1. Situation Analysis:
A. Nature of Demand
The products in discussion are ‘bioresorbable’ internal fixation devices. These devices are surgically placed to stabilize broken bones, aiding in allowing the body to heal itself.
Internal fixation devices in the past had been made of stainless steel or titanium, but with problems resulting from those permanent devices, an innovative approach is being considered. Bioresorbable implants are a possible replacement to the original implants that would eliminate the need for removal, which has shown to be a problem for traditional implants.
The Association for the Study of Internal Fixation (AO) formed in 1958 to improve and standardize the state of internal fixation. Over time, companies were formed to help the AO vision, with Synthes forming to serve and distribute to North America.
Synthes management asked a Harvard Business Team review board to evaluate the potential for moving forward with bioresorbable internal fixation devices. The purpose of this case was to see how feasible and beneficial it would be for Synthes to enter the bioresorbables market.
B. Extent of Demand
In 2000, internal fixation device sales were near 541.5 million dollars, with an additional 5% annual growth. In cases of trauma where there was damage that required aligning bones, most often internal fixation devises were needed. Some of the parts included in this were plates, rods and screws.
The use of the stainless steel or titanium products was vital to surgeons. They were also had a feasible price. The need from bioresorbables came from the implants needing to be removed. The need for removal is based on varying factors. Pain the patient deals with, visibility, and the fear of metal in the body. Growth could also be hindered in children due to leaving it in. Another concern with leaving them in is it could interfere with X-rays and MRI’s.
C. Nature of Competition
Synthes had stayed in the shadows in bioresorbable products, while other competitors had stepped up to the plate in advance. The HBS had established three different groups to categorize the competitors. Heavyweights included companies that were huge producers of orthopedic devices and had running marketing lines of bioresorbable implants. Johnson and Johnson was one of these. They had pioneered bioresorbables with their Orthosorb pins in 1987. At 2001 tallies, J&J was highly invested in bioresorbable technology.
Biomet was another heavyweight. Although they are smaller than J&J, they still had a strong pull on the market. In 2000 they neared one billion dollars in sales focusing in trauma, maxillofacial and joint replacement. Their strongpoint is the introduction of ReUnite line, which is so far the most extensive line of bioresorbables on the market.
Specialists are competitors that make only bioresorbables. These include Bionx and Macropore, with both companies’ sales totaling 3.6 million dollars.
Smith & Nephew is considered a potential competitor; not yet having the power to be a strong competitor, but definitely having the potential to get there soon.
D. Environmental Climate
Technological trends continue to advance. Competitors in this field have put much emphasis into advancing polymers research. With Johnson & Johnson and Biomet already having lines of bioresorbable products on the market (Orthosorb and ReUnite, respectively), competition is investing time and money into the advancement of implant material, which makes for a competitive climate.
Technology is ever-improving. After the first and second generation polymers, advancements in materials are improving, regardless of whether Synthes joins in on the advances or not. It is possible for another company to be in the process of making advanced product, and have the competitive edge over Synthes.
E. Stage of Product Life Cycle
According to Wasson’s Market Life Cycle, Synthes has...