Globus Medical (GMED) acquired substantially all of the assets of privately-owned StelKast, manufacturer of implants and instruments for hip and knee replacement. GMED paid USD $24.1MM in cash, with an additional potential $4.3MM in product sales milestones. A robotic system for joint reconstruction applications is expected for commercial availability in late 2020.
The acquisition is the first part of GMED’s strategy to acquire implant and metallurgical technology with a proven safety record and long history of clinical use to combine with their robotic technology. The company seeks to build on its experience with robotics to expand into cranial procedures, as well as arthroplasty, with disruptive and differentiated products.
GMED has been developing a robotic system for total joints for the past several quarters, with an accelerated investment in the program during 1H19. The company doesn’t plan to aggressively ramp up commercial activity on the acquired hip and knee devices themselves until launch of the accompanying robotic system.
In response to questions about strategy, President and Chief Executive Officer Dave Demski remarked that with a strong core competency and team behind development (recall their acquisitions of KB Medical and Nemaris/Surgimap), they sought other ways to leverage robotic technology.
Further, when asked about developing a single platform with the ability to perform multiple procedure types with minor hardware changes (for instance, joint and spine), Mr. Demski suggested the benefits of keeping the system specifically tailored for each specialty. “I understand the value proposition…but I think that when you get into the dynamics of the accounts—the surgeons and the different specialties—getting them to share technology like that is a challenge, and you have to get them all to agree on which one.”
StelKast was established in 1992 to design, manufacture and distribute its own orthopedic implants. ORTHOWORLD and analysts estimate the company’s yearly revenue at ~$10MM, all in the U.S. Its portfolio comprises over 40 devices including modular hip stems, acetabular cups, posterior stabilizing and cruciate retaining knees and a revision knee. EXp Polyethylene Technology blends UHMWPE, antioxidant vitamin E and cross-linking for long-term oxidative stability, preservation of mechanical properties, etc.
Upon launch, the new Globus system will join others serving the joint replacement segment with robotic-assisted tools, such as Corin, Smith & Nephew, Stryker, THINK Surgical, Zimmer Biomet…and others that will surely emerge.