TUTORIAL – Contract Manufacturing Market June 2016 · TUTORIAL . Contract Manufacturing. June...
Transcript of TUTORIAL – Contract Manufacturing Market June 2016 · TUTORIAL . Contract Manufacturing. June...
Ali MADANIPhone: + 33 1 47 78 46 [email protected]
TUTORIAL – Contract Manufacturing MarketJune 2016
Ali MADANIPhone: + 33 1 47 78 46 [email protected]
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TUTORIAL Contract Manufacturing
June 2016
Table of contents
OEM Contract Manufacturing strategyContract Manufacturing value chainOEM contract manufacturing strategy: Depuy Synthes, Zimmer Biomet, Stryker, Smith & Nephew, Medtronic and Challengers
Contract Manufacturing market sizing : By products & by customers
Forging, casting, hip machining & finishing, knee machining & finishing, spine & trauma machining & finishing, instruments, cases & trays, coating, ceramics, marking, packaging and sterilization. Orthopaedic contract manufacturing & in-house in 2015 Heavy trends: Market concentration, OEM facility disinvestments, moving to LLC ?
Contract Manufacturing market Forecasts
I
II
III
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TUTORIAL Contract Manufacturing
June 2016
Contract Manufacturing market value chain: The Major OEMs have a different outsourcing strategy Vs the challengers.The challengers outsource almost all their products.
Hospitals &
Clinics
Orthopaediccompanies
OEM
Revenues in 2015: 39 B US$
5 majors& Several hundreds
challengers
Cont
ract
M
anuf
actu
rers
Implants
Instruments
Cases & Trays
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TUTORIAL Contract Manufacturing
June 2016
OEM Contract Manufacturing strategy: Zimmer Biomet
Source: Avicenne 2016
Casting: In-House Warsaw (USA)
Forging: Winterthur (CH) – Berlin (Gr)
Machining & other facilities: Warsaw, Dover, Parsippany, Jacksonville, Palm Beach (USA) -Winterthur (CH) - Bridgend (UK) – Shannon, Galway (Ir) - Valence (Fr) - Valencia (Spain) - Ponce (Puerto Rico) - Beijing, Jinhua, Changzhou (China)
Contract Manufacturing Rate
0% 20% 40% 60% 80% 100%
Packaging
Coating
Sintering
Cases & Trays
Instruments
Implants Machining & Finishing
Implants Casting
Implants Forging
0% 20% 40% 60% 80% 100%
Trauma Lock. plateTrauma LF plate
Hip CupTibial knee
Hip stem
0% 20% 40% 60% 80% 100%
Spine LumbarSpine cervical
Trauma plates & screwsKnee insertKnee tibial
Knee femoralHip linerHip head
Hip cupHip stem
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TUTORIAL Contract Manufacturing
June 2016
OEM Contract Manufacturing strategy: Smith & Nephew
Source: Avicenne 2016
Contract Manufacturing Rate
0% 20% 40% 60% 80% 100%
Packaging
Coating
Sintering
Cases & Trays
Instruments
Implants Machining & Finishing
Implants Casting
Implants Forging
0% 20% 40% 60% 80% 100%
Trauma Lock. plateTrauma LF plate
Hip CupFemoral knee Oximium
Tibial kneeHip stem
0% 20% 40% 60% 80% 100%
Trauma plates & screws
Knee insertKnee tibial
Knee femoralHip liner
Hip headHip cup
Hip stem
Casting: No In-House casting
Forging: No In-House forging
Machining & other facilities: Memphis, Oklahoma City (USA) - Calgary (Canada) -Aarau (CH) - Warwick (UK) - Tuttlingen (Gr) - Beijing (China) – Sangameshwar (India)
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TUTORIAL Contract Manufacturing
June 2016
