The biggest revenue streams in spine surgery are not the fastest growing

Put simply, regardless of the relative share, differences in market growth rates or other metrics, some spine surgery technologies will generate substantially more sales than others during the 2012 to 2020 timeframe.

Looking at the MedMarket Diligence, “Worldwide Spine Surgery Data Forecast, 2010-2020″, posterior pedicle screw fusion systems and artificial cervical discs will generate the largest revenue increases over this period, since even at modest growth rates the size of the penetrated market results in big gains from 2012 to 2020. In other words, while AxiaLIF represents one of the fastest growing spine surgery device markets, the aggregate change in AxiaLIF revenues from 2010 to 2020 is only $270 million versus $2.97 billion for posterior pedicle screw fusion systems, ┬áHere a growth rate of under 10% on such a large existing market greatly eclipses the absolute impact of a dramatic growth rate (i.e., >30%) of an emerging market.

Source: MedMarket Diligence, LLC; “Spine Surgery Worldwide Data Forecast, 2010-2020.” See link.

On a country-by-country basis, these differences are more pronounced.

Minimally invasive spine surgery patient registry (SMISS)

The Society for Minimally Invasive Spine Surgery (SMISS) has established a prospective registry to track the impact of minimally invasive spine surgery on patient outcomes.  According to Globus Medical, Inc., a private manufacturer of spine implants that has agreed to fund the registry, which will be a registry for the treatment of degenerative lumbar spondylolisthesis, degenerative disc disease, spinal stenosis, and degenerative scoliosis:

The registry will capture prospective clinical data from 10 to 15 clinical sites throughout the country, up to 250 patients, utilizing an electronic data capture program which will allow for "patient portals" to facilitate data collection from anywhere an internet connection is available. Patients will be followed for a minimum of 24 months looking at Health Related Quality of Life (HRQOL) and Quality Adjusted Life Years (QALY) outcomes, the rate and incidence of peri-operative and post-operative adverse events, radiographic correction and fusion rates as well as cost of treatment with the MIS approach.

Spine surgery technologies currently represent a $13 billion global market that will grow to $23 billion by 2020.  Despite price pressure in medical technologies, growth will continue due to innovations that enable mobility and reduce pain in a rapidly growing demographic of older patients.  (See MedMarket Diligence Report #M520.)

Vertebral Compression Fracture Treatment Technologies

From “Worldwide Spine Surgery: Products, Technologies, Markets & Opportunities, 2010-2020″, Report #M520, published 2011 by MedMarekt Diligence:

Vertebral compression fractures result primarily from osteoporosis and the consequent weakening of bones, including those in the spine. VCFs can result in tremendous back pain both in the short and long term. Because the injured vertebra is compressed and loses height, kyphotic deformity of that particular vertebra and the spine as a whole often results. Kyphosis in and of itself can produce pain long after the vertebral compression fracture has healed. As discussed earlier, several conditions can lead to osteoporosis, including estrogen deficiency, multiple myeloma, radiation therapy, and natural aging. Bones weakened either due to the primary disease process or as a result of treatment of such diseases are more prone to fracture. Common sites osteoporotic fracture include the spine, hip, and wrist.

The traditional treatment for VCFs is conservative care with back braces, bed rest, and analgesic medications for alleviating pain. Although given time the fracture eventually heals, the vertebral body remains in a collapsed, compressed state. This can result in prolonged pain, impaired function, and decreased activity. Additionally, bone and muscle loss resulting from a lack of activity can make recovery even more difficult, leading to the so-called ‘downward spiral’ of vertebral osteoporosis.

In recent years, two minimally invasive procedures have been introduced to treat VCFs: vertebroplasty and kyphoplasty. The procedures are very different, in that vertebroplasty is designed to stabilize the break, while kyphoplasty attempts to both stabilize the break and bring the collapsed vertebra back to its original height. 

Companies with products in vertebroplasty and/or kyphoplasty on the market or under development include: Alphatec, ArthroCare, AscendX, Benvenue Medical, Biomet, BoneSupport, CareFusion, Cook, DePuy Spine, Dfine, Integra Spine, Lafitt, Medtronic, Orthovita, Osseon Therapeutics, Signus, Sintea, Skeltex, Soteira, Spine Wave, SpineAlign, Stryker, Synthes, Tecres, Teknimed, Vexim.

Kyphoplasty is currently the bigger market, but trends in procedure volume, pricing and unit sales are causing the gap in global market between kyphoplasty and vertebroplasty to disappear during the forecast period.

 

Vertebro-kypho

Source: MedMarket Diligence, LLC; Report #M520.

