The personal touch in the connected world: Ortho implants challenger Corin creates its own value pathway
Mid-size orthopaedic implants group Corin is back in the public eye after its recent purchase by a Permira-funded group. Now ready to embark on the next chapter of its development globally, it has a clear growth plan and a firm strategic line on both what it will and won't do as a business.
Corin Orthopaedics Holding Ltd was no slouch in press and PR department, especially in the early years of the new millennium, when its financial and hip and knee product news churn was often hard to keep up with. That changed in late 2012, when a consortium of private equity investors based mainly in Italy, set up the 2IL Orthopaedics vehicle to buy Corin for £30.5m ($48m). Corin then largely went under the radar and out of public view.
There was the odd news feed about big M&A (Tornier, among others), however, and the group kept growing its revenues – but did not disclose them. Global Strategic Marketing Director of 18 months Elvio Gramignano says that the Cirencester, UK company has seen CAGR organic growth of 24% in its combined hip and knee businesses over the past three years. Speaking to In Vivo at the start of what Corin sees as a new chapter in its development, Gramignano predicts sales of £125m ($166m) in a global orthopaedic implants market of $17.5bn in 2018.
This is a market growing at 3%-5% on the back of the higher health care spending required to meet the long-term needs of a growing, aging population and increasing obesity levels.
When Permira signed the definitive agreement in May to acquire a majority stake in Corin, it meant that CEO Stefano Alfonsi and other senior staff at the group could immediately adopt a more open approach. This, says Gramignano, is "somewhat liberating" and "very good for business," observing that the new owner was willing to commit on the investment required to enable Corin to deploy its total vision.
That vision is to: create a product portfolio that is superior or at least equal to those of competitors; leverage the concept of personalised health care in a unique way; and focus on patient information.
Equally clear is what Corin will not be pursuing, at least for the present. It won't be matching rivals' ambitions to produce all manner of different sizes and customised implants. It won't be going down the robotics route, which the company says is too expensive for health care systems just now – and also that it can achieve the same result whilst delivering greater value. And it has deliberately decided not to go into China or India, for the moment, as it wants to maintain focus on a limited number of core countries.
Patient information, personalisation and outcomes
Corin's method of deploying personalised health care is to focus on information about the patient, from biomechanics and physiology right down to the number of steps a patient takes before surgery and in recovery. Better outcomes can be achieved if the implant and the information are combined together in a package, says Corin. In addition, there will be potentially decreased costs due to the personalisation of the surgery, altered treatment pathway and reduced revision rates. "We are doing this with a clear eye to improving value" says Gramignano, "and we believe we may improve the outcomes without increasing the cost of the overall cycle of care."
He describes four pillars of focus for the company as it builds out is value proposition: personalisation of the surgery; developing technologies to power the implants; "connecting the dots" in an ecosystem concept; and using the information derived to deliver greater value in the healthcare sector worldwide.
Corin's fundamental aim is to revolutionise orthopaedics
Corin's fundamental aim is to revolutionise orthopaedics, says the Marketing Director, a business designed and built in the 1970-80s, and still managed more or less in the same way, as if we were still in the pre-connected world. Connecting the dots of information and updating them would allow a surgeon, nurse, radiologist or other healthcare professional to use a Corin app on a mobile phone or other device to view patients' X-rays, biomechanics information and logistics in real time. "For the orthopedic industry, this is a revolution, and to do this, we need to invest in information systems and technologies."
OPS™ sets the course for Corin
Corin actually started down this route in 2014, with its purchase of start-up company Optimized Ortho and its Optimised Positioning System (OPS™) system for total hip replacement. OPS™ has experienced very strong growth in its home market of Australia, and has been US FDA approved (although not yet for dynamic hip analysis), and launched in Europe (UK and Germany, and to be launched in France soon).
In Australia, the procedure has typically included a schedule of patients meeting the surgeon, and then three X-rays and a CT scan. Corin provides patient biomechanics information, and proposals on hip cup and stem positions, sizes, offsets and leg-lengths. A surgeon approves the final report and selects the implant. Corin 3D prints acetabular and femoral guides to guide the surgeon during the procedure. This procedure is currently available for the hip, but will be applicable to other joints, eventually.
The overall process is time neutral, ie it takes no longer than average surgeries, whereas a robot can increase the OP time by 20-30 minutes, Gramignano claims. The Corin system can provide improved outcomes for patients as well as cost savings. "We get it right first time, so we can expect increased survivorship and fewer complications." He adds, "This is what value in health care is about, it's the big issue." Use of the data derived from procedures and monitoring is a longer-term vision.
Right now, Corin is working on sharing more widely the insights that OPS™ generates. It already has a portal that connects the company, radiologists and surgeons. Alongside that, it has embarked on a new remote patient manager (RPM™) project, an app-based system that supports behavioral modification, providing detailed patient profiles and optimum treatment suggestions. The patients and surgeons are connected by telemedicine, allowing monitoring of the rehab of the patient.
A new logistics system, WebOPS, is being built to streamline and monitor the shipment of the implants and instruments to hospitals. The salesforce is also connected to this tool. It's a whole system transformation that Corin is now able to conduct under the watchful eye of all stakeholders.
Working with health care systems to reduce costs
As health care costs rise with the ageing population and the emergence of more expensive drugs. Corin sees a need to find ways of improving the outcomes while decreasing the overall costs. "Our thinking is to reduce the cost of the overall cycle of care by connecting all the information and providing it to all stakeholders, including patients, whose rehab tends to be better if they play a more active role. "We think we have a responsibility to work more closely with the players in each health care system."