OEM Contract Manufacturing strategy: Stryker
Source: Avicenne 2016
Casting: In-House Mahwah (US) - Limerick (Ir)
Forging: No In-House Forge
Machining & other facilities: Mahwah, Kalamazoo, Malvern, Ft. Lauderdale(US) - Cork, Limerick, Carrigtwohill (Ir) - Cestas, Rennes (Fr) - Kiel, Fribourg, Stetten (Ger) -Changzhou, Suzhou (China) - Selzach, Neuchatel (CH)
Contract Manufacturing Rate
0% 20% 40% 60% 80% 100%
Packaging
Coating
Sintering (Ceramics)
Cases & Trays
Instruments
Implants Machining & Finishing
Implants Casting
Implants Forging
0% 20% 40% 60% 80% 100%
Trauma Lock. plate
Trauma LF plate
Hip cup
Hip stem
0% 20% 40% 60% 80% 100%
Spine LumbarSpine cervical
Trauma plates & screwsKnee insertKnee tibial
Knee femoralHip linerHip head
Hip cupHip stem
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TUTORIAL Contract Manufacturing
June 2016
OEM Contract Manufacturing strategy: Depuy-Synthes
Casting: In-House Raynham (US), Leeds (UK), Cork (Ir)
Forging: No In-House Forge
Machining & other facilities: Warsaw, Raynham (US) - Leeds (UK) - Cork (Ir) - Suzhou (China) & Synthes: 10 facilities in Europe and 4 in US
Source: Avicenne 2016
Contract Manufacturing Rate
0% 20% 40% 60% 80% 100%
Packaging
Coating
Sintering
Cases & Trays
Instruments
Implants Machining & Finishing
Implants Casting
Implants Forging
0% 20% 40% 60% 80% 100%
Trauma Lock. plate
Trauma LF plate
Tibial knee
Hip stem
0% 20% 40% 60% 80% 100%
Spine LumbarSpine cervical
Trauma plates & screwsKnee insertKnee tibial
Knee femoralHip linerHip head
Hip cupHip stem
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TUTORIAL Contract Manufacturing
June 2016
OEM Contract Manufacturing needs: Challengers
Source: Avicenne 2016
In-House Contract manufacturing
21 000
188 000
86 000155 000
865 000
0 400 000 800 000 1 200 000
Trauma LC plates
Trauma LF plates
Knee tibial
Hip cups
Hip stems
394 000
858 000
158 000
153 000
0 500 000 1 000 000
Knee tibial
Knee femoral
Hip cups
Hip stems
44 000
18 000
17 000
0 15 000 30 000 45 000 60 000
Knee tibial
Knee femoral
Hip stems
88 000
158 000
214 000
298 000
157 000
0 100 000 200 000 300 000 400 000
Knee insert
Knee tibial
Hip Liner
Hip head
Hip cup
Forging
Casting
Wholly machined
Nb of components in 2015
21 000
1 800
3 200
96 000
0 40 000 80 000 120 000
Trauma LF plates
Knee tibial
Hip cups
Hip stems
788 000
193 000
499 000
696 000
318 000
0 400 000 800 000
Knee insert
Knee tibial
Hip Liner
Hip head
Hip cup
Challengers
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TUTORIAL Contract Manufacturing
June 2016
OEM Contract Manufacturing strategy: Challengers
Source: Avicenne 2016
In-House Contract manufacturing
77 300
34 700
19 300
24 400
0 30 000 60 000 90 000
Trauma instruments
Spine instruments
Knee instruments
Hip instruments
105 000
140 000
63 000
362 000
0 100 000 200 000 300 000 400 000
Tibial knees
Femoral knees
Hip Cups
Hip stems
13 600
3 900
1 000
1 300
0 4 000 8 000 12 000 16 000
Trauma instruments
Spine instruments
Knee instruments
Hip instruments
26 000
35 000
16 000
90 000
0 150 000
Tibial knees
Femoral knees
Hip Cups
Hip stems
Spine & Traumamachining
Instruments
Coating
Nb of components in 2015
209 000
209 000
40 000
32 000
84 000
0 100 000 200 000
Trauma screws
Trauma plates
Cerv. Screws & cages
Spine Cerv. plates
Lumbar Univ.sys.
