Becker's Spine Review

24 DEVICES & IMPLANTS Post-coronavirus outlook for 4 major companies in orthopedics — Stryker, Medtronic & more By Laura Dyrda T he medical technology giants are feeling the impact of the coronavirus pandemic including giants in the or- thopedic space such as Johnson & Johnson, Stryker, Medtronic and Zimmer Biomet. The virus first began affecting these compa- nies while it spread through China in Janu- ary and February; many of these companies have manufacturing in China and Chinese factories were shut down for a time to curb the spread of the virus. As things began to get up and running in China again, the vi- rus spread to the U.S., where new challeng- es arose. On March 17, CMS urged hospitals to halt elective surgery and devote resources to treating coronavirus patients. Many hospitals independently announced a reduction, post- ponement or cancelation of elective surgeries, including many orthopedic and spine cases. In hospitals where these cases are ongoing, vendor presence is limited. Moody's altered the U.S. medical products and devices sector outlook from "positive" to "stable" on March 17 due to the elective surgery cancelations, although the firm an- ticipates it will recover with canceled sur- geries being performed later this year or next year. e American Academy of Orthopaedic Surgeons also canceled its annual meeting, scheduled for March 24-28. Device compa- nies typically launch or display new products at the convention. Here are key notes on the outlook of these four companies as of March 20: 1. Johnson & Johnson has a market cap of $325 billion. DePuy Synthes, part of John- son & Johnson Medical Device Companies, is building its digital and robotic presence as well in the orthopedic space. The compa- ny generates around $10 billion in annual sales and continues to release new capabil- ities with Brainlab. Meanwhile, Johnson & Johnson teamed with Janssen Pharmaceuti- cal and Beth Israel Deaconess Medical Cen- ter on March 13 to develop a COVID-19 preventative vaccination. Moody's rated Johnson & Johnson as Aaa on Aug. 29, 2019, and it has a negative outlook. 2. Stryker has a market cap of $55 billion. Moody's expects Stryker to proceed with its $5.4 billion acquisition of Wright Medical de- spite the coronavirus spread, but is not pro- jecting much other transformational M&A in the foreseeable future. And when elective surgeries do pick up again, Moody's sees companies with robotic technology, such as Stryker's Mako, as expanding rapidly. Stryker has a rating of Baa1 stable and reports nearly 800 robotic systems installed worldwide. 3. Medtronic has a market cap of nearly $105 billion. Medtronic has an A3 stable rating from Moody's, which expects its car- diology-related revenues to grow at an ac- celerated rate because the company's prod- ucts are used for high-risk cases. On March 18, Medtronic reported it had increased its ventilator production by more than 40 per- cent and is on track to double its capacity to manufacture ventilators in response to the growing need for coronavirus patients. 4. Zimmer Biomet has a market cap of $17.6 billion. Moody's expects to see Zim- mer Biomet's sales of its robotic platform, ROSA, to increase when elective surgery volume swings back to normal. Zimmer Biomet received FDA approval for ROSA in 2019 and Moody's thinks it will be able to grow due to physician loyalty to its prod- ucts. Zimmer Biomet has a Baa3 stable rat- ing. n $2.5B in sales projected for Novartis' spinal muscular atrophy drug by 2025 By Alan Condon Z olgensma, Novartis' gene therapy drug for spinal muscular atrophy, recently demonstrated significant therapeutic benefits for patients in various extended clinical trials, reports Pharmaceutical Technology. The new data highlighted advantages for patients treated presymptomatically and showed sustained durability in patients up to five years post-dosing. The trial results are expected to boost Zolgensma's sales and grow its patient pool. Zolgensma is anticipated to lead the SMA market and reach $2.5 billion in sales by 2025, according to GlobalData. Priced at $2.1 million, Zolgensma offers a one-time treatment for SMA. The drug secured $186 million in fourth quarter sales for Novartis, with full-year 2019 sales totalling $361 million. Novartis is pursuing regulatory approval in more than 30 countries. The company recently secured approval for the drug in Japan and expects de- cisions to be made by Swiss, Canadian and Australian authorities in late 2020 or early 2021. n

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