Corin does not use individualised instrument kits per se, but based on the advanced OPS™ planning and statistical modelling is able to provide only those that are needed for a particular surgery, resulting in a massive saving on equipment costs, and on sterilisation costs at the hospital. A study in UK has shown that hospitals can save up to £200 ($264) per hip surgery on reduced sterilisation costs alone, if they use this type of system.
Corin is now creating the software to make the hip system available more widely. By 2019, it expects all its system components to be connected.
It believes OPS™ and its focus on and understanding of biomechanics to be "absolutely unique." For instance, nobody knows how far patients should walk after surgery to get the best result, says Gramignano. This has been impossible to track, but now devices can be connected, there is the possibility of tracking and gathering data and providing better information.
One possible hurdle up ahead is compliance with data protection rules. Corin uses HIPAA-compliant clouds for the RPM system, and this receives only anonymized data. "In the future, it is likely that we will be able to make educated predictions on outcomes based on the insights delivered prior to surgery."
Competing in a world of giants
Mid-sized companies do not have the power of the big boys in ortho, who can provide for multiple needs by way of bundled discounts. They typically have revenues in the multi-billions. "Are we competing with them? In some accounts, yes, but probably not overall," says Gramignano. But Corin is a fast-growing company, more than doubling in size since 2015 (sales of £50m), so there is a chance that it may quickly be viewed as a threat. "In five years, it might be different, but at the moment, we are a challenger."
Corin's response is to provide value, says Gramignano. Its task is deceptively simple: parachuting into the traditional model of health care, scrutinising the whole cycle of care, deriving information from wristbands and apps, examining the data, doing functional and dynamic analysis, planning surgery, sourcing just the implants and instruments needed, and lastly, monitoring patients' complete cycle of care from first clinical appointment through to post-discharge.
The hub is giving the right people the right information to allow them to take the right decision. Corin is already seeing results of its concept in Australia, where the Australian Orthopaedic Association National Joint Replacement Registry (AOANJRR) is showing that Corin implants are performing better than others and the OPS™ technology is certainly a contributor to this success. The Corin system referred to includes only OPS™ technologies so far, but "the data are there, and they show we are moving in the right direction."
Growth leverages past efforts
Corin scored 19-24% growth in 2015-17, and is targeting double-digit growth across the next five years, a performance that it says will be far in excess of the industry average. That would take Corin past the notional $200m sales threshold and that level of revenue is probably the threshold to go into the next phase, says Corin.
Corin was born out of the metal on metal (MoM) concept, and that is the reason for its early success and why it went to the stock market, scoring early market penetration with its Rotaglide+™ total knee, Uniglide™ unicompartmental knee and Cormet™ hip resurfacing. As is well documented, MoM hips were subject to a UK MHRA alert in 2010, and Corin has been one of the manufacturers to face legal action from implantees over the release of metal ion particles into the body, which can lead to severe soft tissue reactions.
But already in 2008, in the new orthopaedic environment, the company saw that it could not survive with only one main product, so started to invest heavily in broadening its hip and knee portfolio. "We are now reaping the benefits of that work" says Gramignano.
Key acquisitions have been made under the growth strategy, the biggest of which was the Tornier hip and knee assets in the wake of the Wright Medical/Tornier merger of 2015. That helped Corin to become the national No. 2 in hips and No. 3 in knees in France. Another acquisition brought MBA NV, the Belgian division of a Spanish distributor, into the Corin Group. Acquisitions will continue to be important in the future to expand the commercial footprint and add more value to support customers and support innovation. Including acquisitions, Corin grew 49% in 2017.
But all eyes are fixed on the Optimized Positioning System (OPS™) technology and the difference it can provide for Corin in the area of personalised care. Corin claims that the technology may presage one of the most significant changes to the way hip replacements are performed in more than 30 years. Corin unveiled the OPS™System at the American Academy of Orthopaedic Surgeons (AAOS) in San Diego, explaining that it challenges the traditional approach whereby surgeons place implants in generic safe zones. But this way implants can be positioned individually for each patient, which should help reduce the complication rate and even reduce wear leading to longer survival times.
"If you don't have good products, you're not going to play. But in the ortho environment, you don't win with the products only" – Elvio Gramignano.
The first US functional, patient-specific hip replacement procedures using OPS™ were performed in November 2016, shortly after FDA clearance. Gramignano is confident. "Our products do not differ that much to those at the top tier of the industry, but we can be different because we are providing deep insights to the surgeon through increased levels of patient information." He adds, "If you don't have good products, you're not going to play. But in the ortho environment now, you don't win with the products only."
Corin is this year also launching a 3D printed cup with a unique coating technology that provides the surface coating not only to the outer layer but throughout the porous strucutre. He is clear that the company is revolutionising orthopaedics with the combination of personalised care linked to connected information for delivery of greater healthcare value.
The immediate priority for the UK company is to advance the ecosystem concept, "connect the dots as it were", and be ready in 2018-19 with a system that is fully connected. A subsequent priority will be to prove out the same concept in knees. And the third aim is to maintain double-digit growth.
Corin describes itself as being very focused on a limited number of countries – the US, Japan, Australia, the UK, France and Germany. It is growing fastest in the US, due to the value associated with the proposal; and that the US links rehab to the overall cost of the cycle of care (spending less on rehab and/or eliminating readmissions confer significant advantages). Corin also has subsidiaries in Belgium, Italy, Austria and Switzerland. It is investing heavily in the manufacturing plant, automating as much as possible and streamlining processes from initial order to final delivery. It forecasts having some 600 staff by the end of this year, 350 of whom will be UK-based.