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Small Bone Innovations is bright spot in lagging orthopedic sector, bankers say
By Paunie Samreth, MergerMarket

July 30, 2009 - Small Bone Innovations, the privately held New York City-based medical devices company, is considered a target for the orthopedic industry, according to industry bankers. SBi was not available for comment.

SBi is a good fit for orthopedic companies such as Biomet, Stryker and Johnson & Johnson because the small bone-and-joint market, or the extremity market, is growing fast despite the recession, three of the bankers said.

According to several published reports, the extremity market is expected to grow 13% this year. By contrast, sales of products for implants in large joints such as hips and knees are struggling. Sales in the orthopedic industry have been softening for some time, with many patients choosing to wait for hip, knee and elbow replacement surgeries, one of the bankers said.

These are procedures that require a long recovery period and many people are wary about taking sick or vacation days during the current rough economic environment, the banker pointed out. The extremity market is still growing because it is considered an underdeveloped market, the three agreed.

Many of the larger companies such as Stryker, Zimmer and DePuy have an extremity division, but none of them is considered the clear market leader, said an industry analyst. SBi is a good fit for these companies because it has made a name for itself as a small bone-and-joint company. The extremity industry is competitive because there is a great deal of money to be made, and SBi is considered a market leader, the analyst said.

SBi completed a Series D round of USD 108m last month. Investors include Goldman Sachs; Khazanah Nasional Berhad, the investment arm of the Malaysian government; Malaysian Technology Development Corporation; The Family Office of Bahrain; Trevi Health Ventures; NGN Capital; 3i Group and TGap Ventures.




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