Zimmer and Accentus Join Up – Analyst Blog

Recently,  a leading orthopedic medical devices company with primary focus on hip and knee implants, Zimmer Holdings (ZMH), entered into an agreement with UK based medical technology company, Accentus Medical. Following this agreement, Zimmer will use Accentus’ Agluna anti-infective technology for several of its products. Financial details of the agreement were not disclosed.

 

As per terms of the agreement, Zimmer will be able to utilize Agluna for joint reconstruction and trauma products. Moreover, the company has an 18-month option to acquire the rights for spinal devices, dental implants and sports medicines. The two companies will work together on further development of Agluna as well as for regulatory approval of products treated with Agluna in both the US and EU.

 

Agluna, a surface modification technology applied to medical devices manufactured from titanium and its alloys, is targeted at reducing infection following surgical procedures. It has been observed that medical device materials are often susceptible to colonization by bacteria, which can be avoided by using Agluna technology. This is significant because in the long-term, Agluna has the potential to reduce approximately $5 billion of costs annually arising from primary joint replacement.

 

 

Zimmer offers a broad line of reconstructive implant and trauma products, as well as orthopedic surgical instruments and supplies. The fundamentals underlying the orthopedic reconstructive industry remain strong. Moreover, an aging global population, obesity, proven clinical benefits, new material technologies, and innovation in surgical techniques will drive the company in the long term. Zimmer is on its way to experience market growth through the new product launches, employment of new technologies and expansion of its footprint in the booming Chinese market.

 

We expect the company to recover its market share losses as well as achieve an above average operating leverage going forward. However, we remain concerned about current macro environment and the pricing pressure.

 

We have a Zacks Rank #3 (short-term Hold recommendation) on the shares. We also reiterate our long-term Neutral rating.