sales representatives from competitors. We expect companies of all sizes to seek out ways to leverage this synergy, either through commercializing their own technology or partnering with others.
Accelerating ASC Shift. We estimate between 10% and 12% of knee replacement procedures are done in the ASC (ambulatory surgery center) environment, with spine procedures slightly lower. Over the course of nearly two years, the pandemic has contributed to the accelerating shift of procedures to outpatient centers. Top orthopedic companies like Stryker, DePuy Synthes, Zimmer Biomet, Smith+Nephew and Enovis consider ASCs to be a key pathway for growing share. We expect to see more ASC-focused products and selling strategies emerge in 2022.
Market Segment Sales and Highlights
Market disruption in 2021 once again hit all segments in roughly the same proportions as in 2020. Knee replacement recovered the slowest. It declined -3.3% compared to 2019. Trauma felt modest disruption compared to other segments and grew +4.4% compared to 2019, according to our estimates. Through the first quarter of 2022, most segments continued to improve but softness remains in knee replacement and spine procedure volumes.
Exhibits 2 and 3 show sales performance and market share by product segment.
Exhibit 2: Orthopedic Product Segment Sales – 2019 to 2021 ($Millions)
| Product Segment | FY19 | FY20 | FY21 |
|---|---|---|---|
| Joint Replacement | $19,549.5 | $17,141.3 | $19,424.8 |
| $ chg | $629.8 | -$2,408.2 | $2,283.4 |
| % chg | 3.3% | -12.3% | 13.3% |
| Knees | $9,324.2 | $7,891.2 | $9,020.3 |
| $ chg | $266.0 | -$1,433.0 | $1,129.2 |
| % chg | 2.9% | -15.4% | 14.3% |
| Hips | $7,788.8 | $7,054.1 | $7,808.9 |
| $ chg | $206.5 | -$734.7 | $754.8 |
| % chg | 2.7% | -9.4% | 10.7% |
| Extremities | $2,436.5 | $2,196.1 | $2,595.5 |
| $ chg | $157.3 | -$240.5 | $399.5 |
| % chg | 6.9% | -9.9% | 18.2% |
| Spine | $9,654.1 | $8,661.1 | $9,791.9 |
| $ chg | $329.4 | -$993.0 | $1,130.9 |
| % chg | 3.5% | -10.3% | 13.1% |
| Trauma | $7,449.3 | $7,125.1 | $7,778.8 |
| $ chg | $243.4 | -$324.2 | $653.7 |
| % chg | 3.4% | -4.4% | 9.2% |
| Sports Medicine | $5,920.7 | $5,282.0 | $6,046.7 |
| $ chg | $306.3 | -$638.7 | $764.7 |
| % chg | 5.5% | -10.8% | 14.5% |
| Orthobiologics | $5,291.1 | $4,535.4 | $5,212.6 |
| $ chg | $203.1 | -$755.7 | $677.3 |
| % chg | 4.0% | -14.3% | 14.9% |
| Other | $5,288.2 | $4,791.1 | $5,383.5 |
| $ chg | $213.2 | -$497.1 | $592.4 |
| % chg | 4.2% | -9.4% | 12.4% |
| Total | $53,152.9 | $47,535.9 | $53,638.3 |
| $ chg | $1,925.2 | -$5,616.9 | $6,102.3 |
| % chg | 3.8% | -10.6% | 12.8% |
Data Source: ORTHOWORLD Inc.
Exhibit 3: Orthopedic Product Segments by 2021 Market Share
Below are our important takeaways and developments for each market segment in 2021.
Joint Replacement: Enabling Technology, Acquisitions and Extremities
- Enabling technology gets tremendous focus from the top-tier players, and we expect companies of all sizes will look to field comprehensive digital portfolios.
- Company valuations spiked in 2021, but orthopedic companies like Enovis or Globus Medical could make mid-sized deals in joint replacement.
- Companies of all sizes focused on their foot/ankle and shoulder product portfolios to capitalize on the growing segments.
Spine: Specialization, Pulse Potential and Virtuous Cycles
- Spine-focused players from Globus Medical to ATEC to those under $100 million outperformed diversified rivals once again.
- NuVasive struggled adapting to the pandemic more than some of its peers, but its Pulse technology could be transformative.
- Globus Medical extolled the benefits of its technology as it claims both market share and sales reps from competitors.
Trauma: Pure Play Disruptors, Stryker/Wright Integration and New Enabling Opportunities
- Foot and ankle companies like Paragon 28 and Treace Medical Concepts are going head-to-head with the largest players in orthopedics.
- Stryker seemingly suffered minimal disruption from its massive integration of Wright Medical.
- The trauma space presents a compelling opportunity for enabling technology to improve the standard of care in complex procedures.
Sports Medicine: Rotator Cuff Repair, Capital Sales and ASC Expansion
- Unmet clinical needs in rotator cuff repair and ACL repair drove significant product development activity in the space for 2021.
- Capital sales in sports medicine rebounded in 2021 after its dip in 2020, but companies like Smith+Nephew and CONMED remain below historical levels.
- The largest orthopedic companies are leveraging their ASC sports medicine presence to drive portfolio-wide sales.
Orthobiologics: Bone Graft Substitutes, Viscosupplement Shift and Revenue Diversification
- Bone graft substitute products comprised an estimated $2 billion market and featured heavily in our orthobiologics news coverage in 2021.
- Bioventus is well-positioned to take market share in the $2 billion osteoarthritis pain treatment market as it shifts toward single-injection treatments.
- Companies like Anika Therapeutics and Bioventus are entering segment adjacencies through acquisitions.
Predictions for 2022 and 2023
Despite the challenges remaining for the balance of 2022, we believe there are ample reasons for optimism. We expect surgical volumes to improve in the second half of 2022 and hopefully normalize sometime in 2023.
The fundamentals of orthopedics remain strong. Demographic trends are favorable and patient recapture rates for orthopedic procedures are high. The market and its stakeholders have become more resilient with each passing challenge over the last two years.
Moreover, companies have a chance to modernize orthopedic care. Faced with a growing imbalance between the demand for orthopedic care and the capacity of healthcare systems to provide it, device companies must find new ways to drive procedure efficiency and reduce costs while improving patient outcomes. We’re excited to be covering the orthopedic industry at such a transformative time.
Note: For detailed orthopedic market information, download ORTHOWORLD’s Annual Report.