Nb of sets in 2015
1 882 000
1 882 000
227 000
182 000
412 000
0 1 000 000 2 000 000
Trauma screws
Trauma plates
Cerv. Screws & cages
Spine Cerv. plates
Lumbar Univ.sys.Challengers
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TUTORIAL Contract Manufacturing
June 2016
Source: Avicenne 2015
Prod
uct s
egm
enta
tion
Femoral
Tibial
Insert
Hip stem
Hip cup
Femoral knee(special forging)
Tibial knee
LF plates
LC platesFo
rgin
g
Femoral knee
Tibial knee
Hip cup
Hip stem
Cast
ing
Stem
Cup
Head
Liner
Hip
m
achi
ning
Knee
m
achi
ning
Prod
uct s
egm
enta
tion
Cup
Femoral
Tibial
Spine lumbar & cages
Spine cervical plates
Spine cervical & cages
Trauma internal plates
Trauma screws & Others
Hip
Spin
e,Tr
aum
am
achi
ning
Knee
Spine
Trauma
Hip
Inst
rum
ents
m
achi
ning
Knee
Spine
Trauma
Stem
Case
s &
Tray
sCo
atin
g
Prod
uct s
egm
enta
tion
Head
LinerCera
mic
s
Hip
Knee
Spine
MPS
Oth
ers
Trauma
Contract Manufacturing product segmentation: 11 segments & 40 sub-segments
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TUTORIAL Contract Manufacturing
June 2016
Forging Contract Manufacturing market 2015-2020Forged stems represent 60% of the total forging Contract Manufacturing market.
-
100
200
300
400
500
600
2015 2016 2017 2018 2019 2020
Hip stem Hip cup Tibial knee Other forged parts
Forging CM: 6,1 %
Hip cup forging: 6.5 %
Hip stem forging : 5.4 %
M U
S$
CAGR 2015-2020
Tibial knee forging: 8.1 %
Other forged parts*: 6.5 %
Source: Avicenne analysis 2016*Other forged parts: mainly Trauma locking Plates, Trauma LF Plates & vertebral disks
Depuy-Synthes
23%
Zimmer Biomet
22%
Stryker16%
Smith & Nephew
17%
Other22%
2015 forging CM market410 MUS$: customers
Forging Contract Manufacturing Drivers:• Very high outsourcing rate• Reasonable assumption: Switch of the remaining In House
part• Very moderate price erosion• Growth in tibial knee forging • Growth in vertebral disks & trauma components forging
In House 15%
Contract Manuf.
85%
2015 forgingmanufacturing (MUS$)
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TUTORIAL Contract Manufacturing
June 2016
In House54%
Contr. Manuf.
46%
2015 casting manufacturing (MUS$)
Casting Contract Manufacturing market 2015-2020Knee femoral cast parts represent more than 70% of the total casting Contract Manufacturing market. In-house manufacturing is bigger than Contract Manufacturing.
0
50
100
150
200
250
300
350
2015 2016 2017 2018 2019 2020
Knee femoral Knee tibial Other casted parts
Casting CM: 8.4 %
M U
S$
CAGR 2015-2020
Source: Avicenne analysis 2016
Depuy-Synthes
21%
Zimmer Biomet
7%
Stryker4%
Smith & Nephew
16%
Other52%
2015 Casting CM market205 MUS$: customers
Casting Contract Manufacturing Drivers:• High growth for the knee by 2020• Assumption: Switch by one or several Majors to more
outsourcing• Very moderate price erosion • Challengers growth
*Other casted parts: Hip cups & hip stems casted
Knee tibialcasting:8,1 %
Other casted parts*
Knee femoral casting: 8.7 %
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TUTORIAL Contract Manufacturing
June 2016
-
500
1 000
1 500
2 000
2 500
2015 2016 2017 2018 2019 2020
Knee instruments Hip instruments Spine instruments Trauma instruments
In House28%Contr.
