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The top 30.

16. Novartis (Alcon)

$5.3 Billion ($58.6B total)


Joseph Jimenez, CEQ, Novartis

Kevin Buehler, Division Head, Alcon

Ed McGough, Sr. VP, Global Manufacturing & Technical Operations, Alcon

Dr. Sabri Markabi, Sr. VP, Research & Development and Chief Medical Officer, Alcon

Erwin Vanhaecke, Ph.D., Sr. VP, Global Quality Operations, Alcon

Stephen Wilson, VP of Global Compliance, Alcon



Forgive the pun, but you might say that pharmaceutical giant Novarits saw the light with its purchase of eye product heavyweight Alcon.

Novartis began buying interest in Fort Worth, Texas-based Alcon from multinational food conglomerate Nestl6 in 2008, but sealed the deal for total control in April 2011 to the tune of nearly $13 billion. Once the deal was sewed up, Alcon became Novartis' second-largest division. It also was the company's fastest-growing unit for the 2011 fiscal year, ended Dec. 31.

Alcon recorded net sales of $10 billion, a 10 percent increase on a pro forma basis, driven by strong global Ophthalmic Pharmaceuticals product growth of 12 percent, Surgical products growth of 11 percent, and by the top six emerging markets (led by China, South Korea and India), which grew 26 percent compared with 2010.

While 3.9 billion in Alcon's sales are the result of the company's Ophthalmic Pharmaceuticals segment, Alcon's largest slice of revenues comes from device-related products such as contact lenses and surgical systems.

Global Surgical net sales were $3.6 billion, an increase of 11 percent over the previous year. Emerging markets grew strongly, while intraocular lens unit sales (IOL) in the United States showed slower growth versus 2010. Global sales of advanced technology intraocular lenses rose 16 percent, mostly due to strong sales of the AcrySof IQ Toric and AcrySof IQ ReSTOR+3.0 intraocular lenses, the company reported. The successful launch of the LenSx femtosecond refractive cataract laser, with more than 500 surgeons now trained to use the technology, expanded the cataract surgical market opportunities for the company. The Constellation vitreoretinal surgical system contributed strong sales growth within the vitreoretinal category. Strong growth in the refractive segment was driven both by sales of equipment and increased market share in the United States.

Global net sales of Vision Care products rose 5 percent in FY11 to $2.4 billion. Contact lens growth was driven by the continued strong performance of Air Optix, which according to Alcon leadership, leads the marketplace in the multifocal segment and achieved 18 percent growth compared with the previous year, and by strong growth of "Dailies" (disposable contact lenses for daily use) in the United States. Sales of contact lenses were impacted by the discontinuation of the firm's specialty contact lens business as well as slower market growth in European countries. Contact lens solutions sales were led by strong growth of the Clear Care hydrogen peroxide solution, offset by weakness in the category for multi-purpose product sales.

Excluding pharmaceutical sales and contact lens solutions, Alcon's device-related business totaled $5.3 billion for the fiscal year.

Executives at Novartis and Alcon often reference the synergies that made the marriage of the two companies a good match. But for Novartis, part of the appeal was the demographics and market potential fueling the ophthalmic sector.

"Several hundred million people around the world live with blindness or serious vision impairment," Alcon Division Head Kevin Buehler said during a company leadership conference, "but 80 percent of all visual impairment can be prevented, treated or cured."

Globally, uncorrected refractive errors are the main cause of visual impairment and cataracts remain the leading cause of blindness. About 90 percent of the world's visually impaired live in developing countries, according to the World Health Organization. By 2020, the Institute of Eye Research estimates 2.5 billion people worldwide will be affected by myopia (nearsightedness) and 60 million people are expected to have open-angle glaucoma, the second-leading cause of blindness after cataracts. By Novartis estimates, ophthalmology is a $30 billion industry and growing about 5 percent per year

"These numbers are staggering, and as an industry we have just started to address these clinical needs. As the leader in eye care, Alcon must strive for breakthrough innovations that bring relief to millions of patients," Buehler added. "There is potential to accelerate growth and access to treatment in each of our businesses and in every region of the world.

We have a unique opportunity to build a division where one plus one translates into a number much bigger than two."

Buehler said that while Alcon clearly has already benefitted Novartis' bottom line, there's still a lot his company can learn from its new parent.

"Productivity has not been a core strength at Alcon," he acknowledged. "It is something that we hope to learn from Novartis. We obviously can benefit from procurement efficiency and also leveraging our manufacturing footprint."

Novartis CEO Joseph Jimenez wrote in a letter to shareholders that the Alcon acquisition primarily was about long-term growth, not cost synergies.

"In eye care, just as with other Novartis segments, innovation is the key driver of success. The aging population and areas of significant unmet medical need make it likely that eye care will remain an industry with strong growth well into the future," Jimenez wrote. "The Alcon Division adds another growth platform to Novartis, and we expect that, because of the complementary nature of Alcon and Novartis, the companies will grow faster together than they would have otherwise."

Alcon plans to invest more than $5 billion in research and development (R&D) over the next five years, which the company claims is the largest corporate commitment to R&D in the eye care industry.

During 2011 Alcon introduced the LenSx Laser that delivers the accuracy of a femtosecond laser to refractive cataract surgery. The LenSx Laser is designed to predictably perform many of the most challenging aspects of traditional cataract surgery with highly reproducible computer precision, according to the company. Alcon bought LenSx Lasers Inc., a privately held company based in Aliso Viejo, Calif., for $361.5 million in cash in 2010.

For Novartis overall, net sales rose 16 percent to $58.6 billion, with a positive currency impact of 4 percent from the weakness of the U.S. dollar against most major currencies during much of 2011. Recently launched product sales grew 38 percent compared with 2010 to $14.4 billion, in large part thanks to the addition of Alcon. Net income decreased 7 percent to $9.2 billion, more than the decline in operating income as a result of lower associated company income, and higher financing costs following the Alcon acquisition, partly offset by a lower tax rate 14.2 percent. Earnings per share declined 11 percent, more than the decline in net income, mainly as a result of the increase in issued shares following the Alcon merger.

17. 3M Healthcare

$5 Billion ($29.6B total)


Inge G. Thulin, President & CEO

David W. Meline, Sr. VP & Chief Financial Officer

Brad T. Sauer, Exec. VP, Health Care Business

Frederick J. Palensky, Exec. VP, Research & Development and Chief Technology Officer

John K. Woodworth, Sr. VP, Corporate Supply Chain Services

Hak Cheol Shin, Exec. VP, International Operations

Roger H.D. Lacey, Sr. VP, Strategy & Corporate Development

NO. OF EMPLOYEES: 84,198 (total)


"Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth."

--Peter F. Drucker

Inspiration is a fickle beast. It seldom arrives by invitation, preferring instead to surprise its hosts with intrusive entrances amid ordinary places or circumstances.

The beast certainly followed protocol when it showed up on Arthur Fry's doorstep in 1973.The 3M scientist was singing in his church choir when he had perhaps the greatest idea of his professional life.

Frustrated by the scraps of paper he used to mark his church hymnal (the makeshift bookmarks always moved around or fell out), Fry had long been searching for a better page-marking system. On the day inspiration struck, Fry remembered a work seminar he attended on a unique adhesive developed by another 3M scientist named Spencer Silver. The adhesive was strong enough to cling to objects but weak enough to allow for a temporary bond.

If Silver's adhesive could be coated on paper, Fry theorized, then it would certainly hold a bookmark in place without damaging the page on which it was placed.

The next day, Fry requested a sample of the adhesive. He began experimenting, coating only one edge of the paper so the portion extending from a book would not be sticky. Fry used some of his experiments to write notes to his boss, leading him to broaden his original idea into the concept that eventually became the Post-it note.

Fry came up with the now iconic product during his "15 percent time," a 3M program that allows employees to use a portion of their paid time to chase rainbows and hatch their own ideas. While it may seem like an wasteful employee perk, the program actually has produced many of the company's best-selling products and has set a precedent for some of the top technology companies of the day, such as Google and Hewlett-Packard.

The program also has kept the company focused on innovation, which executives believe is the path to future prosperity.

"We can neither save nor spend our way into prosperity, but we can and must imagine, innovate and invest our way there. It is the only thing which guarantees success," 3M Chairman, President and CEO George W. Buckley told shareholders in his farewell letter included within the company's 2011 annual report. Buckley retired in February 2012 and was succeeded by Inge G. Thulin, a 32-year 3M veteran who most recent served as executive vice president and chief operating officer.

"An innovative company cannot be built just on inanimate lab work or mathematics alone," Buckley's letter continued. "It is built on a belief in the power of R&D, belief in the people doing that kind of work and a deep conviction that the collective power of their imagination and creativity will generate future opportunity and financial betterment for the company."

Imagination and creativity certainly have been well-rewarded over the last several years: The global technological conglomerate responsible for such revolutionary inventions as masking tape, dry-silver microfilm and immune response modifier drugs increased its research and development spending by 21.4 percent since 2009. Last year, R&D funding climbed 9.5 percent to $1.57 billion, the highest total in at least six years.

Such investment in future innovation indubitably contributed to the company's growth since the depths of the Great Recession. Net sales jumped 11.1 percent last year to $29.6 billion and operating income rose 4.4 percent to $6.1 billion, according to the firm's 2011 annual report. Since falling off a proverbial cliff in 2009, 3M's earnings have rebounded significantly--sales have skyrocketed 28.1 percent, operating income has swelled 28.3 percent and net income has ballooned 34.1 percent.

The company's Health Care segment earnings have followed the same trajectory; sales have grown 17.2 percent and operating income has risen 10.3 percent over the last three years, 3M financial data indicate. The segment, which makes surgical supplies, food safety products, inhalation and transdermal drug delivery systems, and oral care products (among others), was one of three divisions to report a double-digit revenue increase in 2011 (the others were Industrial and Transportation, which posted a 19.5 percent sales hike, and Safety, Security and Protection Services, which recorded a 15.2 percent increase). Sales jumped 11.5 percent to $5 billion, due partly to foreign currency exchange rates and demand for products inherited in the 2010 acquisition of Arizant Inc., an Eden Prairie, Minn.-based manufacturer of blankets and hospital gowns that keep patients warm on the operating table and guard against hypothermia. Executives estimate the Arizant acquisition contributed 1.2 percent to the Health Care sector's revenue growth.

Operating income in Health Care rose 9.3 percent to $1.5 billion last year but income margins were down--29.6 percent compared with 30.2 percent in 2010. Executives attributed the decrease in part to growth investments in the health information systems and infection prevention solutions.

Those investments include a collaboration with Cap/, Ill.-based Sage Products Inc. to help minimize the risk of healthcare-associated infections. 3M also agreed to sell Sage products in certain international markets.

