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New Product Launches Drive Stryker’s Growth and Profitability

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Aug. 24 2016, Published 11:50 a.m. ET

Stryker’s R&D strategy

Stryker (SYK) has a strong investment strategy with a focus on innovation. In addition to the expansion of its product portfolio through acquisitions, the company constantly aims to develop new products and enhance its existing products through internal R&D (research and development).

Stryker’s 2Q16 organic sales rose by ~6.6%. In 2Q16, Stryker invested ~6.4% of its sales in R&D. Stryker’s peers Medtronic (MDT), Abbott Laboratories (ABT), and Zimmer Biomet (ZBH) spent ~7.6%, 6.5%, and 4.6% of their respective sales on R&D in their last-reported quarters.

The iShares Edge MSCI Min Vol USA ETF (USMV) is a low volatility ETF composed of around 125 US stocks. USMV holds ~1.2% of its total holdings in SYK.

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Recent launches

On July 20, 2016, Stryker announced the launch of Episode Performance Manager (or EPM), a tool that helps healthcare providers to understand CMS (Centers for Medicare and Medicaid Services) claims data and identify cost improvement and efficiency areas in order to improve outcomes and profitability in the orthopedics business.

The tool enables the expansion of digital offerings by Stryker’s Reconstructive segment’s SPS (Stryker Performance Solutions) division.

In July 2016, Stryker launched SonicAnchor, a “soft tissue fixation system.” The technology uses ultrasonic energy for use in surgeries for extremities repair. The product is expected to yield improved surgery outcomes. It’s been specifically developed for surgeries that require the reattachment of tendon to bone, such as carpal ligament reconstruction, Achilles tendon repair, and digital tendon transfer.

Stryker received FDA clearance for its Tritanium Posterior Lumbar Cage on March 4, 2016. This is a device used for patients with degenerative disc disease, a back pain related to the loss of flexibility and cushioning. The device aids in lumber spinal fixation for patients.

In the Spine segment, Stryker also launched Aero-C, the enhancement of the company’s spinal implant Aero platform. It’s the company’s only straightforward anterior cervical discectomy and fusion device. It offers a more streamlined surgery approach compared to the screw-based technologies used traditionally.

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