 

 

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Evolution of spine surgery market is changing the landscape

The global market for spine surgery devices was estimated to be worth about $12.43 billion in 2010, and is forecast to reach approximately $23.90 billion by 2020, exhibiting a compound annual growth rate (CAGR) of 6.96% (2011-2020). The device segments comprising this total are:

  • Posterior Pedicle Screw Fusion Systems
  • Anterior Cervical Plate Systems
  • Anterior Thoracolumbar Plate Systems
  • Anterior Lumbar Interbody Fusion (ALIF) devices
  • Transforaminal Lumbar Interbody Fusion (TLIF) devices
  • Posterior Lumbar Interbody Fusion (PLIF) devices
  • Axial Lumbar Interbody Fusion (AxiaLIF) devices
  • Interspinous Process Spacer (ISP)
  • Cervical Artificial Discs
  • Lumbar Artificial Discs
  • Vertebroplasty
  • Balloon Kyphoplasty
  • Allografts
  • Demineralized Bone Matrix (DBM)
  • Bone Morphogenetic Proteins (BMPs)

This growth will be driven by a number of factors, including:

  • The ageing population worldwide
  • Increasing incidence of obesity
  • A growing middle class in developing countries, with the ability to pay out of pocket for spine surgery
  • Improving worldwide economy
  • Technological device enhancements, leading to improved surgical results
  • Developments in minimally invasive spine surgery (MISS) devices driving a strong increase in MISS, with its numerous advantages
  • In the US, improvements in reimbursement as clinical trials demonstrate the efficacy of treatments using the devices
  • US healthcare reform leading to medical insurance coverage for more people, allowing those suffering from intractable back pain to receive surgical treatment

As a result of aggregate growth and the differential growth rates of specific spine surgery product types, the landscape of spine surgery will change from 2011 to 2020. Although the aggregate growth is just under 7%, this is the net effect of all growth rates that range, individual product segments, from a decline of 5% in CAGR to an increase of over 30% CAGR.

 

Global Spine Surgery Market by Product Type, 2011 & 2020

Source: "Worldwide Spine Surgery: Products, Technologies, Markets and Opportunities, 2010-2020", Report #M520, MedMarket Diligence, LLC.

Spine surgery technologies gaining/losing ground on each other

One thing to keep in mind about the spine surgery market is that, without exception, each and every technology continues to grow from the underlying procedure volume and even if prices are declining (as they are in some cases) the resulting market is also increasing as a result of procedure volume increases.

Hence, for the sake of highlighting where the growth stands out, it is useful to see the change in each technology's share of the total market over the 2010 to 2020 period.

Below is illustrated the change in percent of total market between 2010 and 2020 for each of the key technologies in spine surgery. First among these in gaining relative share are lumbar artificial discs and posterior pedicle screw fusion systems.

 

 

Source: MedMarket Diligence, LLC; Report #M520, "Worldwide Spine Surgery: Products, Technologies, Markets and Opportunities, 2010-2020".

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Spine surgery largely unfazed by recent market challenges

Few medical device markets have demonstrated the kind of staying power — prices, procedure growth, market growth — shown by spine surgical technologies.  The swelling caseload of new patients, the persistent clinical need and the stream of innovations from manufacturers in this arena have enabled growth rates that have not recently been seen in most other device markets.

Of course, the market has been pinched by insurer pushback on some procedures (e.g., fusion when degenerative disc disease is involved), price pressures on some established devices and, in the U.S., regulatory reform that is long in coming.

A definite kind of demand inelasticity exists in spine disorders and trauma that has enabled it to be an area in which manufacturers have been able to succeed despite the capital restrictions and recessionary forces that have plagued markets since at least 2008.

Spine surgery technologies are comprised of the following discrete segments:

  • Posterior Pedicle Screw Fusion Systems
  • Anterior Cervical Plate Systems
  • Anterior Thoracolumbar Plate Systems
  • Anterior Lumbar Interbody Fusion (ALIF) devices
  • Transforaminal Lumbar Interbody Fusion (TLIF) devices
  • Posterior Lumbar Interbody Fusion (PLIF) devices
  • Axial Lumbar Interbody Fusion (AxiaLIF) devices
  • Interspinous Process Spacer (ISP)
  • Cervical Artificial Discs
  • Lumbar Artificial Discs
  • Vertebroplasty
  • Balloon Kyphoplasty
  • Allografts
  • Demineralized Bone Matrix (DBM)
  • Bone Morphogenetic Proteins (BMPs)

Below is an exhibit (drawn from the 2011 MedMarket Diligence worldwide report on spine surgery) illustrating the different growth in spine surgery technology segments.

Source: MedMarket Diligence Report #M520.

Posterior pedicle screw fusion systems currently represent the largest share of the global spine technology market, a dominance that will persist through the forecast period based on its large established base. However, as is evident in the uptake of new spine technologies, there is ample opportunity for participants in all but a few sectors that are declining in absolute or relative terms.

Spine surgery technologies: changes in market composition

 

Markets for products in spine surgery show a decline in spine fusion and total disc replacement, but an increase in intraspinous process spacers and nucleus replacement.  Although the exhibit below displays this only for Asia/Pacific markets, the trend is true globally.

asia-pacific-spine-fusion

Source:  Exhibit 3-107 is taken from MedMarket Diligence report #M510, "Spine Surgery: Products, Technologies, Markets & Opportunities, Worldwide, 2008-2017."

 

Despite the recent challenge to vertebroplasty, indicating that its results are equivalent to controls, kyphoplasty offers a more progressive approach, via balloon expansion, to disc compression.