Stryker to buy Small Bone Innovations for up to $375M

Stryker will add the world's only PMA-approved, cementless, three-piece total ankle replacement system to its portfolio with its acquisition of Pennsylvania's Small Bone Innovations for up to $375 million in cash, the company announced June 30.

As its name suggests, privately held SBI focuses on small joint replacement in the body's extremities. The Scandinavian Total Ankle Replacement System (STAR) is the most published total ankle replacement device in the world, Stryker says. In 2009, it was indicated for use as "a non-cemented implant to replace a painful arthritic ankle joint due to osteoarthritis, post-traumatic arthritis or rheumatoid arthritis," according to the FDA.

"The addition of the STAR Ankle strengthens our product offering in this fast growing business, and demonstrates our continued commitment to growth in this segment and more broadly in extremities," said David Floyd, president of the orthopedics group, in a statement. "We are dedicated to providing our Foot & Ankle customers and their patients with a complete set of solutions for their clinical needs."

Stryker's product list indicates that it has a variety of plates, screws and nails for foot and ankle surgery, but no total replacement product. The company says the purchased products had about $48 million in sales in 2013. Stryker also adds products in the finger, wrist and elbow segments.

Much of the focus remains on the larger markets for hip and knee replacements, but the extremities segment is growing faster and the Millennium Research Group estimates the U.S. market will be worth $4.2 billion in 2016.

The transaction does not measure up to Stryker's rumored interest in Smith & Nephew, but still provides another fine example of the consolidation in the orthopedics space. It shows hospitals' desires to purchase fewer models of the same type of implant in bulk in order to cut costs. SBI will give Stryker more opportunities to capitalize on the trend by bundling products.

Stryker's trauma and extremities products contributed $288 in Q1 2014 revenue out of a total of $999 million for its reconstructive division.

- read the release

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