Another significant infection prevention investment that took place in 2011 (year ended Dec. 31) was the development and market release of the 3M Clean-Trace Hygiene Management System, a tool that can help hospitals assess surface cleanliness in less than a minute. The Clean-Trace System detects adenosine triphosphate, a substance in all living cells that is found on any contaminated surface.

The company's Health Care sector also unveiled a new mobile software system for doctors that enables them to manage their daily schedule, review patient information, dictate progress notes and log charges. The 3M Mobile Physician Solution also provides instant access to patient information from any location. Upon its release in May 2011, 3M touted its physician-oriented software system as the "industry's first mobile solution to offer comprehensive intelligent coding advice to physicians as they capture and record professional fees."

$4.3 billion Amount returned to 3M shareholders through dividends and share repurchases in 2011.

18. Toshiba

$4.6 Billion ($74.4B total)


Atsutoshi Nishida, Chairman & Director, Toshiba Corp.

Satoshi Tsunakawa, President & CEO, Toshiba Medical Systems Corp.

Toshiya Miyaguchi, President, Toshiba America Medical Systems

Kevin Abbott, Sr.VP, CFO & Treasurer, Toshiba America Medical Systems

Donald Fowler, Sr.VP & General Manager, Toshiba America Medical Systems

Doug Ryan, VP,, Marketing & Strategic Development, Toshiba America Medical Systems

Scott Goodwin, VP of Sales, Toshiba America Medical Systems

NO. OF EMPLOYEES: 210,000 (total)


At 137 years old, Toshiba Corp. is at the top of this list as far as venerable multinational conglomerates go. The healthcare arm of the global electronics giant Toshiba--Toshiba Medical Systems Corp.--manufacturers diagnostic imaging (cardiovascular X-rays, computed tomography imaging, magnetic resonance imaging, and ultrasound). Much of the company's business comes out of its North American base, Toshiba America Medical Systems, in Tustin, Calif. The medical division barely is mentioned in detail in the company's annual financial reports, but it's certainly doing a robust business.

Overall, Toshiba Corp. net sales for the 2011 fiscal year (ended March 31, 2012) were $74.4 billion, a decrease of approximately $3.6 billion compared to the previous year's sales. The company cited appreciation of the yen, the Japan earthquake and floods in Thailand as major factors impacting financial performance for the year. Operating income was $2.5 billion, a decrease of roughly $400 million. Net income for the year was $1.9 billion, a decrease of $523 million.

The company reported that its medical sales division inked "steady increases" in business for FY11. The company had $4.4 billion yen in sales, an increase of 23 percent (in yen).

Toshiba America Medical Systems made a number of key strategic hires throughout the fiscal year.

In April last year, two key hires were made. Stephen Bumb was named director of the company's X-ray Vascular Business Unit. As the new director, he is responsible for implementing strategic and tactical marketing plans to drive growth. He also interfaces with the global business unit at Toshiba Medical Systems Corporation to communicate the needs and requirements of the U.S. market. Prior to joining Toshiba, Bumb was the marketing director for Edwards Lifesciences Critical Care in Irvine, Calif. In his time there, he was key in the development and operation of a comprehensive, nationwide clinician education program, the re-engineering of the company's sales training program and development of a new sales channel, contributing to a 30 percent annual growth for two new market development-stage products. He has also held executive positions at Imagyn Medical Technologies and Vascular Control Systems Inc.

At the end of the month, Donald L. Fowler was brought on board as general manager and senior vice president. In this role, Fowler is responsible for driving the growth of Toshiba's multimodality business in the United States. He oversees sales, marketing, service, finance, human resources and information technology functions.

"Mr. Fowler has had an impressive career in diagnostic imaging," said Toshiya Miyaguchi, president, TAMS. "His multi-functional, multi-modality experience, as well as his history leading a $2.5 billion dollar business, make him a great fit for this position."

Prior to Toshiba, Fowler held the position of vice president of MR Business Unit at Siemens Medical Solutions USA.

In June, the company announced that Guy Poloni, Ph.D., had been named product manager for the Vantage Titan 3T MR system. In his new position, Poloni develops and implements product marketing strategies and programs for the system, and is helping to launch the product, which at the time of his hiring was pending 510(k) clearance. Prior to joining Toshiba, Poloni worked as Sequence Development Unit Director at Buffalo Neuroimaging Center at The Jacobs Neurological Institute in Buffalo, N.Y. Poloni has received numerous research fellowships and has co-authored multiple articles for medical journals, such as The Neurologist and European Journal of Paediatric Neurology. He holds a doctorate and a master's degree in theoretical physics and a bachelor's degree in physics from the University of Milan in Italy.

In August, Toshiba America Medical Systems named Scott Goodwin vice president of Sales. He oversees CT, MR, X ray/vascular and ultrasound sales field operations, sales and customer training and applications. Goodwin joined Toshiba after two years with Philips Healthcare as general manager, Nuclear Medicine Business. Prior to that, he worked for Siemens Medical Solutions as general manager, Western Zone Sales. During his nearly 20 years at Siemens, Goodwin held the positions of vice president, CT Business Management; national sales director, PET/CT systems; as well as several other sales-related positions.

What's immediately notable about Toshiba Medical Systems is the firm's steady stream of new product introductions. And FY11 was no different.

On April 14, 2011, Toshiba introduced upgrades across its ultrasound product line. The recently added features available on the Aplio XG, Aplio MX, Xario XG and Viamo systems include Auto IMT, 4-D imaging improvements and workflow protocol enhancements. Additional upgrades to the Viamo include ApliPure, TissuePure imaging and DICOM structured reporting. Auto-IMT can determine the thickness of the near and far arterial walls from three segments of the carotid artery at an optimal angle of incidence and two complementary planes, according to the company. Auto-IMT traces the two complementary planes automatically and calculates the distance between them in order to help with early detection and monitoring of cardiovascular disease. AutoIMT uses the collected images following the American Society of Echocardiography's consensus statement for the diagnosis.

During biopsies, 4-D imaging allows for more accurate guidance of the biopsy needle. Precise visualization of the needle path creates safer exams and reduces potential complications. Workflow enhancements include protocols that standardize image output and increase exam efficiency by reducing the number of tasks per exam, according to the company. Sonographers have the ability to add custom annotations and reshuffle images as well as being able to exit the protocol when additional images are required and re-enter at the same place to continue the protocol with just the click of a button.

Upgrades to the Viamo include ApliPure, TissuePure Imaging and DICOM structured reporting. The new upgrades enable clinicians to perform advanced exams with greater image definition and clinical accuracy without compromising on patient access, making it well-suited for high-end radiology, vascular, and OB/GYN exams and procedures at patients' bedsides. A new 40-centimeter depth setting allows improved imaging of patients that traditionally have been difficult to image.

In August, the company rolled out the U.S. Food and Drug Administration (FDA)-cleared HDR-08A Imaging System that offers Toshiba's Kalare R&F technology with a new user interface and more advanced image processing, increasing the dynamic range of fluoroscopy. With these new system features, according to the company, clinicians can obtain more information from the images, resulting in quicker, more accurate patient diagnoses.

In September, the company's M-Power magnetic resonance (MR) imaging interface received FDA clearance. M-Power is a customizable MR system user interface designed to allow users to streamline and accelerate scanning processes and enhance diagnoses. M-Power is available for use on Toshiba's Vantage Atlas, Vantage Titan 1.5 and Titan 3T MR systems.

November brought with it FDA clearance of the Aplio 300 ultrasound system.

"The Aplio 300 combines powerful visualization capabilities, workflow automation tools and better ergonomics for more accurate diagnoses and better patient throughput," said Tomohiro Hasegawa, director, Ultrasound Business Unit, Toshiba. "The system meets a variety of needs, making it an essential ultrasound system for today's healthcare environment." The system is smaller and designed for high-volume ultrasound exams, including radiology, OB/GYN and cardiovascular.

Also introduced in November of fiscal 2011 was the Vantage Titan 1.5T MR Series.

The start of 2012 included FDA clearance of the Aquilion Prime CT system, the latest addition to the Aquilion CT product line and part of Toshiba's "ONE Family" of CT scanners. The system can generate 160 unique "slices" per rotation, enhancing imaging. The Aquilion Prime was designed for healthcare facilities that need to perform a wide variety of advanced clinical examinations and produce high-quality clinical images with reduced radiation exposure.

"The combination of the 0.35-second gantry rotation speed and the state-of-the-art reconstruction technology allows many examinations to be performed and reconstructed in mere seconds, improving patient care and overall departmental efficiency," said Joseph Cooper, director, CT Business Unit, Toshiba. "That, along with standard patient safety features ... helps clinicians acquire quality images while attempting to minimize radiation dose as much as possible."

Though clearly busy on the new-product front, Toshiba executives weren't too busy to look for some inorganic growth.

In April 2011, the company purchased Minneapolis, Minn.-based Vital Images Inc. in an all cash deal for $273 million ($18.75 per share).

"After a decade-long successful partnership spanning more than 50 countries, [Terumo] is taking the partnership to the next level," said Satoshi Tsunakawa, CEO of Toshiba Medical Systems Corp. "We have enormous respect for Vital's products, pipeline and people, and look forward to working with their highly skilled team to enhance clinical value for patients throughout the world."

Established in 1998, Vital Images makes of advanced visualization and analysis software for physicians and healthcare specialists. The company's software enables the visualization and analysis of 2-D, 3-D and 4-D images of anatomy and physiological function using computed tomography and magnetic resonance scan data, offering medical specialists time-saving, Web-accessible tools for greater productivity.

19. Zimmer

$4.5 Billion


David C. Dvorak, President & CEO

Cheryl R. Blanchard, Ph.D., Sr.VP & Chief Scientific Officer

James T. Crines, Exec.VP of Finance & Chief Financial Officer

Jeffery A. McCaulley, President, Zimmer Reconstructive

Jeffrey B. Paulsen, Group President, Global Businesses

Bruno A. Melzi, Chairman of Europe, Middle East and Africa

Stephen H.L. Ooi, President of Asia Pacific



When Zimmer Holdings Inc. issued its first annual report 10 years ago, executives used the theme "New Products New Markets New Geographies" to convey their future vision for the newly independent company.

"New products are the lifeblood of any medical device company and our goal is to be a new products machine," former President and CEO J. Raymond Elliott told shareholders in a letter within the firm's debut report. (Elliott eventually left Zimmer in 2007 and was hired two years later by Boston Scientific Corp. to revive the fortunes of that device firm after its ill-fated takeover of Guidant Corp. He retired from Boston Scientific on Dec. 31, 2011).

"A key to our future will be our ability to leverage our brand strength, our sales forces, and our heritage of trust for success in new markets," Elliott's letter continued. "We intend to enter rapidly growing, adjacent markets such as spine, pain management and blood management. We believe orthobiologics may transform orthopaedic treatments ... Finally, we are a global company. With approximately one-third of our revenues from outside the Americas, we have only just begun to focus on new geographies. From the historic strength of our base in Asia and particularly in Japan, Korea and Taiwan, we believe we can continue to take advantage of the increasing sophistication of economies and healthcare systems in this most populous region of the world."

