Overview

In July 2016, Zimmer Biomet Holdings (ZBH) acquired LDR Holdings for around $1 billion, which helped strengthen the company’s spine business. It’s been one year since the acquisition, and the company has almost completed the commercial integration of LDR Holdings with the Zimmer Biomet Holdings and expects to begin capitalizing on the cross-selling opportunities. The sales channel integration is a key part of the process. The LDR acquisition contributed around 2.4% to the sales growth in 2Q17.

For details at the time of the acquisition, read Zimmer Biomet to Strengthen its Spine Business through LDR Acquisition.

How Is ZBH’s Spine Business Positioned a Year after LDRH Acquisition?

Spine business product portfolio and future outlook

With the acquisition of LDR Holdings, Zimmer Biomet Holdings acquired its market-leading Mobi-C CDR (cervical disc replacement) device. The product continues to generate significant demand in the market, boosting Zimmer Biomet Holding’s spine sales. The Vitality Spinal Fixation System, SternaLock Blu, SternaLock 360 primary closure systems, and the RibFix Blu Thoracic Fixation System are some of the other key products under the company’s Spine & CMF business segment that continue to show strong growth momentum. However, the product portfolio except non-Mobi-C has been facing some challenges through the integration due to the dis-synergies in channel integration. Zimmer Biomet Holdings expects its expanded spine business to register growth in 4Q17 and continue the growth momentum into 2018. To expand its spine business, Zimmer Biomet Holdings also acquired MedTech recently, which manufactures robotics technologies for brain and spine surgeries.

As per the company, the global spine market is worth $10 billion. Zimmer Biomet Holdings is one of the leading players in this market. With the completion of the integration of the LDR Holdings, it is further expected to register accelerated growth across the market segment as the company now offers a comprehensive spine portfolio. Major competitors of Zimmer Biomet Holdings in this market segment include Medtronic (MDT), Depuy Synthes, a subsidiary of Johnson & Johnson (JNJ), and Stryker (SYK).

For exposure to Zimmer Biomet Holdings, while diversifying the company-specific and industry-specific risks, investors can invest in the iShares Russell Mid-Cap Value ETF (IWS). IWS holds ~0.62% of its total holdings in ZBH.

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