BERLIN, Germany – While American companies dominate the German market for orthopedic implants, German companies continue to grow aggressively winning customers worldwide by building on a reputation that is simply expressed as "Made in Germany."

Speaking with orthopedic companies at the German Orthopedics and Trauma Surgery Congress held here over the past week, the key words were innovation and niche to provoke discussions about strategies to cope in an increasingly competitive German market.

"As a German manufacturer I have to say the sales driven by Americans in Germany is impressive," said Thomas Güttler, director for product management in hip replacement for Aesculap AG (Tuttlingen).

"These are good companies, but they are earning high prices in the U.S. and then using that strength to buy market share in Germany, dictating the price pressure," he said.

He said that devices remain a profitable business for Germans as well, but that with thinner margins, Germans companies do not have the same resources available for surgeon support and marketing as their American-based counterparts.

"No one is losing money, he said, "but if we needed the same service level in Germany that is provided in the U.S., where there is a sales representative attending every surgery, then yes, we would be losing money."

Among the German-based companies, he said that for combined hip and knee implants Aesculap is the leader, followed closely by Waldemar Link GmbH & Co. KG (Hamburg) and then "about 20 more companies with sales less than $100 million."

Aesculap, owned by B. Braun (Melsungen), has secured a strong position in the German market with its innovative short stem hip replacement that contributes to the 15% share of the hip replacement market, according to Güttler.

The short stem hip has won an innovation clause exception to the German reimbursement system on evidence of its cost-effectiveness.

"Cost-effectiveness in innovation does not mean cheap," said Güttler explaining the procedure and the device result in better outcomes for patients and a healthier recovery for the patient, which saves money for hospitals.

He also said the company leads in orthopedic surgery navigation which is used only with the company's proprietary implants.

"We sell implants, not computers," said Güttler, who said another German company, BrainLab, is the open-source provider of navigation for other companies' implants.

Winning in the 'quality market'

Clicking off a list of export markets, Matthias Mertens, marketing manager for Waldemar Link, said the company leads in Spain, is among the top providers in Italy and is the leading exporter to China for hip and knee implants. "In China, the market is dominated by domestically manufactured cheap implants that run about $100 per implant," he said.

"We are positioned in what is called the quality market, which is experiencing double-digit growth and where we became the market leader in 2005," Mertens added, including products across the sector for hip, knee, revision and custom implants.

"In 2006, Zimmer [Warsaw, Indiana] took the lead, but we won it back in 2007 and this year we will increase the distance from Zimmer," he said.

"We entered the Chinese market 12 years ago and won very good relations with the key opinion leaders," Mertens said, adding that in 2009 a key customer for Link implants will become the president of the Chinese orthopedic association.

"This will positively affect the impact of Link products in the market," he said

The Chinese hold the "Made in Germany" brand in high esteem, he said and Link has successfully created a preference among surgeons for cast, and not forged, metal implants which have a 35% greater load transfer rating and are more fracture resistant.

Link presents the typical profile of a German company that is still family-owned and operated, and which has built its product portfolio by exploiting niche opportunities with innovative products.

Two niche areas where Link continues to lead in its native German market are custom implants and tumor implants. "Tumor is very challenging, as these are young patients around 14 years old who need flexibility in the implant, as their bones are still growing," said Mertens.

For revision knee procedures, he claims Link supplies 50% of the German market, "if not more."

The knee revision market was estimated to be more than 10% of the 160,000 knee surgeries performed in Germany in 2008, and Mertens said this trend is increasing rapidly, predicting it will reach 15% in the next two years.

"Revision surgery is very demanding, much more so than the primary implantation as you are now dealing with large bone defects. When there are such complications with a patient in Germany, the surgeon calls Link," he said.

The company's reputation also was enhanced by the Lubinus SP2 cemented total hip replacement implant that the Swedish hip registry recorded with a 98% survival rate over 25,000 implantations.

Mertens said Link has sold more than 450,000 Lubinus SP2 implants worldwide and it is regarded as an industry benchmark.

Also typical of the German profile, Link is a conservative player focused on checking each implant, "and not one in every 100," said Mertens, and not running after the next market trend.

"We did not jump on the hip-resurfacing trend," he said. "It was a technology we tried and rejected in 1976 because we were not convinced it was superior."

And, "we definitely have not jumped on this hype about a 'gender knee,'" he said disapprovingly.

"Zimmer is running around the market saying they have a knee designed for women, which we find curious, as two-thirds of the market is already for women, so it would seem they should be designing a different knee for men instead, as every company's products are already focused on women.

"Hype is fine if you are selling machines," Mertens said, "but here we are talking about patients."

Working niche opportunities with innovations

Another conservative, family-run German company that has been quietly growing over the past eight years by developing specialized products is Merete Medical GmbH (Berlin).

In its only report of performance in 2006, Merete said sales had increased 30% for each of the past three years and employment was up 50% to 60 people.

The company said employment was expected to grow to 130 people by 2011 with the addition of its €5 million ($6.25 million) facility in Luckenwalde that controls the entire production cycle from raw materials to finished implants.

Holger Finzel, head of sales for Merete, said through a translator that the company opened an office in New York in 2005 to support its sales in the U.S., and that sales have doubled each year.

"Prices in the US are three times higher than Germany," he added with a smile that needed no translation.

Merete also exports to hospitals in Poland, the Netherlands, Austria and Switzerland.

In Germany the company's lead specialty is hip revision where Finzel estimated Merete holds 15% of the market with 4,500 procedures annually.

Though the company's OsteoBridge long bone segmental defect fixation was approved by the FDA in May 2007, the first implant of the device was with a Kansas man in April 2008.

Fox News reported on this arm implant, the replacement of a cancer-ridden humerous with the Merete device as an alternative to amputation.

After removing the tumor, the OsteoBridge was attached to the remaining bone above and below the removed section of the humerous and adjusted.

Underscoring the success of working niche opportunities, Merete in the past several years has secured 38 patents and registered 58 brand names in its growing portfolio of products.

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