Elliott's successor could have used the same theme last year to provide investors with a progress report on those early goals. Since breaking free of global biopharmaceutical giant Bristol-Myers Squibb in August 2001, Zimmer has indeed become a new product "machine"--the Warsaw, Ind.-based firm regularly debuts dozens of new products every year, many of them timed to coincide with industry trade shows like the American Academy of Orthopaedic Surgeons and the North American Spine Society annual meetings.

The company also has entered some of those rapidly growing markets Elliott mentioned in his letter, namely spine and orthobiologics. Zimmer's spinal portfolio includes thoracolumbar and cervicothoracic products, while its orthobiologics lineup includes the Fortitude Osso Interbody Spacer, the CopiOs bone void tiller, the AlloFuse Demineralized bone matrix and the Chondrofix Osteochondral Allograft, a product designed to address osteochondral lesions in a single-stage procedure. The Chondrofix implant is an osteochondral plug comprised of articular cartilage and subchondral bone, according to Zimmer.

The company is collaborating with St. Louis, Mo.-based ISTO Technologies Inc. to develop other chondral grafts for cartilage repair. One of the pair's creations--the DeNovo NT Natural Tissue Graft--has been used in more than 1,600 cartilage repair procedures in 2011 (the product uses particulated juvenile cartilage tissue to repair articular cartilage defects in the knee, ankle, shoulder, hip, elbow and toe joints). The companies also are working together on a Phase III clinical study to evaluate the DeNovo ET Engineered Tissue Graft, an implant designed to repair knee cartilage damage.

In its relatively brief existence as a publicly listed firm, Zimmer has become a significant player in the global orthopedics market. The firm has operations in more than 25 countries and sells products in more than 100. The emerging markets of Brazil, Russia, India and China (the "BRIC" brethren) have become so essential to long-term growth that executives announced plans last year to build a new research and development center in China to focus on the unique needs of Asian patients and clinicians.

Sales in the Asia Pacific region (which include Australia, China, Hong Kong, India, Korea, Malaysia, New Zealand Singapore, Taiwan and Thailand) posted the best growth in 2011, according to Zimmer's latest annual report. Revenue spiked 16 percent to $796.5 million, or 18 percent of total net sales. Japan was the largest market in this region, accounting for roughly 52 percent of sales.


North and South American sales remained flat last year at $2.4 billion, though the region captured more than half (55 percent) of the company's total revenue. The United States accounted for 93 percent of all sales in this area.

Europe contributed $1.2 billion in revenue to Zimmer's bottom line in 2011 (year ended Dec. 31), a 10 percent hike compared with the $1.09 billion this region reported in 2010. France, Germany, Italy, Spain, Switzerland and the United Kingdom accounted for 72 percent of the area's net sales.

Such robust gains in the Asia Pacific and European markets helped push sales 5.5 per cent to $4.5 billion last year and diluted earnings per share to $4.03. Net earnings skyrocketed 27.4 percent to $760 million, a welcome change from the 17 percent plunge the company's earnings encountered in 2010. Gross profit totaled $3.3 billion and operating profit came in at $1 billion, an 11.7 percent increase compared with the $916.7 million in operating profit the company reported in 2010.

Reconstructive product sales garnered the most revenue for Zimmer last year, comprising roughly three-quarters of the company's total net sales. Hip, knee and extremities devices generated $3.3 billion in sales, a 4 percent increase compared with the $3.2 billion these products earned for Zimmer in 2010.

Knee implant sales were driven by the popularity of the NexGen Complete Knee Solution product line, including Gender Solutions Knee Femoral implants, the NexGen LPS-Flex Knee and the NexGen CR-Flex Knee, a synthetic device introduced in 2003 that surgeons use to cap the femur to the tibia at the knee. Sales of the Gender Solutions Natural-Knee Flex System, the Gender Solutions Patello Femoral Joint and Zimmer's patient specific instruments also contributed to the 2 percent growth in this product category (revenue totaled $1.82 billion).

Hip sales performed well for the second consecutive year, growing 7 percent to $1.35 billion. Sales drivers remained unchanged from 2010--they included the M/L Taper Stem, the M/L Taper Stem with Kinective technology, the CLS Spotorno Stem from the CLS Hip System and the Alloclassic Zweymuller Stem, a cementless hip used in more than 325,000 replacement surgeries worldwide. Sales of the Continuum Acetabular System, the Trilogy IT Acetabular System, the Allofit IT Alloclassic Acetabular System, the Trabecular Metal Revision Shell and Augment Cups were strong compared with 2010, as were sales of BIOLOX delta heads and Fitmore Hip Stems.

The Fitmore Hip Stem is a bone-preserving system of implants specifically designed for use with less invasive surgical procedures. The system aims to provide stable reconstruction of patients' anatomies by matching stem and different medial curvatures. The triple taper design and proximal Ti-Plasma coating enables a secure press-fit, while the trapezoidal cross-section provides for rotational stability.

Sales of extremities products surged 9 percent in 2011 to $163.4 million. The top sellers in this category were the Bigliani/Flatow Complete Shoulder Solution and the Trabecular Metal Reverse Shoulder System, according to the annual report.

Dental product sales experienced an impressive turnaround from a 10 percent loss in 2009, growing 13 percent last year to generate $248 million for Zimmer. Sales were led by the 10-year-old Tapered Screw-Vent implant system, a device that features an internal hex platform which reduces stress on crestal bone and resists abutment screw loosening, helping to create ideal conditions for bone level maintenance.

Trauma product sales jumped 16 percent to $286 million, driven by demand for Zimmer Periarticular Locking Plates, the NCB Plating System and the Natural Nail System, a next generation system of intramedullary nails designed to restore the preinjury shape of fractured long bones and provide stable fixation during fracture healing. The nails feature a unique screw nail connection that allows a surgeon to create a true fixed angle construct that unites the injured bone to the nail.

Spinal product sales fell 4 percent to $225 million due to "operational challenges" with the company's American sales force, a difficult reimbursement landscape and a continued decline in Dynesys Stabilization System sales. Those challenges proved too difficult to offset by solid sales of the PathFinder NXT Minimally Invasive and Sequoia Pedicle Screw Systems, the company's Universal Clamp System and its Trabecular Metal products. Zimmer's PathFinder screw system allows surgeons to approach the implant site through a miniature opening or percutaneously.

Orthopedic Surgical product sales experienced solid growth last year, ballooning 9 percent to $348.8 million. Sales stalwarts in this category included the company's Palacos bone cement, wound debridement products and tourniquet devices.

Sales in the Orthopedic Surgical product category also received a boost from the company's December 2010 acquisition of Sodem Diffusion S.A., the Swiss manufacturer of SoPlus Orthopaedic Surgical Power Tools. Sodem Diffusion's portfolio includes the SoPlus Universal large bone system and the SoPlus Ultra small bone system with associated consumables.

20. Smith & Nephew

$4.3 Billion


Olivier Bohuon, CEO

Adrian Hennah, Chief Financial Officer

Mark Augusti, President, Clinical Therapies/Biologics

Michael Frazzette, President, Advanced Surgical Devices

Roger Teasdale, President, Advanced Wound Management

Francisco Canal Vega, President, Emerging Markets

Kevin Johnson, President, International Markets

Gordon Howe, Sr. VP, Global Planning & Development



All companies experience growing pains every now and then. Facebook currently seems to be wracked with them as it seeks solutions to sagging sales and rebuilds investor confidence damaged in a rocky public trading debut.

Both Microsoft and Intel corporations are experiencing pangs of maturation too, as they reinvent themselves to remain competitive in a mobile device-dominant industry. Data from information technology research and advisory firm Gartner Inc. show that global PC shipments fell 1.4 percent in the fourth quarter of 2011.

The aches have even spread to older companies-multinational entities such as Daimler and PepsiCo, which are implementing various productivity and investment initiatives to jumpstart growth. PepsiCo, for instance, is increasing the advertising and marketing budget of its global brands (particularly in North America) by $500 million to $600 million this year to spur sales.

"... Over the past five years, PepsiCo has delivered double-digit compound annual growth in core net revenue, 8 percent compound annual growth in core earnings per share, and returned about $30 billion to shareholders in the form of dividends and share repurchases," PepsiCo Chairman and CEO Indra Nooyi said when the company announced its 2012 strategic priorities in February. "Our goal is to continue on that earnings trajectory over the next five to 10 years, fully recognizing that we need to make changes in how we operate to address the challenges we identified in the review process. 2012 will be a transition year, in which we will be taking the appropriate steps to build a stronger, more successful company going forward."

Smith & Nephew plc experienced its own growing pains last year, welcoming a new chief executive who orchestrated an ambitious corporate realignment that streamlines operations in developed countries and targets growth in the emerging markets of Brazil, Russia, India and China (known collectively as the "BRIC" countries). This quartet of nations has a combined population of 2.7 billion people, a gross domestic product that ballooned 92.7 percent over the last decade (2000-2010), market capitalization valued at $6.4 trillion last year, and--perhaps most importantly--an incredible need for healthcare products and services.

The realignment--announced last summer--merged Smith & Nephew's Orthopaedics and Endoscopy business segments into a new Advanced Surgical Devices division; the move prompted the departure of Joseph M. DeVivo, who had led the Orthopaedics business segment since 2006. The company's advanced wound management business remains a separate unit. Both divisions focus on the established markets of the United States, Canada, Europe, Japan, Australia and New Zealand.

Smith & Nephew also created a new division to focus solely on the BRIC markets. This division has some autonomy, selling the company's full suite of endoscopy, orthopedic and wound management products. It also is charged with helping to drive research and development initiatives.

A fourth division is concentrating on international markets such as Central and Latin Americas, Eastern Europe, South Africa, South Korea and Southeast Asia. While this division mainly is served by distributors, management is streamlining the number of distributors it uses, as well as examining and targeting market opportunities for investment.

The four divisions each have a manager that reports directly to the CEO.

Clearly, the realignment is designed to help the company grow sales in the BRIC bloc--executives are aiming for a four-fold increase within the next four years, from $120 million to $500 million. Given the demographics and unprecedented economic growth in the BRIC market (its import and service demands are estimated to be more than $2 trillion, or 13.5 percent of global imports), Smith and Nephew's 2016 revenue goal may not be such a difficult one to attain.

"In emerging markets, we will build upon our initial success in China and expand to create sustainable businesses in India,

Brazil and Russia," CEO Olivier Bohuon wrote in his first letter to company shareholders. The Frenchman with two decades of experience in the pharmaceutical industry (but none in the medical device sector) succeeded former chief executive David Illingworth in April 2011.

