is globus forming a truama line?

They are 3rd party reps that DePuy Synthes is hiring in large quantity to slowly phase out SC's. They have no benefits and their cost is a fraction of an SC's. They aren't JnJ employees. Believe they've hired about 200 as of now, and plan to hire another 200 in 2017. They will eventually comprise over 90% of "sales" force and reduce Depuy Synthes total commission payouts by over 75%, which is currently the largest line item on their P&L ledger

 

dumb move, no value proposition for globus to get into trauma

 

could be a smart move. choose a few key procedures and come out with something unique. a good prox humerus plate, distal radius and prox tib plate, a simple basic screw set and just cherry pick key cases to get to 100 Million in sales in 3 years. dont neeed to try to become the gorilla. surgeon loyalty has evaporated as depuy botched the entire synthes intergration and killed all those long, hard earned relationships.

 

Agree with your strategy if that was what they were actually up to. According to those who've seen their strategy and products up close, there's nothing special, just me too generic equivalents. If true, price will be their only lever. Good luck with that. The market is flooded with wanna be niche players. Besides if they don't have a complete portfolio, they will have a hard time getting in most hospitals. Hospitals are trying to reduce vendors not add them. They are looking for companies able to displace current vendors at lower prices not ankle biters to nibble around the edges.

 

But consider their first set of Spine products were nothing special, yet they were @ $200 million in sales fairly quickly.

 

Trauma is a different game. Just think, if they've hit the wall in spine and can't grow...why do they think they can be a factor in an even tighter market. Innovation is always the answer but they are not innovating.

 

what makes you think they hit a wall in spine. From where I sit they are making the most growth, with Nuvasive a close second. The rest are struggling to hold on.

 

You guys are missing the big picture. The whole idea in entering the trauma space is not to overtake DS. It's to become more appealing to potential buyers. Globus is very much available to be purchased, but they're stuck between being too small for a quick M&A and not big enough to justify actually buying smaller players themselves. Getting into trauma simply makes them more attractive to a larger vendor looking to enhance BOTH their trauma and spine portfolios.

 

Get off the Synthes board Dan, you no longer work here!

 

Exactly right. They couldn't care less about DS, only about growing Globus and making more money. And if they happen to cut into DS' wallet while making themselves more attractive to be acquired, so be it.

 

The only companies acquiring orthopedic companies are orthopedic companies. Anyone interested in buying Globus would not be interested in their emergence as a trauma player. Trauma will be dilutive to their bottom line for years if not forever and actually cost them at the negotiation table. This is a bad move. They should have sold out at peak market cap. Overseas generics have hit our shores and gaining strength. Pricing in spine could go down 75% from current levels in the next 5 years. The collapse of pricing will destroy shareholder value for all companies highly leveraged to sell implants. The big companies all see the writing on the wall and are aggressively experimenting with repless models to reduce their single greatest variable cost: REPS Time to go get some skills in another vocation - this is not your father's orthopedic industry!

 

Amazing....J&J management has no idea that these agency reps will never be able to replace reps with relationships. Does Synthes realize that the RMs who have left their position for "development' positions outside of Trauma are most likely going to be the first ones to jump to Globus?

 

DG is a nice guy but will ultimately fail. He's a product of nepotism and really never built anything on his own. His style can best be described as "get along to get by". That might have worked at Synthes during its high growth years when everybody looked good. These are different times and Globus is not Synthes. Wyss was impatient but had a long term outlook. Paul is impatient and has a short term outlook. J&J has ruined Synthes, no doubt. But that does not mean Globus will be the benefactor as marketshare shifts. DG will be sacked when they are nowhere near where they expect to be in 2-3 years. He's still better off than sticking around to witness the wrecking ball finish off the once dominant Synthes empire.

 

You are right that hospitals are looking for bottom line lowest price. However, amongst the GOOD consultants, price is easily overcome due to solid relationships. The GOOD consultants laugh when people say price is the barrier. Understand that it is these exact consultants that Globus is after. They aren't looking for guys to win on price because they themselves don't plan on fighting with price. They want Synthes consultants with relationships because that's how they plan on winning: relationships. Not saying their plan will or will not work, just saying that that's their identified strategy.

 

I've seen this with J&J before. The one and only focus is on cost savings. They don't even entertain the possibility that this change in philosophy will negatively effect the top (sales) line.

 

There are maybe 50 SC's left at Synthes who have the influence to truly flip an entire account. Of those 50, how many do you think will really be willing to go join a startup like Globus trauma? Unless there is some sort of otherworldly comp offer, don't see it happening.

 

The comp offers will be huge and Globus will get a fair amount of top-end SC's. Keep in mind, Synthes isn't the only company where the elite SC's work. They also don't need to flip entire accounts. Even with price erosion Trauma product is still very high margin. And maybe most importantly, J&J isn't done fucking with us.

 

been in the business a long time and never seen a Synthes rep move to a competitor and convert significant business. It's a myth the business moves with the rep. Many legacy Synthes reps are talented and hard working. The smart ones know they are not bigger than the game and will never leave no matter how bad it gets under J&J. They know the business won't port with them. Besides, they are counted down their years to retirement not looking to start over. Globus may guarantee some of the holdouts big $$$ to come over but it's a failed strategy. Just ask Zimmer, Biomet, Smith & Nephew and Stryker. Big guarantees, massive upfront consignment costs and dirt cheap pricing is not sustainable for long.

 

You nailed it. The market has changed and trauma is not spine. Besides most hospitals have never heard of Globus and not about to trust acute care to an unknown and unproven entity. There's no questioning DePuy Synthes is losing share in trauma but mainly to the other major players. By the time Globus figures which way is up, the major redistribution of share up for grabs will already be locked down by the other players. My bet is on Zimmer Biomet finally figuring out how not to trip over themselves and you can rule out Stryker. It will be a 3 horse race. Stryker will probably buy Smith & Nephew. Fun to speculate.

 

I agree and I doubt Globus would jump into this market if they didn't think there was opportunity. Remember, success is relative. They don't need to be Synthes. If they can get close to Stryker, that would be a significant win for the company. They will pay very good commissions.