Manuf.72%
2015 instruments manufacturing (MUS$)
Instruments Contract Manufacturing market 2015-2020Manufacturing customized instruments is highly complex and mainly outsourced. Certain simple instruments are still made In-House or supplied from LLCs.
Instruments machining CM: 6.7 %
M U
S$
CAGR 2015-2020
Source: Avicenne analysis 2016
Depuy-Synthes
19%
Zimmer Biomet
16%
Stryker14%
Smith & Nephew
10%
Other34%
2015 Instruments machining CM market
1 450 MUS$: customers
Instruments machining Contract Manufacturing Drivers:
• Growth in the knee segment by 2020• Spine : Procedures growth• Logical assumption : Part switch by certain spine & trauma
Majors to more outsourcing• Moderate price erosion • Challengers growth
Hip instruments:
5.2 %
Spine instruments:
7.9 %
Knee instruments:
6.9 %
Trauma instruments:
6.5 %
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TUTORIAL Contract Manufacturing
June 2016
Cases & trays Contract Manufacturing market 2015-2020Cases & trays follow the same dynamics as instruments. Almost completely outsourced
-
100
200
300
400
500
600
2015 2016 2017 2018 2019 2020
Hip cases Knee cases Spine cases Trauma cases
Cases & trays CM: 6,7 %
Knee cases:6.9 %
Hip cases: 5.2 %
M U
S$
CAGR 2015-2020
Spine cases: 7.9 %
Trauma cases:6.5 %
Depuy-Synthes
27%
Zimmer Biomet
22%
Stryker14%
Medtronic5%
Smith & Nephew
10%
Other22%
Cases & trays CM market410 MUS$: customers
Cases & trays Contract Manufacturing Drivers:• High outsourcing rate• Cases & trays follow Instruments dynamics• Small price erosion• Knee & spine procedures growth• Challenger dynamics & trend toward average decrease in
surgeon procedures
In House16,94%Contract
Manuf.96%
2015 cases & traysmanufacturing (MUS$)
Source: Avicenne analysis 2016
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TUTORIAL Contract Manufacturing
June 2016
Ceramics Contract Manufacturing market 2015-2020Ceramics is almost fully outsourced. Slow growth in the hip segment limits the growth in ceramics.
-
50
100
150
200
250
300
350
2015 2016 2017 2018 2019 2020
Hip heads Hip liners
Ceramics CM: 5.2 %
Hip liner:5.2 %
Hip head: 5.2 %
M U
S$
CAGR 2015-2020
Depuy-Synthes
20%
Zimmer Biomet
29%
Stryker14%
Smith & Nephe
w13%
Other24%
Ceramics CM market230 MUS$: customers
Ceramics Contract Manufacturing Drivers:
• Hip growth, mainly in developed countries• Very moderate price erosion• Very high Outsourcing rate
In House2%
Contract Manuf.
98%
2015 ceramicsmanufacturing (MUS$)
Source: Avicenne analysis 2016
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TUTORIAL Contract Manufacturing
June 2016
-
50
100
150
200
250
300
2015 2016 2017 2018 2019 2020
Hip stems Knee femoral parts Knee tibial parts Hip cups
In House33%
Contr. Manuf.
67%
2015 coating (MUS$)
Coating Contract Manufacturing market 2015-2020OEMs often making the monolayer & non-complex coating In-House. Zimmer Biomet & Depuy-Synthes almost entirely outsource
Coating CM: 7.9 %
M U
S$
CAGR 2015-2020
Source: Avicenne analysis 2016
Depuy-Synthes
31%Zimmer Biomet
32%Stryker
5%
Smith & Nephew
5%
Other27%
2015 coating CM market175 MUS$: customers
Coating Contract Manufacturing Drivers:
• Growth in the knee segment by 2020• Trend toward Cementless, even in emerging countries• Moderate price erosion • Challengers growth
Knee femoral parts: 8.9 %
Knee tibialparts: 8,7 %
Hip stems:7.1 %
Hip cups:6.9 %
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17
TUTORIAL Contract Manufacturing
June 2016
Contract Manufacturing market value chain: the Major OEMs have a different outsourcing strategy than the challengers.The challengers outsource almost all their products.
