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More than 200 companies exhibited at The North American Spine Society (NASS) Annual Meeting last week. Still, most of our conversations returned to two players: Orthofix and SeaSpine.
Orthofix and SeaSpine announced their intent to merge the day before the conference kicked off. The combined organization will get a new name when the deal closes in 1Q23. Their portfolio will form the eighth-largest spine company by revenue and be bolstered by trauma, enabling technology, orthobiologics and bone growth therapy.
The merger is expected to give the company significant scale to better compete with the top orthopedic companies. Orthofix and SeaSpine noted that their combined revenues were $693 million as of the 12 months that ended September 30, 2022.
Orthofix is the more established player with a broader orthopedic portfolio, while SeaSpine has a strong cadence of new products and continues to perform above the market average.
We believe that SeaSpine’s rapid product introduction and growth, combined with Orthofix’s scale and access, could bring great synergy to the new company.
Analysts and even industry competitors noted that the merger is a good move. The spine market has hundreds of companies and could benefit from consolidation. Smaller companies are closely watching for any disruption with the merger that would allow them to take market share.
At NASS, Orthofix and SeaSpine highlighted technologies that fall within significant spine market trends: enabling technology, additive manufacturing and motion preservation. Many of the companies we spoke with and the surgeon-led education we attended affirmed these shifts.
Enabling Technology: A Focus on Robotics
NASS showcased the major spine companies’ enabling and digital technology platforms and startups’ robotic systems.
Medtronic, Globus Medical, NuVasive and Brainlab are the more established companies in spine robotics. While robotic sales remained brisk throughout the pandemic, we’ve started to see the capital equipment environment tighten. Companies have noted that purchasing cycles are elongating, and hospitals are moving away from outright purchases of robots to rental agreements.
That’s not to say that the companies aren’t seeing success. Globus Medical reported an all-time revenue high for enabling technology in the second quarter of this year.
Even with these market dynamics, smaller companies continue to launch robotic systems, believing there is plenty of runway for adoption. Accelus, eCential Robotics, Curexo and Point Robotics exhibited at NASS as newer names in the game. Curexo, eCential and Point Robotics have open platforms, and they hope to partner with smaller spine companies that can’t afford to develop a system.
We attended a packed surgeon education session on enabling technology. When the moderator asked for a show of hands as to how many surgeons used the different technologies, only one had experience in robotics.
Robotics remains at an infancy stage in terms of technology and adoption, but we expect both will continue to accelerate.
Additive Manufacturing: A Must-Have Technology
Additive manufacturing has become prolific in spine in the last decade. Most spine companies think additive manufacturing must be part of their portfolio to be competitive today. The technology’s grip on the spine market is always evident on the exhibit floor at NASS.
ulrich medical USA announced FDA 510(k) clearance for its first additively manufactured device, the Flux-C cervical interbody. Ahead of NASS, we covered multiple announcements:
- Stryker launched the Monterey AL interbody system
- Nexus Spine announced 5,000 implantations of Tranquil
- Cutting Edge Spine announced 510(k) clearance for its T-FIX 3DSI joint fusion
- SeaSpine launched its WaveForm TA interbody.
We expect additive manufacturing to continue to play an essential role in spine as surgeons and companies seek greater fusion between implant and bone. Additionally, there’s room for advancements in software, manufacturing and materials that will make for more streamlined processes and better implants.
Spine company Curiteva touted its forthcoming 3D-printed PEEK interbody device at NASS. Evonik and 3D Systems have also noted that 3D printing polymers will be a future innovation in spine.
Motion Preservation: A Growing Market
Fusion accounts for 85% of the spine market, by our estimates. However, motion preservation, including total disc replacement, continues to be the faster-growing market.
Companies with these technologies, including Orthofix and its M6-C cervical artificial disc and Centinel Spine and its prodisc portfolio, say they’re the bright spot in their portfolios. Many of these implants were highlighted at NASS alongside products still in development, like Premia Spine’s TOPS System for facet replacement and 3Spine’s MOTUS for total joint replacement.
We attended an abstract presentation where seven surgeons presented research on lumbar facet arthroplasty, total disc replacement and vertebral body tethering. The surgeons shared success with motion preservation technology and emphasized matching the right patient to the procedure.
Of interest, one surgeon in the audience asked the panel why they were lecturing their colleagues on the importance of motion preservation when they should be lecturing device companies. One surgeon responded that motion preservation requires a long and expensive regulatory pathway, and companies prioritize devices for the 510(k) route.
Certainly, fusion will always have a place in spine. But we expect attention will continue to be placed on motion preservation, specifically the total disc replacement market.
