Orthopedic markets to return to normal this year as post-pandemic boost fades
Orthopedic companies have made a fast start to 2023, with Zimmer Biomet’s CEO saying “pretty much everything went better than expected” in the first quarter and an analyst admitting to being “kind of blown away by how good the growth rates were in hip, knee and extremity” at Stryker. The fast growth has raised questions about the impact of a pandemic-related backlog and when growth will normalize.
Analysts at Needham looked at pre-pandemic growth rates to try to answer the questions. Based on how quickly each part of the orthopedic industry grew from 2013 to 2019, the analysts estimated what would have happened if the pandemic had not disrupted the sectors.
The analysis suggests the hypothetical, no-pandemic hip market would have grown to $6.22 billion in 2023. As the analysts expect the actual hip market to be worth $6.27 billion in 2023, they predict that the market will normalize late this year and end the post-pandemic sales boost.
Growth rates could remain elevated in other areas for longer. Applying the same methodology to the spine and knee markets, the analysts predict growth will return to normal by mid-2024 and late 2024, respectively. The trauma and extremities markets could have the most robust sales boost, with the data suggesting growth will remain elevated until after 2025.
Based on the data, the analysts see “potential for additional upside to consensus estimates for most orthopedics and spine companies” this year but cautioned that “higher growth rates in the near-term are likely to accelerate the timing of a return to more normalized growth rates.” The analysts note that improved pricing trends could cause markets to exceed estimates based on pre-pandemic growth rates.