"These emerging markets are enjoying good GDP growth and there is an increasing demand for high-quality medical products from amongst the population and an expanding surgical infrastructure to deliver these safely, the key features required to make a new market attractive to Smith & Nephew. Our performance in the established and emerging markets will be driven by an unremitting focus to innovate for value...Our future success depends upon offering new technologies designed for each market where we operate. We are accelerating our rate of innovation by increasing the research and development budget and prioritizing projects that will deliver maximum value."

Smith & Nephew certainly seemed to prioritize effectively last year: Total revenue jumped 8 percent to $4.3 billion and gross profit climbed 6.8 percent to $3.1 billion. While much of that growth stemmed from gains in each of the company's three business segments (the orthopedic manufacturer reported its 2011 full-year earnings under its former organizational structure), part of the overall revenue increase can be linked to higher R&D funding.

After maintaining research levels during the Great Recession, Smith & Nephew increased its R&D budget last year by 10.6 percent to $167 million, or 3.9 percent of total revenue. Since the start of the slowdown in late 2007, the company has spent an average of $153.4 million on research and development.

Such a healthy dose of research dollars has led to a plethora of new products over the last five years, including the Legion/Genesis II Total Knee System, the Fast-Fix meniscal repair system, the Twin-Fix suture anchor for rotator cuff repair, the Allevyn AG Gentle Border and Cadex dressing, the PEEK Interference Screw, BioSure PK Interference Screw, TwinFix Ultra PK FT Suture Anchor and the Knotless Instability Anchor, among others.

The Visionaire line of custom-fit instruments for knee replacement surgery helped boost sales in the Orthopaedics division by 5 percent in 2011 (year ended Dec. 31). Sales rose $117 million to $2.3 billion; more than half of that total came from the United States, where revenue climbed 2 percent to $1.2 billion. International revenue jumped 9 percent to $1.1 billion.
Revenue by geography   $4.3bn

A US                    1,756
B UK                      291
C Continental Europe    1,118
D Other                 1,105


Established Markets

Emerging Markets

International Markets

Knee implant sales grew 8 percent to $869 million due mainly to solid demand for the Legion Total Knee System, which incorporates the company's Verilast technology, a mix of Oxinium alloy and a highly cross-linked polyethylene designed to help reduce wear--one of the leading causes of implant failure. Smith & Nephew extended its Visionaire instrument line further into its knee portfolio last year with the launch of Visionaire for the TC-Plus knee system.

Global hip sales increased 2 percent to $704 million. The main growth driver in this product category was the R3 Acetabular System, an advanced multi-bearing acetabular cup implant used in total hip replacements. The R3 device is engineered for multiple bearing options and has a porous coating designed to enhance fixation and bony in-growth.

The company claims the R3 Acetabular System provides flexibility for surgeons and is designed to reduce wear. Optimized inserts accommodate larger head sizes and help the R3 System achieve a greater range of motion. Despite such advantageous features, Smith & Nephew decided in June 2012 to start a voluntary market withdrawal of the optional metal liner component of the R3 System. Chief Medical Officer Andy Weymann said the London, United Kingdom-based firm regularly reviews product efficacy and is not satisfied with the clinical results of the optional metal liner component.

Roughly 7,700 metal liners have been implanted in patients since the component was introduced in 2007 and launched glob ally in 2009. Most of the liners have been used in stemmed total hip replacements. The withdrawal of the R3 System's metal liner component could possibly impact the company's global hip sales in 2012.

The impact, however, could very well be absorbed by future sales of the SMF Short Modular Femoral Hip System, a primary hip stem that substantially is shorter than traditional length stems yet maintains optimal fixation and stability, according to product literature. Unveiled in February 2011, the SMP Hip complements the firm's new Direct Anterior retractor set, an instrument system and technique that enables orthopedic surgeons to enter the hip socket through the front or anterior, which results in significantly less soft tissue disruption and post-operative pain than traditional procedures.

Also making its market debut last year was the Strucsure CP, an advanced injectable, hard-setting bone graft substitute designed to gradually resorb while being replaced by natural bone. The material joined Smith & Nephew's Trauma product line, which generated $457 million in revenue last year, a 5 percent increase compared with the $434 million the devices garnered in 2010. Despite the increase, however, this product category underperformed during the second half of 2011. Chief Financial Officer Adrian Hennah blamed the poor showing on the mid-year expiration of an $8 million annual royalty agreement. The death of that agreement trimmed global trauma sales by 2 percent in Q4 and U.S. trauma revenue by 3 percent, he noted.

Clinical therapies revenue finished the year strongly, climbing 7 percent to $237 million.

The Endoscopy division delivered a strong performance as well last year, collecting $939 million in total revenue, a 10 percent increase compared with 2010. U.S. sales rose 3 percent to $363 million while overseas proceeds ballooned 15 percent to $576 million.

Sales of sports medicine repair products grew 15 percent to $448 million, thanks partly to the launches of the Fast-Fix 360 Meniscal Repair System and the Bioraptor Curved guide system.

Arthroscopy devices garnered $303 million in sales last year, a 7 percent increase compared with 2010. Top-selling devices included the company's new Dyonics Platinum range of specialty blades.

Visualization product proceeds fell 4 percent to $107 million, due mostly to the company's "strategy to focus only on those capital items [that] are closely aligned with the core resection and repair businesses," the annual report states.

Smith & Nephew's Advanced Wound Management division experienced the best growth of 2011--sales jumped 12 percent to $1 billion. International deals outweighed domestic transactions by a considerable margin: Overseas sales grew 13 percent to $830 million, while U.S. revenue climbed 6 percent to $189 million.

Growth drivers in the Advanced Wound Management division included PICO, a single-use negative pressure wound therapy sys tern, the Rynasys Soft Port and the Versajet II.

21. Olympus Medical Systems

$4.2 Billion (S10B total)


Yasuyuki Kimoto, Chairman

Shuichi Takayama, President & CEO

Mark Gumz, President and CEO of Olympus Corporation of the Americas

Luke Calcraft, President, Olympus Medical Systems Corp.

Haruhito Morishima, Group President of the Medical Systems Group

Charlie Goodwin, Group VP, Olympus Surgical

NO. OF EMPLOYEES: 40,000 (total)


The year 2011 was a roller coaster of scandal for Tokyo, Japan-based Olympus Corp. In October, British-born Michael Woodford was suddenly ousted as CEO of the company. He had been company president for six months, and two weeks prior had been promoted to CEO, when he exposed" one of the biggest and longest-running loss-hiding arrangements in Japanese corporate history," according to The Wall Street Journal. Tsuyoshi Kikukawa, the board chairman, who had appointed Woodford to these positions, reassumed the title of CEO and president.

Woodford alleged that his removal was related to several prior acquisitions he had been seeking answers to, particularly the $2.2 billion deal in 2008 to acquire British medical equipment maker Gyms Group. Eyebrows were raised about the $687 million paid to a middleman as a fee--a sum equal to 31 percent of the purchase price, and which ranks as the highest ever merger-and-acquisition fee. The company initially responded, on Oct. 19 that "major differences had arisen between Mr. Woodford and other management regarding the direction and conduct of the company's business."

Other acquisitions brought the company's accounting and business practices into question. The purchase of three Japanese companies outside the company's core business were recorded on the books as worth $721 million less than their acquisition value of 12 months earlier. Japanese press speculated on a connection to Yakuza (Japanese organized crime syndicates). Olympus defended itself against allegations of impropriety, citing its audit board's view that "no dishonesty or illegality is found in the transaction itself, nor any breach of obligation to good management or any

systematic errors by the directors recognized."

On Oct. 26,Tsuyoshi Kikukawa resigned his positions as chairman, president and CEO; he was replaced by Shuichi Takayama. On Nov. 8, the company admitted that its accounting practices had been "inappropriate" and that money had been used to cover losses on investments dating back to the 1990s. The company blamed its shady accounting on former president Tsuyoshi Kikukawa, auditor Hideo Yamada and executive vice president Hisashi Mori.

Medical division sales for fiscal 2011 (ended March 31, 2012) were 4.2 billion, a drop of 1.7 percent (in yen). Operating income dropped 4.9 percent to approximately $828 million. Medical sales comprise 41 percent of the company's revenue.

According to the company, the sales of disposable guide wires used for endoscope treatment for pancreatic ducts continued to be favorable, particularly in the Japanese market. Sales of endoscopic video systems also grew. There was an overall decline in revenue in the Medical Systems business for the period as a result of the temporary difficulties in the procurement of parts due to the impact of the Japanese earthquake and tsunami in early 2011 and the resulting adjustments made in the production of some products. Unfavorable exchange rates also impacted fiscal results. On a constant currency basis, nets sales and operating income rose 2.8 percent and 4.3 percent, respectively.

For the company overall, net sales for the year were approximately $10 billion a marginal increase of less than a percent. Net loss for the year was $590 million, compared to net income of $46 million for fiscal 2010.

In April last year Luke Calcraft was named as president of the Olympus Corporation of the Americas' Medical Systems Group. Calcraft reports directly to Haruhito Morishima, group president of the Medical Systems Group for Olympus Corporation in Japan. Calcraft will be based in Center Valley, Pa., the company's headquarters in the United States. In the newly created position, Calcraft will oversee all medical and surgical business lines including ear, nose and throat; gastroenterology; general surgery, gynecology; urology; respiratory and service. In addition, he will be responsible for developing strategic alliances and expanding the company's business opportunities in both the North and South American continents.

"Luke's appointment to this new role reflects our ongoing activities to better serve our customers' needs, in both the medical and surgical areas, through adopting a more global management strategy," said Morishima. "This approach will ensure that our international operations are consistent but flexible, allowing us to adapt our customer service to meet local needs."

Calcraft, a 21-year veteran of Olympus, most recently served as the managing director of Olympus Europa's Medical Systems and Micro-Imaging Solutions Group, responsible for the medical and microscopy businesses in Europe, Russia, the Middle East and Africa. He previously held positions as national sales manager for EndoTherapy, selling endoscopic devices in the U.K.; head of Corporate Affairs and International Medical Sales and head of Professional Training and International Medical Export Sales. Calcraft also has experience in the U.S. market, having served as chief operating officer of Olympus Surgical & Industrial America, managing Olympus' Industrial Endoscope and Microscopy businesses in the region.

In July 2011, Olympus acquired venture-backed Spirus Medical Inc., an endoscope insertion device manufacturer based in Stoughton, Mass. The acquisition was implemented through Gyrus ACMI Inc., a consolidated subsidiary of Olympus based in the United States. Spirus makes devices that aid in the insertion and advancement of endoscopes for upper and lower endoscopy. Spirus' manual rotation devices, developed in 2006, were used in conjunction with a conventional endoscope. Last year, the company succeeded in developing a powered spiral endoscope insertion technology driven by an integral motor incorporated into a propriety endoscope design. The powered technology consists of a rotatable soft spiral incorporated on the insertion tube of endoscopes to facilitate deep insertion of endoscopes within a shorter amount of time, as compared to conventional endoscopes. Olympus plans to develop new endoscopic systems by combining Spirus technology with its own endoscopic system technology. The company will be renamed Olympus Endo Technology America Inc.

