AAOS 2018 Annual Meeting

CMOs need structure as well as size & Constant growth in tough market conditions through 2020

CMOs need structure as well as size!

Written by John Brosky - 2017

The major orthopedic players continue to manufacture in-house at a higher rate than other industries.  Because they have no robust alternative for outsourcing to companies unable to absorb the volume. In the first part of this interview Ali Madani from Avicenne Medical suggests the need for bringing structure to the CMO sector.  Other key issues include:

  • The vast opportunities for growth in partnering with OEMs
  • Ali Madani, Chief Executive Officer & Founder, Avicenne ConsultingThe prospect of greater OEM divestiture of production facilities.

The market for orthopedic implants can be seen as mature with basic products that have reached the commodity stage of competition. Yet the orthopedic industry itself is relatively young, having emerged only 20 years ago, according to Ali Madani, the founder and managing partner of Avicenne Medical.

From this point of view, he says, the constant consolidation among contract manufacturing organisations (CMOs) over 15 years can be seen as the normal and healthy development of an industry in its adolescence. And like a teenager, we can expect to see continued, even faster expansion as this vital segment of the orthopedics industry strives to realize its full potential.

Zone de Texte: Ali Madani, Chief Executive Officer & Founder, Avicenne ConsultingAhead of the IMPLANTS 2017 conference on June 8 in Paris, Madani focused in this interview on a study of trends in outsourcing of product manufacturing by major orthopedic companies and he shares his perspectives on how the CMO market needs to evolve, and quickly, to capture a vast opportunity.

IMPLANTS: We have seen a non-stop expansion of a few major CMOs, Is there no end in sight?

Ali Madani: There has been a tremendous concentration among CMOs through acquisitions. Industry leaders like Tecomet, Orchid or Greatbatch have been built over 15 years by an aggressive acquisition of smaller contract Manufacturers. In fact, these companies are responding to a generalized and global manufacturing trend where the major OEMs [original equipment manufacturers] are pushing for more and more outsourcing of production.

IMPLANTS: Yet at the same time the major OEMs continue to expand their in-house production.

Madani: Because they have no choice! Because they do not see enough robust solutions coming from the CMOs to meet their needs. The players in the CMO space today are not structured enough to meet the real opportunity coming from the OEMs.  Yes, we have seen Tecomet, Orchid or Greatbatch, now called Integer, growing year after year through acquisitions, and we can expect this trend to continue, not only for the major players but among the medium-sizes CMOs as well.