Hospitals &
Clinics
Orthopaediccompanies
OEM
Revenues in 2015: 39 B US$
5 majors& Several hundreds
challengers
Cont
ract
M
anuf
actu
rers
Implants2.5 B US$
Instruments1.4 B US$
Cases & Trays0.4 B US$
Ali MADANIPhone: + 33 1 47 78 46 [email protected]
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TUTORIAL Contract Manufacturing
June 2016
Contract Manufacturers worldwide revenues in 2015 (in M US$): Top 15 made 48% (43% in 2014) of the ortho contract manufacturing market
Source: Avicenne 2016
MU
S $
0 50 100 150 200 250 300 350 400 450 500
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TUTORIAL Contract Manufacturing
June 2016From 101 to >1000:
800 M US$Average < 1 M US$
Top 16-100: 1,450 M US$Average: 19 M US$
Top 15: 2,050 M US$Average: 136 M US$
Contract Manufacturing competitor ranking& dispersion
Source: Avicenne 2016
33%
19%
N°15
N°100
34MUS$
3MUS$
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TUTORIAL Contract Manufacturing
June 2016
Heavy trend: The OEM facility disinvestments
Dec.2007
Intech acquired Wright Medical facility in Toulon, France
Feb. 2008
Sandvik acquired Medtronic facility
in Memphis, USA
Feb. 2008
Greatbatchacquired Depuyfacility in Chaumont, France
Sept.2010
Lisi acquired the Stryker facility, Herouville, France
Dec.2007
Symmetry acquired DepuyFacility in New Bedford, USA
Feb.2012
Symmetry acquired J&J surgical instruments
business
Even though it is being accomplished step by step, OEM
facility disinvestments is a
heavy trend.
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TUTORIAL Contract Manufacturing
June 2016
Orthopaedic Contract Manufacturing concentration by acquisition
2007Doncasters
2007 JKB Medical Tech
2008Medtronic Memphis
Facilities
2008 Eurocut
2006 Everest Metal
2007Clamonta
2008DePuy OEM Bedford
Facility
2007TNCO
2003Symmetry
2003 MettisOrtho
2006 Riley Medical
2007SSI/UCA
Merger
2011Surgical Instruments Codman & Shurtleff
1977Unique Instruments
1992Stealth Technologies
2001HY-VAC
2003Stro Met Inc
2004Unique Design
2005Bio-Vac
2005 Bio-Coat
2006McDee
2007 MPS & Keller & Anzon
2008Azary Technologies
2012Sandvik
2015Alhenia &
Cam Bioceramics China
1977 Wilson Greatbatch
1998 Hittman Materials
1998Medical Components
2001Sierra-KD
2002Globe Tool
2004NanoGram
2007EAC & Ouan Emerteq
&Intellisensing & EnpathMedical & Biomec Inc.
2008PRECIMED
2008Depuy Facilities
2015 Lake Region
2012NeuroNexus
2014 CCC Medical Devices
2013 MicroPower
1963Tecomet
2011 Kemac Technology
2012 Teleflex
2014 Symmetry
20143D Medical
Symmetry acquired by Tecomet Sandvik acquired by Orchid Source: Avicenne analysis 2016
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TUTORIAL Contract Manufacturing
June 2016
The risk of moving to LLC by 2020: Developed countries & Low Labor Cost countries
Source: Avicenne 2015
Generic orthopaedicinstruments
Massively outsource In LLC
Complexes & customized Orthopaedic instruments
Massively outsourceStay in USA & Europe
Implants forging & casting
Stay in USA & EuropeMore outsourcing for the Majors
Implants hip & knee machining
Trendby 2020
Spine & trauma implants machining
Few % go to the major OEM facilities in LLC
Depuy-Synthes & Medtronic will stay In-House. Other players outsource more and more in LLC
Level of movingto LLC
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23
TUTORIAL Contract Manufacturing
June 2016
Contract Manufacturing market historical revenues & forecasts (M US$)Implants will grow more rapidly than the instruments & cases & trays. The stable CM market in 2011 & 2012 slowed the market dynamic. In the period, 2015-2020 CM market growth will accelerate.