Throughout the fiscal year, the company made a number of new product introductions.

In May last year, Olympus received U.S. Food and Drug Administration (FDA) clearance for it ScopeGuide technology, which is designed to assist gastrointestinal physicians, colorectal surgeons and nurses during a colonoscopy to visualize the colonoscope as it travels through the colon. The system uses magnetic endoscopic imaging to produce a three-dimensional view of the scope and its location within the colon in real-time. A number of small electromagnetic transmission coils located within the colonoscope itself generate a weak magnetic field, which is picked up by the ScopeGuide receiver. The received signals allow the ScopeGuide processor to calculate the location and orientation of each transmission coil, which is used to generate the 3-D rendering of the scope, displayed on a screen. A separate handheld 3-D marker helps an assistant to visualize where abdominal pressure will be most effective.

In October, Olympus introduced a new surgical imaging platform, Visera Elite, and a new 5 millimeter high-definition (HD) deflectable videolaparoscope, called the Endoeye Flex 5. The Visera Elite platform is equipped with HDTV imaging capability and advanced image processing to provide the best possible image for Olympus surgical scopes across multiple specialties. The Endoeye Flex 5 offers HD resolution in a 5 millimeter diameter scope. The device uses digital-chip technology to place the camera on the tip of the scope enabling doctors to see fine details during surgical procedures. Additionally, the scope allows for 100-degree angulation in all directions providing complete visualization of complex anatomical structures, according to the company. The deflectable tip on the Endoeye Flex 5 offers surgeons the flexibility to change the direction of view giving them a new way to observe the anatomy. It also minimizes potential collisions between instruments, which is common when operating in narrow spaces in procedures like single site surgery, helping to ensure intra-abdominal triangulation. In addition, the Endoeye Flex 5 is autoclavable, which can result in significant reprocessing cost savings for the hospital. The system is designed for a range of bariatric, thoracic, colorectal and other specialties, including the single-site surgery approach. Olympus offers a system solution for single-site surgery, comprising access, visualization and instrumentation. In laparo-endoscopic single site surgery, the TriPort+ access system is placed into an umbilical incision allowing single-port access for up to four instruments. The Endoeye Flex 5 allows the surgeon to get the desired view and position the scope away from the instruments. After the procedure, the surgeon removes the port, allowing the natural contours of the bellybutton to help hide the small surgical incision. Single site surgery has the potential to result in improved healing for patients over traditional open surgery.

In December the company introduced a line of EZ Shot 2 single-use aspiration needles for endoscopic ultrasound (EUS) procedures. According to the company, the four needles offer improved puncture capability along with an adjustable sheath designed to help physicians more accurately approach the targeted site. Available in a complete selection of sizes and styles, the surface of the EZ Shot 2 needle is designed with unique echogenic dimples to ensure it is clearly visible while performing endoscopic ultrasound.

March of this year brought FDA clearance of Olympus' Thunderbeat line of hand instruments and universal surgical platform. According to the company, at the time of its release, Thunderbeat was the only surgical device that combined advanced bipolar and ultrasonic energies into a single multi-functional hand instrument allowing surgeons to simultaneously seal and cut vessels up to and including 7 millimeters in size with minimal thermal spread. Additionally, it is designed for faster cutting speeds, improved vessel sealing, and higher grasping forces at the tip when compared to other energy instruments. In can be used in any procedure in which cutting, vessel sealing and cutting, coagulation, grasping, and dissection is performed.

"Our aim as a leading global healthcare company is to advance medical and surgical techniques and minimally invasive procedures through the development of inspiring technological solutions and innovative products like Thunderbeat that overcome the day-to-day constraints that physicians and surgeons face," said Calcraft, president of Olympus Corporation of the Americas' Medical Systems Group. "Olympus is committed to helping physicians and surgeons per form advanced procedures that elevate the standards of patient care and deliver better treatment, while improving outcomes and enhancing quality of life."

22. Hospira

$4.1 Billion


John C. Staley, Chairman of the Board

F. Michael Ball, CEO

Richard Davies, Sr. VP and Chief Commercial Officer

John B. Elliot, Sr. VP, Operations

Zena G. Kaufman, Sr. VP, Quality

Anil G. D'Souza, Corp. VP, Global Marketing and Corporate Development

Sumant Ramachandra, M.D., Ph.D., Sr. VP,, Research & Development and Medical Affairs, and Chief Scientific Officer



For Hospira, fiscal year 2011 (ended Dec. 31) began and ended with changes at the top. In March, the board of directors of the Lake Forest, Ill.-based company appointed F. Michael (Mike) Ball as the company's new CEO and a member of the board. Ball was president of Allergan Inc. (where he had been for 16 years) and he succeeded the company's founding CEO, Christopher B. Begley, who became executive chairman. Hospira provides infusion therapy, systems and supplies; infusion pumps and other medication management systems; specialty injectables; and contract manufacturing services.

"From the outset of our CEO search, the board and I were determined to identify a candidate who would extend Hospira's growth trajectory, expand our giobal reach, and inspire our employees as we continue our patient-focused journey to sustainable top-tier financial performance," said Begley at the time of the announcement." With his proven track record of growing complex global businesses, demonstrated success in leading diversified healthcare portfolios and strong commitment to creating value for all company stakeholders, we found the perfect fit with Mike Ball. We are thrilled to welcome Mike to the Hospira family, and I look forward to partnering with him and our board to continue to advance our great company--a company that is stronger and better positioned for success now than at any point in our rich history."

During his tenure at Allergan, Ball was responsible for accelerating growth in international markets and leading the strategy and execution of global commercial activities for a diverse slate of businesses, including specialty pharmaceuticals, over-the-counter products and surgical devices.

As executive chairman, Begley's task was to focus on ensuring continuity of leadership, providing strategic counsel to Ball and managing an orderly transition of the CEO responsibilities. Begley assumed his new role after launching Hospira as the company's founding CEO following its 2004 spin off from Abbott Laboratories. During his tenure, Hospira doubled its market capitalization, geographic footprint and revenue outside the United States; improved adjusted gross margins by more than 1,000 basis points; and generated more than $3 billion in cash flow from operations, according to company statistics.

His new role, however, was short-lived.

In early December, the board announced that Begley would retire as executive chairman. John C. Staley, a founding director of the company's board, took over as non-executive chairman in January.

For full-year 2011, net sales were $4.1 billion, an increase of 3.6 percent, and earnings per share was $3.04.

"While 2011 was a challenging year as a result of our quality transformation efforts, we met our revised financial expectations, generating over $4 billion in sales, and advanced our remediation efforts," said Ball. "We made significant progress on many fronts during the year, including the launch in the United States of two important oncolytic products and an anti-infective drug, as well as initiating the Phase III U.S. clinical program for our biosimilar erythropoietin. We remain firmly committed to reinforcing our foundation and instilling a culture of high quality throughout the organization, actions we believe will create a strong competitive advantage for Hospira and position us for sustainable, long-term growth and increased shareholder value."

Partially offsetting growth was device quality issues (infusion pump recalls), the continued impact on net sales of certain quality actions the company undertook to improve the global status of its regulatory compliance, including responding to the U.S. Food and Drug Administration (FDA) observations and warning letter related to the company's manufacturing facility in Rocky Mount, N.C.

Income from operations decreased 14.7 percent to $669 million for the full year, compared to $784 million for the full year of 2010. The decline was a result of certain quality actions and inventory losses.

"While resolving the quality-related issues entails challenges in 2012, we believe that the quality improvement process will make Hospira an even stronger, more competitive global company," said Ball." We will also continue investing in Hospira's growth opportunities in 2012. Reinforcing Hospira's foundation and driving growth will best position Hospira to serve the needs of our customers and patients, and deliver strong value to our shareholders."

In 2011, the company announced that it planned to spend as much as $375 million over three years to bring its manufacturing operations up to par. One site of particular focus is Hospira's Rocky Mount plant, used in the production of parenterals and a part of the company's contract manufacturing business. The plant provides 25 percent of Hospira's annual revenue. Approximately 80 percent of the spending is expected to go to Rocky Mount, the report said. The remediation effort will encompass both the pharma and medical device sides of the business.

"Quality assurance auditor" and "senior biological quality supervisor" are among the positions the company hoped to fill by the end of the year, according to reports.

Throughout 2011, Hospira continued efforts to resolve issues with its line of Symbiq infusion pumps.


Listed by the FDA as a Class II recall in November 2010, Hospira continued efforts to resolve issues for the power cord used on the Symbiq one-channel infuser and Symbiq two-channel infuser. Complaints of broken, bent, or missing prongs, charring, sparks, visible smoke, and a burnt smell have been reported on Symbiq AC power cords, resulting in the recall.

Hospira also continued efforts on its Feb. 14, 2011, recall for the 205,689 Plum XL, XLM, and XLD infusion pumps distributed nationwide and internationally. According to the 8-year-old company, Hospira received reports of the Plum XL, XLM, and XLD infusion pumps with no audible alarm at the low-audio-level setting.

At the end of March 2011, the company submitted a 510(k) application with the FDA for modifications to the Symbiq infusion system.

"With this submission complete, we are on track to meet our commitments for resuming new customer shipments of Symbiq infusion pumps and advancing the continuous evolution of one of the most innovative infusion platforms in the hospital today," said Sumant Ramachandra, M.D., Ph.D., senior vice president, Research & Development and Medical & Regulatory Affairs, and chief scientific officer, Hospira. "As one of the first companies to file an application under the draft FDA guidance for infusion pumps, we are looking forward to con tinning to work with the Agency through this new and innovative regulatory process."

In May 2011, Hospira received regulatory approval from Health Canada for its software upgrade to the Symbiq. In March this year the FDA provided regulatory clearance for the upgraded Symbiq device.

23. Terumo Medical

$4 Billion


Koji Nakao, Chairman, Terumo Group

Utaro Shintaku, President, Terumo Group

Hiroshi Matsumura, Group President, General Hospital Business Group

Hideo Arase, President & CEO, Terumo Americas Holding Inc.

Toshiaki Takagi, General Manager of R&D, Intellectual Property Dept.

James Rushworth, President, Temmo Interventional Systems

Mark Sutter, President Terumo Cardiovascular Systems

Adrian Gilmore, President, Terumo Medical Products



In 1921, a group of medical scientists founded Terumo Corporation based on a corporate philosophy of "contributing to society through healthcare." It is still the company's mantra. Ninety years ago (the company celebrated its anniversary in September 2011) the company began making thermometers, which, incidentally, is how the firm's name was derived. It comes from the German pronunciation of word thermometer.

