Dive Brief:

• A survey of 200 U.S. surgeons by UBS analysts suggests orthopaedic procedure volumes will stay below 2019 levels throughout this year.

• The doctors polled online in February and March expect volumes to improve throughout the year but still be down 2% on the comparable period of 2019 in the fourth quarter. Volumes will only start exceeding pre-pandemic levels in 2022. 

• The surgeons, who are required to meet a threshold of hip and knee procedures performed, expect Stryker to pick up share in those markets but are downbeat on the prospects of Smith & Nephew in both segments.

Dive Insight:

Orthopaedic procedure volumes, and by extension sales of knee and hip implants, have been strongly dented by the number of COVID-19 cases. With vaccination campaigns now well underway, there are hopes that routine healthcare can resume in the U.S. and other key markets as this year progresses, delivering a boost to sales of the devices.

The UBS survey suggests it will be a bit of a slog to get back to 2019 levels. Collectively, the polled surgeons expect volumes to be down 16% in the first quarter compared to the same period of 2019. The surgeons foresee the shortfall compared to 2019 volumes shrinking throughout the year, going from 10% to 5% to 2% over the final three quarters of 2021.

In the longer term, success in robotics could dictate the winners and losers in the space. Forty-five percent of respondents named robotics as the tech they are most excited about, with 8% of the surgeons singling out Stryker’s Mako system by name. The UBS analysts said Stryker has the lead in large joint robotics but Zimmer Biomet, Smith & Nephew and Johnson & Johnson are all giving chase.

If Stryker can hold on to its early lead, it could capitalize as use of robotics increases in coming years. The surgeons expect use of robotics in total knee arthroplasty to increase from 17% to 36% over the next three years. Similar rises are forecast for total hip arthroplasty and partial knee arthroplasty.

Manufacturers of orthopaedic devices will compare their 2021 revenues to the pandemic-hit 2020. As such, the companies will achieve year-on-year growth even if volumes fall short of 2019 levels across 2021. The surgeons expect volumes to grow 5% above 2019 levels in 2022.

The industry-wide projections may mask considerable variation in individual company performance. The analysts tried to gauge the prospects of each company by asking the surgeons which they expect to gain and lose the most market share in the hip and knee markets. 

Stryker fared best in both markets. In knees, 37% of surgeons expect Stryker to gain the most share, while 9% expect it to lose the most share. The UBS analysts subtracted the losses from the gains to give Stryker a 27% net positive on the market share question. Zimmer had the next best net share gain figure, 16%, followed by J&J at 10% and Smith & Nephew at -2%. 

The hip data are similar. In that space, Stryker led with a 26% net share gain, followed by J&J on 16% and Zimmer on 10%. Smith & Nephew again lagged behind on -1%. 

Stryker performed similarly well on the hip and knee share gain questions on earlier surveys. Expected share gains could explain why consensus analyst estimates for Stryker hip and knee sales in the first quarter and full-year 2021 are higher than its peers. The UBS analysts said the estimates for Stryker “seem slightly high” but the numbers for Zimmer, J&J and Smith & Nephew look “doable.”