SYNTHES

Case Submission
Abhishek Malhotra
Akhil Bajaj
Apoorv Khanna
Megha Srinivasan
Ramakanta Panigrahi
Richa Sinha
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Bioresorbable The future

Bioresorbable implants didn't do so well in the first generation. In the second generation implants started
being used in few applications like sizeable factures of skull and face. Over the years the use has increased
but not to the extent that they had predicted. It still has to reach the tipping point. Synthes's main
competitor J&J has already positioned itself in the market and the risk of losing out on the market share was
immense. If significant R&D efforts were put in, the hockey stick growth curve would hit in given in the
advantages which it has over the traditional implants:
No second surgery required
No imaging shadow in X-Ray and MRI
Better Blood flow to the bone

Synthes Capabilities

Synthes had developed reasonable capabilities on bioresorbable. This was a result of the following efforts
Synthes Maxillofacial had built a 10 person, $3 million per year business in bioresorbable plates and
screws for fractures of the face and skull. These efforts provided Synthes with valuable experience
in creating second-generation polymers and their production techniques.
The Synthes Osteobiologics group had several engineers working on the development of polymers
and manufacturing techniques for trauma devices.
Stratec, which was one of Synthes sister companies had manufactured bioresorbable transplants.

Thus, it was believed that Synthes could match or surpass the quality of bioresorbable devices currently on
the market within three to five years. This would take $20 million of development effort and a team of 20 to
30 engineers, product managers, and production personnel.

Market for Bioresorbables:

Fractures in US 6 million
Simple Fractures 85% 5.10 million
Require Surgery 15% 0.9 million
Adults requiring Surgery 80% 0.72 million
Children Requiring surgery 20% 0.18 million

Removal of Plates
Adults (20%) 0.144 million
Children (40%) 0.072 million

Hand/Foot Fractures are 50% of Adults and 70% of Pediatric: 0.486 million.

Market for Bioresorbable Fixation Devices is:

Total (25% of all hand, foot, wrist, and ankle surgeries)
= 0.0972 million

Pediatric market = 0.0360 million

The potential market for bioresorbable fixtures is 0.0972 million surgeries. With the current products of
bioresorbable fixtures competitors have the potential to capture this market. The limiting growth is due to
the lack of clinical trials and failures of the existing products. The market for bioresorbable is at its early
stage and there are early adopters. If Synthes is able to come with products that are proven clinically and
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educate surgeons how to choose the right fixtures, metallic or bioresorbable, depending on the fracture,
Synthes will be able to get early majority and then after 5 years there will be an explosion and capture the
market.

Stakeholders

The AO: AO was formed on the principals of breaking the traditional methods in internal fixations
and standardising the. Synthes with its roots in AO, is synonymous to AO. It is highly regarded for
its product quality. In collaboration with AO, Synthes can work on research, development and
education of bioresorbable. It can capitalize on the market acceptability that Synthes already has in
terms of acceptability on Doctors.
Sales force: Synthes has strong network of 300 Sales force with excellent relationships with
Doctors. Doctors and Surgeons on field have trust that they will get quick and reliable support on
any issues related to Synthes products.
Competition: The competitors can now copy existing products of Synthes in 6 months at a much
lower cost. To maintain competitive advantage Synthes should innovate and enter into
bioresorbable.

Recommendation:

We would recoomend that Synthes take a hybrid stance. The market currently is not profitable enough and
it would be difficult for Synthes to commit their resources to this new line of products under bioresorbables.
However, basis the numbers above the future potential of bioresorbables seems promising and currently
Synthes is 2-3 years behind competition in this vertical. Hence, they need to definitely take steps to create a
small presence in this market.
They should take a combination of wait & watch approach while at the same time, commit some resources
towards R&D of the 3rd generation of bioresorbable implants because thats when the product is expected to
become commercially viable. Currently, they can test waters and educate the market as well as develop a
line of bioresorbable implants specifically the plates & the screws that are currently more mature and stable
as compared to rods that have proven to be clinically unviable for major fractures.
By taking this hybrid approach, they would not only be be better prepared to enter the market when
bioresorbables prove clinically & commercially viable but also possibily dominate the market if they can get a
major headstart on the 3rd generation bioresorbable implants.