The basic temperature-gaging devices are still on Terumo's list of products, along with 21st century technology in different areas of medical technology including medical devices for cardiothoracic surgery, left-ventricular assist system for end-stage heart failure, minimally invasive coronary and endovascular interventional and neuro-interventional technologies of cerebral aneurysms, transfusion technology, and an array of syringe and hypodermic needle products for hospital and physician office use.

In August last year, Forbes magazine ranked Temmo Corp. 14th on its list of top 100 innovative companies. According to editors at the financial magazine, the ranking was based on findings from an eight-year study led by a team of independent industry researchers who assessed companies based on an "innovation premium," a measure of investor expectation for future innovation such as new product development services and market development.

For the 2011 fiscal year (ended March 31), the overall company's sales were approximately $4 billion, an increase of 3.3 percent (in yen). Net income increased 10 percent to $390 million. By product segment, the company's General Hospital business recorded $1.8 billion in sales, up 2 percent; the Cardiac &Vascular division totaled sales of $1.7 billion, up 6.5 percent; Blood Management had sales of $296 million, up 2.5 percent; and Consumer Healthcare division revenue fell 32 percent to $52 million.

Japan is the largest market for the company, responsible for approximately $2 billion in sales, which grew marginally at 1.9 percent. The Americas made up the second-largest segment at $687 million in revenue, up 6 percent compared to the prior period. Europe followed close behind with sales of $683 million, up 16 percent. Though not a revenue leader, other Asian markets outside Japan showed the most significant sales growth, increasing 18 percent to about $452 million.

The company's executives have vowed to aggressively pursue growth opportunities, and acquisition has been one of the clear paths to that goal. The company's blockbuster deal of the year was its deal in March 2011 to buy CaridianBCT from Sweden-based Gambro AB for $2.6 billion, including debt. The purchase price was about 15 times CaridianBCT's 2010 earnings before interest, taxes, depreciation and amortization. CafidianBCT, based in Lakewood, Colo., makes machines that collect blood components and filter pathogens, and are used by blood banks and hospitals. Buying the unit will boost annual sales by about $851 million and add customers in North America, Terumo officials said. Terumo's transfusion division sells mainly low-tech products such as blood bags, blood filters and aphaeresis systems that are used to separate blood components.

"The increasing number of cancer patients in the aging populations of the developed world will increase the demand for platelet transfusion," officials said in a statement released on the company website. Terumo is aiming for at least 10 percent annual growth in sales from its blood business, Koji Nakao, an executive vice president, told reporters at a press conference in Tokyo following the announcement.

A strong yen bolstered the buying power of Japanese companies looking for U.S. and European companies to buy in 2011. The acquisition made Terumo the world's biggest maker of blood transfusion equipment, overtaking Haemonetics Corp. of Braintree, Mass., Terumo officials claimed in an interview with Bloomberg.

The company continued to make strategic buys throughout 2011.

In May last year, Temmo announced a deal to purchase Plymouth, Mass.-based Harvest Technologies Corp., a biotechnology company working to commercialize the world's first point-of-care technology that allows physicians to derive highly concentrated autologous, adult stem cells from their patients in just 15 minutes. The acquisition for $70 million provides Terumo access to Harvest Technologies' two medical device therapies that show promising benefits in optimizing the body's natural healing process. The SmartPrep 2 APC+ system allows physicians to rapidly prepare highly concentrated, autologous platelet rich plasma (PRP) enriched with growth factors to naturally stimulate the body's healing process for bone and soft-tissue wounds, according to Terumo. Harvest Technologies' SmartPReP 2 BMAC is considered a potential breakthrough technology because it can process and concentrate the cellular components from autologous bone marrow, including adult stem cells, within 15 minutes, while some concentration techniques require hours, or in some cases days, to prepare. The concentrate produced by this system has been documented to generate more total nucleated cells with enhanced viability that affect a desired outcome in animal models compared to concentrations obtained by using the most common laboratory methods described in successful clinical studies--while being significantly easier to implement and requiring half the amount of aspirate of bone marrow from the patient.

Both applications have shown promising results in the treatment of cardiovascular and peripheral artery disease, according to analysts.

Harvest Technologies focused its initial sales efforts in Europe to support clinical research for the treatment of end-stage critical limb ischemia (CLI), a result of peripheral artery disease, which often leads to lower-limb amputation and increased patient morbidity and mortality rates. Harvest also is conducting a 42-patient pilot, randomized, controlled, safety cardiac study of its BMAC system in three U.S. medical centers. The BMAC product is injected into the patient's heart muscle during bypass surgery to study its safety and effectiveness in this patient population. Previous studies using similar techniques have shown clinical promise.

On the new product front, the company gained 510(k) clearance from the U.S. Food & Drug Administration to market its new K-Pack Surshield hypodermic needle featuring integrated, passive sharps protection for use with pre-filled syringes for intramuscular and subcutaneous pharmaceutical applications. The K-Pack Surshield comes individually packaged and sterile in a rigid container with a tamper-evident and color-coded label. Initially, U.S. customers will have access to the K-pack Surshield with Terumo's 25-gauge needle designed for minimal patient trauma. Terumo also applied for 510(k) clearance of its smaller 27-gauge needle. The K-Pack Surshield 25-gauge needle has CE Mark approval outside the United States as well. Company officials noted that unique packaging distinguishes the device from similar devices.

Like many Japanese companies, Terumo Corp. was impacted by the earthquake and tsunami disasters in early March 2011. The company donated approximately $1.2 million in supplies and money to support disaster relief in Japan. In addition, the company, in cooperation with the American Red Cross, enacted an internal dollar-for-dollar matching contribution program to raise additional funds. The initial disaster caused no damage or casualties at the company's headquarters or at any other Japan-based manufacturing plants. An aftershock created minor damage to one Terumo plant, but it didn't affect manufacturing operations. As a result of the devastation, however, Terumo initiated a program to assess all of its Japanese suppliers who provide raw materials for the production of products at all its global plants.

Though Terumo has facilities throughout the United States, The fiscal year included the expansion of a lab and manufacturing facility in Elkton, Md. The company's U.S. headquarters are in Somerset, N.J.

24. Synthes

$3.9 Billion


Dr. h.c. mult. Hansjorg Wyss, Board Chairman

Michel Orsinger, President & CEO

Robert Donohue, Chief Financial Officer

Ciro Romer, President, Europe, Middle East &

Africa & Global Operations



Synthes Inc. certainly didn't act like a company in transition last year. After announcing a historic $21.3 billion merger agreement with global healthcare conglomerate Johnson & Johnson, the Swiss surgical implant manufacturer routinely conducted business as if nothing had changed. And for the most part, nothing had changed.

Though the companies reached an agreement in late April, the merger was subject to anti-trust review in both the United States and European Union. It also required the blessing of Synthes shareholders, which occurred in mid-December, eight months after the deal was first announced.

The European anti-trust review--originally expected to move easily through the European regulatory system--hit a stumbling block in the fall after the deal was referred to a second phase in-depth probe by the EU's anti-trust unit. The referral gave authorities an additional four months to rule on the case (the final deadline was March 19, 2012).

Prompting the in depth probe was European regulators' concerns about the deal's potential to monopolize the market and hurt innovation. Market dominance, however, likely was a motivating factor behind the merger--by purchasing Synthes, J&J was attempting to gain a majority of the estimated $5.5 billion global trauma device market.

Such a strategy did not sit well with EU anti-trust chieftains. Their initial investigation concluded the deal would combine two of Europe's largest suppliers of spine devices and turn Synthes into the world's largest producer of trauma products and devices for facial and skill factures. J&J, meanwhile, would become the global leader of shoulder replacements and components.

"The proposed acquisition would remove a competitor from some markets which are already concentrated," EU anti-trust chief Joaquin Almunia said in a prepared statement last fall. "The commission needs to make sure that effective competition is preserved in order to maintain innovation and prevent harm to patients."

The commission preserved competition by requiring J&J to sell its DePuy Orthopaedics Trauma business to Warsaw, Ind.-based Biomet Inc. for $280 million. The compromise was mutually beneficial for all three parties: It allowed J&J to finally close the deal for Synthes (in mid-June 2012, more than a year after its proposal) and it gives Biomet a stronger presence in the global trauma market, according to CEO Jeffrey R. Binder. Perhaps most importantly though, the sale eased European regulatory concerns about a trauma market monopoly.

"We obtained remedies to ensure that competition will remain strong in these markets for the ultimate benefit of patients and social security systems," Almunia said in a statement.

Within a week of receiving the go-ahead from EU anti-trust officials, J&J had completed the Synthes deal and posted a welcoming message to visitors on the firm's website. Conversely, Synthes Board President Hansjorg Wyss and President/CEO Michel Orsinger composed a farewell message to shareholders in the company's 2011 annual report. In a joint letter, the pair reminded investors of the opportunities created by the merger and said the two companies' combined forces would be better positioned to tackle future regulatory issues and competitive pressures.

"We should all keep in mind the opportunities brought about by this merger," Wyss and Orsinger wrote. "In the wider context of an increasingly challenging healthcare environment, the combination of our core strengths will be a welcomed improvement in our capacity to tackle regulatory and competitive difficulties ahead. As a result, both our surgeon customers and our employees will reap benefits from this business combination. Above all, we will continue to do the things that made Synthes so successful."

Some of the things that made Synthes successful in 2011 included a partnership with Eli Lilly and the introduction of a spate of new products, including the Dynamic Locking Screw and the ETN PROtect tibia nail. The Dynamic Locking Screw, according to Synthes, is designed to boost biological bone healing by allowing micro-motions that improve circumferential bone growth.

The Expert Tibial Nail PROtect, including its cannulation, is coated with a thin layer (approximately 50 [micro]m) of gentamicinladen polymer. The coating is abrasion-resistant and is designed to withstand most of the forces occurring during nail insertion. It is completely resorbed after roughly six months.

The company continued its foray into the craniomaxillofacial sector with the debut of ZipFix, a product that enables fast sternal closure after thoracic interventions.

Such innovations helped boost total revenue last year by 7.7 percent to $3.9 billion. Net earnings climbed 6.5 percent to $966.7 million, while research and development spending jumped 15.3 percent to $198.8 million. U.S. sales generated the bulk of Synthes' revenue in 2011 (year ended Dec. 31), collecting $2.1 billion, a 2.7 percent increase compared with 2010. Other markets (which the company defines as "rest of the world") contributed $1.8 billion to the bottom line, a staggering 14.3 percent spike compared with the $1.6 billion amassed from foreign customers in 2010.

European sales (which includes the Middle East and Africa) grew 2.3 percent in local currency while Latin American revenue surged 13 percent. Sales in Asia virtually exploded, ballooning 17 percent; contributing to the increase most likely was the more than 200 surgeon educational events Synthes held in the region last year. In China, where the firm opened its first manufacturing facility in 2010, executives made good headway on three novel clinical trials that eventually will enable Synthes to sell devices manufactured in China specifically for local patients. Bigwigs expect to launch the first of these products next year.

