Slow spine market growth to persist as insurers push back, UBS survey suggests

Dive Brief:

Analysts at UBS are forecasting 1% to 2% growth for the spine device market in the next few years as insurance companies continue to take a hard line on paying for procedures.
UBS expects Medtronic and Globus Medical to get a boost from their robotic and navigation offerings while Johnson & Johnson is seen as continuing to lose market share.
The outlook is based on the results of a 15-minute online survey of 123 spine surgeons and neurosurgeons conducted by UBS in May.

Dive Insight:

The spinal implant market has been a slow grower in the medtech sector for years, hampered by pushback from insurers, pricing pressures and what UBS calls “cannibalization” from competing neuromodulation treatments. Insurers want to see whether more conservative treatments have failed before authorizing spine surgery and are asking for more documentation, the analysts said. Spinal fusion cases received the most pushback in the survey.

Robots were used in about 12% of procedures among the surgeons surveyed. The doctors projected this figure would climb to 16% next year and increase to 25% in five years. Robotic surgery offerings from Medtronic and Globus Medical are generating interest, along with NuVasive’s newly introduced integrated hardware and software surgical platform, called Pulse, and Zimmer Biomet’s Rosa Spine, which will not likely launch until 2020. Zimmer's spine unit fell 6.2% in the most recent quarter.

UBS calculates the spinal implant market grew in the 2% to 3% range from 2013 to 2016, then softened even more in 2017, slipping to a growth rate of 1% to 2% that has persisted through the first quarter of this year. UBS expects that lower rate of growth to remain the norm and forecasts market share among companies will stay relatively stable.

“While we do not anticipate a large fall off in spine growth we think the market will likely grow very low single digits at best and think further slowing is more likely than acceleration,” the analysts wrote in a report published Tuesday.

UBS based its projections on its May survey of spine surgeons and neurosurgeons. The respondents performed an average of 278 spine procedures annually and expect to increase to 331 on average over the next 2 years.

The surgeons provided UBS with data on their mix of implants. Based on this input, J&J’s market share is seen slipping 1.5% over the next year, while Medtronic is seen gaining 1.1%. UBS noted that Medtronic’s Mazor robot sales are booked in the company’s brain division.

The UBS analysts estimated NuVasive's market share will edge up 0.9%. The company reported second quarter spinal hardware sales Tuesday of roughly $160 million, up about 6% from last year. "The results were all the more impressive given the flattish spine growth reported by others in the market," Jefferies analysts wrote in a July 30 note to investors.

Stryker could benefit from increased interest in 3D printed titanium technology, according to the analysts. Other large companies competing in the spine device market include Orthofix, SeaSpine and Alphatec.