Don’t anticipate a pandemic-related backlog in procedures to gas gross sales of orthopedic medical units this 12 months, based on a brand new evaluation by Needham & Co.
In a latest report, the funding financial institution mentioned the backlog seems to have been largely exhausted, with 2023 gross sales of most orthopedic merchandise coming in simply modestly larger than they might have if the pandemic by no means occurred.
Needham calculated the fixed foreign money compound annual progress charges, or CAGRs, from 2013 to 2019 for 4 main classes of orthopedic units and utilized them to the pandemic years of 2020 to 2023 to see how the merchandise have fared.
The hip market grew essentially the most final 12 months, based on the evaluation. The fixed foreign money CAGR for hip alternative merchandise was 1.9% from 2013 to 2019. If the market grew on the identical price by way of the pandemic years, 2023 gross sales would have reached $6.22B. Needham estimates 2023 gross sales had been truly $6.32B, or 1.5% larger than its non-COVID estimate.
The backbone market was the following greatest performer. Needham estimated the fixed foreign money CAGR for 2013 to 2019 at 1.6%, which might have resulted in gross sales of $9.77B in 2023 in the event that they grew by the identical price. The financial institution estimates that 2023 gross sales truly rose to $9.88B in 2023, or 1.1% larger than the non-COVID estimate.
For the knee market, the fixed foreign money CAGR was 2.7% from 2013 to 2019, with gross sales anticipated to succeed in $8.55B in 2023 in they grew on the identical tempo. As an alternative, gross sales reached an estimated $8.61B in 2023, topping Needham’s non-COVID estimate by 0.7%.
The trauma and extremities market, in the meantime, noticed slower-than-expected progress. Needham estimates the section had a continuing foreign money CAGR of 6.2% from 2013 to 2019. If the market had grown on the identical price through the pandemic, gross sales would have hit $10.31B in 2023. Needham estimates that gross sales reached solely $9.54B in 2023, or 7.5% decrease than its non-COVID estimate.
Needham famous costs for implants improved after the pandemic, which can have resulted in higher-than-expected gross sales. “However even accounting for improved pricing, we predict that orthopedic market progress is more likely to be meaningfully slower in 2024 than in 2023,” it added.
General, Needham is anticipating the orthopedics market to develop by 4.8% in 2024, in contrast with an estimated 7.3% in 2023. “Whereas most orthopedics corporations beat consensus throughout 2023, we predict upside could also be extra restricted in 2024,” Needham added.
The funding financial institution mentioned it nonetheless favors Enovis (NYSE:ENOV) and Alphatec (NASDAQ:ATEC) within the orthopedics and backbone segments as their shares are decrease, with progress anticipated to be pushed extra by share beneficial properties than precise market progress.
Different orthopedic corporations coated by Needham embrace CONMED (CNMD), Globus Medical (GMED), OrthoPediatrics (KIDS), Paragon 28 (FNA), Medtronic (MDT), Stryker (SYK) and Zimmer Biomet (ZBH).