The company's power tools business turned in a solid performance in 2011, thanks to the integration of products acquired in the November 2010 purchase of The Anspach Effort Inc. Synthes executives said Anspach's focus on high speed surgical power tools for use in neurosurgery, spinal and ENT surgery would help Synthes expand its power tools product offering to hospitals and surgeons worldwide.

"We will establish a dedicated power tools division, with close to $200 million in total sales," Orsinger said when the purchase was announced.

Synthes announced its collaboration with Eli Lilly and Company about two months after publicly acknowledging its merger with J&J. The two companies (Eli Lilly and Synthes) signed a joint development agreement to address the needs of patients with osteoporosis and bone fractures.

The agreement allows for the joint development and licensing of early stage compounds from Lilly to Synthes for use within orthopedic trauma, spine, craniomaxillofacial and reconstructive areas.

The early stage compounds have pre clinical and in some cases clinical data packages and have the potential to aid in the local treatment and regeneration of the skeleton.

The two companies will jointly develop site-specific osteoinductive (i.e. bone healing) products based on Synthes' biomaterials combined with Lilly's biologics or pharmaceuticals.

Within a second development program, Synthes and Lilly jointly will conduct and fund the evaluation of additional orthopedic uses for Lilly's osteoporosis drug Forteo (teriparatide [rDNA origin] injection), marketed as Forsteo in some countries outside of the United States.

Building upon a Phase II study that Lilly has already completed, Lilly and Synthes will collaborate on additional clinical studies to evaluate future indications for Forteo, including fracture healing.

In addition to the development component of the agreement, the collaboration also includes the U.S. co promotion of Forteo to orthopedic surgeons, an important segment of physicians who treat patients with a fracture due to osteoporosis.

Lilly Bio-Medicines Bone/Muscle/Joint global development platform leader Johnston Erwin said the collaboration additionally will explore ways to treat fractures with Forteo in older patients and/or those who have osteoporosis and, longer term, will look for new ways to deliver medicine locally to the fracture site.

Forteo, a U.S. Food and Drug Administration-approved osteoporosis therapy, is used to treat postmenopausal women with osteoporosis who are prone to fractures. It also is used to increase bone mass in men with primary or hypogonadal osteoporosis who are prone to fractures.

25. CareFusion

$3.5 Billion


Kieran Gallahue, Chairman & CEO

Jim Hinrichs, Chief Financial Officer

Don Abbey, Sr.VP of Quality & Regulatory Affairs

Tom Leonard, President, Medical Systems

Mike Martino, Sr.VP of Innovation, Business

Development & Strategy



With nearly three fiscal years under its belt (FY 2012 was drawing to a close at press time), CareFusion, a spinoff f Cardinal Health, continues to shape itself as an independent medtech firm.

"Growth in our Infusion, Dispensing and Infection Prevention businesses, gross margin expansion and the benefit of strong spending controls drove double-digit improvements in our adjusted operating earnings for the quarter and for the year," said Kieran Gallahue, chairman and CEO. "We continue to make progress in optimizing our product portfolio and expanding our geographical footprint."

Revenue for fiscal 2011 (ended June 30, 2011) increased 2 percent to $3.5 billion. (Results from the company's International Surgical Products business, which had been included in its Medical Technologies and Services segment and was divested in April 2011, were classified as "discontinued operations" in the company's end-of-year financials. Reported results and comparisons to prior periods exclude the historical results of the ISP business. That's why the company is reporting an increase in revenue when reported revenue last year was $3.9 billion.) Operating income increased to $496 million and income from continuing operations increased to $291 million, or $1.29 per diluted share. Excluding nonrecurring items, adjusted operating income increased $87 million to $602 million and adjusted income from continuing operations increased $70 million to $371 million, or $1.65 per diluted share.

Revenue for the Critical Care Technologies (infusion, dispensing and respiratory care businesses that develop capital equipment and related dedicated and non-dedicated disposables) segment increased 3 percent to $2.7 billion. Segment profit increased 10 percent to $434 million, and adjusted segment profit increased 14 percent to $511 million. Revenue for the Medical Technologies and Services segment (infection prevention and medical specialties products and services businesses that develop single-use, disposable products and reusable surgical instruments) decreased 4 percent to $799 million. Segment profit increased 17 percent to $49 million, and adjusted segment profit increased 40 percent to $91 million.

R&D investments totaled $155 million for FY11, a drop from $159 million in 2010.

Important changes at the top kicked off FY11.

Kieran T. Gallahue was named chairman and CEO, succeeding David L. Schlotterbeck, who retired as the company's inaugural chief executive. Gallahue previously served as president and CEO of ResMed, a maker of devices for treating, diagnosing and managing sleep-related respiratory disorders. During his tenure at ResMed, the company grew revenue approximately 500 percent to $1.2 billion, while expanding operating margins and increasing net income more than 20 percent annually. He holds a Bachelor of Science degree in Economics and Accounting from Rutgers University and a master's degree in business from Harvard Business School.

James F. Hinrichs was promoted to chief financial officer (CFO), replacing Edward Borkowski who left the company. As the former CFO of Cardinal Health's Clinical and Medical Products segment, Hinrichs led the CareFusion financial organization prior to the hiring of Borkowski in May 2009 and continued as controller until he was named senior vice president of Global Customer Support in January. The Cardinal Health Clinical and Medical Products segment became the foundation of CareFusion following its spinoff on Sept. 1, 2009. Prior to his role as CFO of the Clinical and Medical Products segment of Cardinal Health, Hinrichs served as executive vice president and controller of Cardinal Health and the CFO of Cardinal Health's Healthcare Supply Chain Services segment. He joined Cardinal Health in February 2004 following 12 years of finance and marketing roles at Merck & Co. He holds undergraduate and graduate degrees in Business from Carnegie Mellon University.

Carlos M. Nunez, M.D., was named CareFusion's chief medical officer (CMO). Nunez is an anesthesiologist, intensivist and hospitalist. He received his medical degree from the University of Miami School of Medicine, where he also completed his postgraduate training in anesthesiology and critical care medicine.

Chief Operating Officer Dwight Winstead stepped down in June 2011 after more than 40 years in healthcare. He joined Cardinal Health in 1997 and held a variety of positions including president of the Clinical Technologies and Services business and group president for Cardinal Health's Automation and Information Services segment.

The company was prolific throughout the fiscal year with new products launched.

The AVAmax vertebral balloon was introduced early in the fiscal year. It is a minimally invasive device for use during kyphoplasty, a procedure for treating spinal compression fractures, which often is caused by osteoporosis. AVAmax is part of an all-in-one system that includes an eight-gauge or 10-gauge needle, bone cement and delivery instruments for kyphoplasty or vertebroplasty, an alternate procedure to treat compression fractures. The all-in-one system gives doctors the choice and flexibility to perform either procedure at the time of patient care. CareFusion established a dedicated sales force to sell the device in order to drive product adoption and market penetration in the United States. The global kyphoplasty procedure health care segment is currently estimated to represent approximately $600 million in sales. Approximately 50 percent of U.S. women and 25 percent of men older than the age of 50 will experience an osteoporosis fracture in their lifetime.

Later in the year, CareFusion launched an 11-gauge vertebral balloon for use in the spinal fracture treatment market. The small-sized balloon allows interventional radiologists and spine surgeons to repair vertebral compression fractures that historically have been more difficult to treat due to their size and location in the spinal column, including smaller vertebra. The device is inserted through a cannula that is 17 percent smaller and a balloon shaft that is 25 percent smaller than any other vertebral balloon on the market, according to the company. This design miniaturization helps make the procedure less invasive for patients without compromising the clinical efficacy of the device since it still meets the pressure and volume requirements of legacy vertebral balloons. For clinicians, the tungsten radiopaque tip enables visibility under imaging, helping to ensure safe deployment of the balloon in the vertebral body.

CareFusion also released SentrySuite, the next-generation clinical diagnostics software for the Jaeger and SensorMedics Pulmonary Diagnostics and CardioPulmonary Diagnostics instruments. SentrySuite is a set of software applications to assist with clinically intelligent diagnostics to improve the quality of patient data. The application focuses on data, organization, workflow and connectivity so physicians can focus more time on patient care.

But growth doesn't just come from new technology. Key acquisitions and streamlining for more efficient operations also can fuel a firm's expansion. CareFusion wasn't shy with either approach.

Midway through the fiscal year, CareFusion sold its Onsite Services instrument management and repair business to Frazier Healthcare. Financial terms of the agreement were not disclosed. OnSite Services provides repair specialists and service technicians who can perform preventative maintenance and instrument repairs at a hospital facility or in a national repair center. Revenue from OnSite Services in fiscal year 2010 was approximately $50 million. OnSite Services includes national repair centers in Highland and Sterling Heights, Mich., with a workforce of approximately 240 employees.

In July last year, CareFusion inked a deal to acquire Rowa, a Germany-based company specializing in robotic medication storage and retrieval systems for retail and hospital pharmacies, for approximately $150 million. Rowa's core products enable high-density, high-speed storage and retrieval of pre-packaged pharmaceutical inventory. With more than 3,500 installations in 30 countries, these automated systems are designed to reduce costs and improve workflow while addressing the unique pharmacy operations requirements outside of the U.S. CareFusion plans to continue Rowa's focus on retail pharmacy customers, while also targeting accelerated expansion within its core hospital customers. Rowa has more than 300 employees and is headquartered in Kelberg, Germany, with operations in Italy, the Netherlands, Denmark and Sweden.

During the current fiscal year, CareFusion also divested its neurodiagnostic Nicolet business to San Carlos, Calif.-based Natus Medical for $58 million in cash. Based in Madison, Wis., the business employed more than 400 people worldwide and generated sales of approximately $95 million in 2011. Natus provides products used for the screening, detection, treatment, monitoring and tracking of common medical ailments in newborn care, hearing impairment, neurological dysfunction, epilepsy, sleep disorders, and balance and mobility disorders. The Nicolet business develops clinically differentiated neurodiagnostic and monitoring products, including a portfolio of electroencephalography and electromyography systems and related accessories, as well as vascular and obstetric doppler sensors and connectivity products. "The decision to divest the Nicolet business is in line with our strategy to simplify and focus our operations and prioritize our investments to profitably grow over the long term," said Gallahue "We have a dedicated team in the Nicolet business that will have greater scale and access to broader market opportunities as part of Natus. More than 50 percent of the Nicolet business is in markets outside of the United States."

Since its spinoff from Cardinal Health in 2009, CareFusion has simplified its portfolio by divesting five non strategic businesses and has completed four acquisitions.