Source: Avicenne research & analysis 2016
1 158 1 245 1 195 1 248 1 326 1 436 1 530 1 629 1 737 1 856 1 987370 390 350 368 391 410 438 467 497 531 5671 904 2 055 2 135 2 256 2 395 2 549
2 7572 961
3 1813 420
3 672
0
1000
2000
3000
4000
5000
6000
7000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Instruments Cases & Trays Implants
CAGR 2010-2020 : 6.1 %
Implants : 7.6 %
Cases : 6.7 %
Instrum.: 6.7 %
M U
S$
CAGR 2015-2020
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TUTORIAL Contract Manufacturing
June 2016
The Orthopaedics Contract Manufacturing market is growing faster than In-house manufacturing.
2010-2020 Orthopaedics Contract Manufacturing (B US$)
2010-2020 Orthopaedics In-house Manufacturing (B US$)
3,4 3,6 3,7
3,9 4,1
4,4 4,7
5,1 5,4
5,8 6,2
0,00,51,01,52,02,53,03,54,04,55,05,56,06,57,0
B U
S$
B U
S$
CAGR 2010-2020: 6.2 %
Source: Avicenne analysis 2016
3,1 3,2 3,3 3,4 3,6 3,7
4,0 4,2
4,4 4,6
4,9
0,00,51,01,52,02,53,03,54,04,55,05,56,06,57,0
CAGR 2010-2020: 4.7 %
In- house manufacturing is growing linearly; the Contract manufacturing will be more dynamic.
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25
TUTORIAL Contract Manufacturing
June 2016
Additive Manufacturing represented in 2015 only a small % of all orthopaedic products manufactured
The main benefits of Additive Manufacturing for orthopaedics is the Bone ingrowth capabilities. It also enables the manufacture of complex metal parts, simultaneously and for different sizes, shapes and design. In the industrial field (mainly aeronautics) the Additive Manufacturing users are looking for weight reduction or advanced cooling.Additive Manufacturing enables the manufacture of complex metal parts, simultaneously and for different sizes, shapes and design.Zimmer, one of the Major orthopaedic companies, penetrated this market 15 years ago with a proprietary technology acquired from IMPLEX, thereby opening the trabecular structure market with an investment of several hundred million US$.Italy for Additive Manufacturing is the most advanced market: Challengers like Lima Corporate and Adler Ortho have invested massively in this technology, following Zimmer, the historical player. The main trabecular products are hip cups, sold by several thousands in Italy each year, and followed by other products like shoulder implants, knee tibial plates, mini-hip stems, etc…Additive Manufacturing focuses today mainly on cementless cups (especially revision) and cages for spine.Today, if the orthopaedic industry use around 1 500 tons of Titanium per year, Additive Manufacturing uses less than 50 tons of titanium per year for Orthopaedic purposes. (< 3% of the total).CMF implants will also be produced by AM due to their complex profiles and small dimensions.
