SYNTHES

Problem Statement

■ There might be a market for bioresorbable implants; Syntes must decide on its feasibility and whether they should enter

■ The question posed is whether or not Synthes should invest in bioresorbable devices

■ If they do enter there might be implications with regards to faulty products because of not enough research or lack of trust in the products laid by surgeons

■ How do they stick to their reputation of being innovators and core competency of R&D

Situation analysis

■ Leading manufacturer of internal fixation devices used by over 80% orthopedic surgeons in the US-its implants are considered ‘gold standard ‘

■ US market leader in metallic (stainless steel and titanium) trauma implants with $240 million in revenues in 2000 and over 300000 patients

■ Affiliated with the Association for the Study of Internal Fixation (AOTC), that has pioneered development of trauma implants

■ Total implant sales across manufacturers were over $540 million with 5% growth rate■ Metal implants necessitated removal after healing due to pain or other complications■ Opportunity in Bioresorbable implants, which dissolved over time, eliminating need

for removal

Challenges faced

■ Implant removal can result in pain, infection or muscle and nerve damage■ Threat of commoditization in metal implants category■ Bioresorbable implants have the potential to replace metal implants ■ Competitors have been aggressively launching bioresorbable products■ Synthes could lose market share in metal implants segment as Bioresorbables

could be too disruptive to their current strategy■ Entering an under researched market with unproven products could tarnish

Synthes’ strong brand as the leader in product development■ Conundrum between waiting for other manufacturers to develop new generation

technology or developing and marketing with currently available technology

Market AnalysisMaterial

Used

Titanium Stainless Steel

Bioresorbable material

6 Million fractures in the US 6000000

85% are simple & do not require surgery 5100000

15% of them need internal fixation devices 900000

80% adults 720000 20% children 18000020% needed them removed 144000

40% needed them removed 72000

• Synthes has a market share of 50% with 240 million sales of a 540 million+ industry.• 24% of the patients need the device removed – could be first to try bioresorbable

Competitive EnvironmentJo

hnso

n &

John

son• Leading

maker of Artificial hips & knees

• Sale of $1 billion per year

• Orthosorb- 90% market share - $2.6 million in revenues

Biom

et • Present in all segments

• $1 billion sales

• ReUnite line made $1.6 million

Biom

x an

d M

acro

pore• Trauma,

sports medicine

• $3.4 million

Smith

& N

ephe

w • Potential competitor as it was the second largest player in the orthopedic trauma market

Porters 5 forcesLow• Need to have a proven track record• Trust factor for products• Surgeons must approve

High• Market in nascent stages• Experimenting with consumers• Need to build trust & confidence with

surgeons

Data not available in case• Ideally they should high bargaining

power due nature of industry

High• Competitors exist• Metal implants still being preferred

Bioresorbable implants

Alternatives

■ The main options available for the company are:– To continue the same way, not enter bioresorbables, focusing on

well established competences (Metallic implants);– To wait for other manufacturers to develop new generation

technology (3rd generation) and push it to the market. Just then, if room for success is present, quickly enter the market;

– To develop and market a line of bioresorbables using the currently available technology (2nd generation);

– To research and develop the next generation technology

Suggested Way forward

■ Fourth option of continued research and development into 3rd generation polymers,

■ Synthes returns to their core competence of R&D■ Synthes is known for innovation and wont be considered follower■ Beneficial also for researchers and scientists who will get to work on

new technology; courses can be driven around this■ Although the costs will be higher the rewards will be more as well■ There is also the risk of their competitors developing these before

them