Additive Manufacturing is a new technology, which today is adapted only to the manufacture of small parts (and small series). Revision cups and several trauma and spine implants can be switched to Additive Manufacturing
Forged CM, 818K34%
Forged IH, 136K6%
Casted CM, 183K8%
Casted IH, 394 K16%
Machined CM, 418K17%
Machined IH, 474K19%
2,4 million units Hip cups manufactured worldwide by processes
Ali MADANIPhone: + 33 1 47 78 46 [email protected]
26
TUTORIAL Contract Manufacturing
June 2016
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
2014 2015 2016 2017 2018
Peek Additive Manuf. Titanium Other cages
Nb
of ca
ges,
in u
nits
Cages Raw Materials in the five main countries in Europe: When Peek and Titanium lose market share, Additive Manufacturing cages will increase dramatically in Europe, when Peek cages lose market share (-4.5% CAGR by 2018) and Titanium cages also decrease by 2% in the five main countries, Additive Manufacturing & Trabecular cages will increase by 19% and achieve 61,000 units in 2018.
Source: Avicenne analysis 2015
Ali MADANIPhone: + 33 1 47 78 46 [email protected]
27
TUTORIAL Contract Manufacturing
June 2016
Executive Summary (1/3)
To manufacture implants, instruments & related products, orthopaedic companies in 2015 spent, 3.7 B US$ In-House and paid their contract manufacturers 4.4 B US$ (+6.2% Vs 2014)In the orthopaedic Contract Manufacturing market, Challengers are the n°1 customer. In 2015 they accounted for 1.680 MUS$ due to their higher rate of outsourcing, followed by Depuy-Synthes, who accounted for 830 M US$, then Zimmer Biomet (625 M US$), Stryker (600 M US$) and Smith & Nephew (470 M US$).Medtronic spent only 180 M US$ because their manufacturing strategy is mainly oriented to In-House made.Instruments are the largest segment, with revenues of 1.4 BUS$ for Contract Manufacturing, followed by spine & trauma machining (820 M US$) and cases & trays (415 M US$). In 2015 forging Contract Manufacturing accounted for 410 M US$ & casting for 200 M US$.OEMs are demanding more and more that their Contract Manufacturers reduce costs and sometimes that they follow them to certain LLC countries to set up facilities there.
Ali MADANIPhone: + 33 1 47 78 46 [email protected]
28
TUTORIAL Contract Manufacturing
June 2016
Executive Summary (2/3)
The Majors want to drastically reduce the number of their Contact Manufacturers. The response to this need is Contract Manufacturing market concentration.The risk of moving to LLC countries will be mainly limited to generic instruments and spine & trauma implants machining.Even though it is being accomplished step by step, OEM facility
disinvestment is a heavy trend. When the Majors find a long term solution to outsource a “heavy or difficult function” they go for it!If the history of Orthopaedic Contract Manufacturing is set to feature more and more facility disinvestment by the Majors, the strategic question for the next few year is, “What other main services will be disinvested by 2020? Casting or the machining of certain products?”Bucking this strategic trend for disinvestment, a few rare, specific cases show that some players in the spine market want to internalize a small proportion of their manufacturing. In our view, this will not modify the general evolution in Contract Manufacturing, which is set to remain the dominant trend for outsourcing.
Ali MADANIPhone: + 33 1 47 78 46 [email protected]
29
TUTORIAL Contract Manufacturing
June 2016
Executive Summary (3/3)
The Contract Manufacturing market benefits from the main orthopaedic drivers; population ageing and product mix evolution. It also has its own intrinsic drivers: OEM implant facilities disinvestment and the growth of the challengers’ market share, which is drastically impacting this market, due to their high outsourcing rate.By 2020, the Contract Manufacturing market will still be growing faster than In-House.Contract Manufacturing remains a robust market with 7.4% CAGR by 2020. Implants will grow more rapidly than instruments and cases & trays.Today, if the orthopaedic industry use around 1,500 tons of Titanium per year, Additive Manufacturing uses less than 50 tons of titanium per year for Orthopaedic purposes. (< 3% of the total).CMF implants will also be massively produced by AM due to their complex profiles and small dimensions.Market growth 2015-2020 for Metal Additive Manufacturing will be between 18% and 30%, according to several industry forecasts. Orthopaedic applications will be one of most dynamic segments.
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