The company continued to deal with infusion pump recall issues throughout the year. Class I (the most serious) recalls were issued for Alaris infusion pumps and AVEA ventilators. The company moved to correct the hardware problems. No deaths or injuries were reported. Both recalls affected parts that no longer were manufactured by the company at the time of each recall.

At press time, however, just shy of the end of CareFusion's 2012 fiscal year, another recall was issued for its AirLife Infant Breathing Circuit products because regulatory officials said they could develop cracks during use, causing a leak in the closed ventilation system. About 280,000 of the disposable products being recalled were manufactured between June 1, 2010 and Feb. 3, 2012, according to CareFusion. There were no reports of patient harm associated with the products, the company said. CareFusion has since improved its manufacturing process and is making a stronger component for its new breathing circuit products, which attach to a mechanical ventilator. The company notified hospitals in late May that it was removing the AirLife products from the market and advised them to destroy whatever remained in their inventory. The U.S. Food and Drug Administration classified the action as a Class I recall on its website on June 29, meaning the defective units could cause serious harm to a patient's health. The company increased its recall reserve fund by $7 million.

26. Fresenius Medical Care

$3.3 Billion ($12.8B total)


Ulf M. (Mark) Schneider, Chairman of the Board

Ben J. Lipps, CEO Fresenius Medical Care

Rainer Baule, CEO Fresenius Kabi

Stephan Sturm, Chief Financial Officer

NO. OF EMPLOYEES: 79,159 (total)


With chronic kidney failure a condition that affects more than 2 million people worldwide, Fresenius Medical are AG & Co. is preparing itself for continued market growth. Through its network of 3,200 dialysis clinics worldwide, the company provides dialysis treatment to 253,000 patients around the globe--which comprises the bulk of the company's revenue stream. To make it onto this list, however, Fresenius also is one of the world's largest manufacturers of dialysis devices and products such as hemodialysis machines, dialyzers and related disposable products.

Overall, the company continues to post solid, steady results year after year.

For fiscal 2011 (ended Dec. 31) Fresenius Medical Care reported sales increase of 6 percent to $12.8 billion. According to the company, organic sales growth was 2 percent; acquisitions contributed 3 percent; and currency translation had an effect of 1 percent. Sales of dialysis services increased by 5 percent to $9.5 billion, up from approximately $9.1 billion. On the device side, dialysis product sales grew by 10 percent to $3.3 billion, up from nearly $3 billion last year.

In North America sales were $8.2 billion, nearly unchanged from $8.1 billion from fiscal 2010. Dialysis services sales were $7.3 billion, unchanged from 2010. Dialysis product sales decreased 2 percent to $813 million. International sales more than made up for stagnate U.S. sales, growing 18 percent to $4.6 billion, compared to $3.9 billion during the previous fiscal year. Sales in dialysis services increased 23 percent to $2.2 billion. Dialysis product sales increased 14 percent to $2.5 billion, mainly driven by higher sales of peritoneal dialysis products, dialyzers, dialysis machines and acute care products, company officials reported. Overall company earnings before interest and taxes (EBIT) increased 8 percent to $2.1 billion, up from $1.9 billion. Net income increased 9 percent to $1.1 billion, up from $979 million in 2010.

On the patient care side, Fresenius made a series of acquisitions and mergers in North America and Europe, including: American Access Care; International Dialysis Centers; the international dialysis service business of Euromedic; and Liberty Dialysis Holdings Inc., the holding company for Liberty Dialysis and Renal Advantage.

On the device front, Fresenius Medical Care AG & Co. purchased the assets of Hema Metrics LLC related to the company's Crit-Line system, which enables non-invasive optical measurement of blood parameters such as percent blood volume change, absolute hematocrit level and continuous oxygen saturation. Crit-Line provides clinicians with a new tool to improve fluid management with less clinical complications, such as hypotension, according to Fresenius. Improved fluid management may lead to fewer hospitalizations for renal patients. Accurate hematocrit measurement, real time, provides the clinician immediate feedback, supporting anemia management. The Crit-Line system and its associated products have been 510(k) cleared by the U.S. Food and Drug Administration, and carry the CE Mark in Europe. Fresenius plans to establish this technology as the standard of care for fluid and anemia management in the North American market.

As part of an increasingly global strategy, Fresenius is expanding its production capacity in Southeast Asia. Fresenius' Kabi division, a maker of infusion therapy and clinical nutrition, opened a new production facility in the coastal city Quy Nhon in central Vietnam. Nearly 380 employees will work at the production facility. With the new plant, Fresenius Kabi will almost double its manufacturing capacity for infusion solutions and liquid medications. Most of these products are intended for the Vietnamese market.

Ulf Mark Schneider, CEO of Fresenius, said: "Health care systems in Vietnam and other countries in Southeast Asia are developing at a rapid pace, so there is a constantly increasing demand for Fresenius Kabi products in these countries. Our new plant in Quy Nhon will help us meet this demand and allow us to make a significant contribution to high-quality, yet affordable health care in the region."

The new plant replaces the existing Fresenius Kabi production facility in Quy Nhon. The new production facility covers 15,000 square meters. The manufacture of infusion solutions already is certified in line with GMP (good manufacturing practice) guidelines set by the World Health Organization. The plant is run by Fresenius Kabi Bidiphar JSC, a joint venture between Fresenius Kabi and Bidiphar, a state-owned health care company based in Quy Nhon. Fresenius Kabi Bidiphar was founded in 2008, and Fresenius Kabi holds the majority of its shares and provides the management team.

For 2012, Fresenius executives expect to grow sales to $14 billion. Net income is expected to grow to $1.3 billion.

65% North America accounted for more than 65 percent of Fresenius revenue in 2011.

27. Bayer

$3.2 Billion ($47.2B total)


Dr. Jorg Reinhardt, Chairman of Bayer HealthCare

Manfred Vehreschild, CFO

Alan Main, Head of Medical Care Division

Sam Liang, President and CEO, Medrad

Joseph Havrilla, Chief Technology & Strategy Officer, Medrad

Jeff Owoc, Sr.VP of Operations, Medrad

NO. OF EMPLOYEES: 55,700 (Bayer HealthCare total)

GLOBAL HEADQUARTERS: Leverkusen, Germany

As is the case with many companies on MPO's Top 30 list, Bayer is a diverse multinational conglomerate, making everything from the ubiquitous Bayer aspirin in the familiar little yellow bottles to complex pharmaceuticals, as well as cotton used in your favorite pair of blue jeans and polyurethane raw materials are used in customized applications from car dashboards and athletic shoes.

In total, the company had $47.2 billion in sales. The healthcare sector of the company brought in $22 billion (47 percent of the companies revenue), which included pharmaceutical and consumer healthcare sales, but device-related businesses, part of the Medical Care division, were responsible for a small fraction of that--a total of nearly $3.2 billion (2.5 billion euros), mainly comprising blood glucose monitoring technology. Blood glucose monitoring devices include the single-strip Contour system and the multi-strip Breeze system. The company also sells the Contour USB meter, which features integrated diabetes management software and direct plug-in to computers, and the A1CNow system for determining long-term blood glucose control (A1c). Most of the meters are produced by various contract manufacturing partners. Device-related businesses also include the injection systems used in contrast agent injection systems for diagnostic and therapeutic medical procedures in computed tomography, magnetic resonance imaging and molecular imaging. During fiscal 2011, to strengthen its position in the diagnostic market, the company combined its diagnostic imaging business--formerly part of the Pharmaceuticals division--and its medical equipment business to form a new Radiology and Interventional business unit. The company's Medrad division makes mechanical systems for removing blood clots from blood vessels--a sector into which Bayer has continued to invest. Medrad makes fluid injection systems for radiology and cardiology, endovascular devices for the safe treatment of cardiovascular disease, magnetic resonance-compatible accessories and provides equipment services.

Sales of the Medical Care division rose by 2.4 percent (through currency and company-reported "portfolio adjustments"). The Diabetes Care business grew, driven by the Contour line of blood glucose meters, according to the company. Sales of these systems rose in all regions, with Europe driving most of the growth--where the company profited from increased demand and new product introductions, particularly in Germany and the United Kingdom.

In September 2011, Warrendale, Pa.-based Medrad purchased Pathway Medical Technologies, Inc. to bolster its portfolio of vascular intervention technology. The purchase price was approximately $125 million, according to unconfirmed industry reports. Officially, details of the deal were not disclosed. Kirkland, Wash. based Pathway manufacturers products to mechanically remove arterial plaque. The company's products clear out blockages in the leg, also known as peripheral arterial disease (PAD). Pathway's Jetstream devices, for example, allow for a minimally invasive procedure designed to restore circulation in the peripheral arteries by reducing vascular narrowing caused by plaque. With differential cutting, Jetstream products are designed to remove plaque without harming healthy tissue.

According to the U.S. Food and Drug Administration (FDA), more than 12 million people in the United States alone are estimated to have some form of PAD.

"The combination of Medrad and Pathway Medical Technologies underscores our strategic commitment to the treatment of patients in the growing interventional field," Dr. Jorg Reinhardt, chairman of the Board of Management of Bayer HealthCare, said at the time the deal was announced. "Pathway's products complement Medrad Interventional's current and future portfolio including our injectors, thrombectomy devices and the Cotavance paclitaxel coated balloon catheter with Paccocath technology and will enable us to extend value to customers and patients through broader product options to diagnose and treat PAD."

Going forward, according to HealthCare division leadership, the company plans to pursue "attractive segments" such as medical data management tools for contrast injection systems and drug-coated balloon catheters to treat vascular disease.

In early September 2011, Medrad received CE Mark for its next generation Cotavance paclitaxel-coated balloon angioplasty catheter with Paccocath technology. The Cotavance balloon catheter is designed to incorporate innovations that include an improved paclitaxel coating process for controlled drug dosing and a new catheter platform with a full range of catheter sizes. The Cotavance balloon catheter is used in percutaneous interventions for the treatment of PAD and is approved for balloon dilation of stenotic lesions in the lilac and infrainguinal arteries while applying paclitaxel to the vessel wall to inhibit restenosis. The company is moving forward with the Investigational Device Exemption process as one of the steps in gaining FDA approval for Cotavance in the United States. Paccocath technology is a proprietary drug matrix applied to the balloon of an angioplasty catheter. The matrix consists of paclitaxel, long used in drug-eluting stents to treat cardiovascular disease, and Ultravist 370, a radiologic contrast agent. When the balloon is inflated to dilate the narrowed vessel, paclitaxel is delivered directly to the diseased area. Bayer Pharma AG is the owner of the Paccocath technology.

Medrad began fiscal 2011 with new management. Jack Darby joined the company as vice president of Medrad Interventional. Darby will act as general manager of the diagnostic and therapeutic lines of the business on a global scale, and also will join Medrad's executive leadership team. He has 20 years of experience in the medical device industry, with most of those years in the interventional cardiology space. Darby previously served as senior vice president of Global Marketing and Distributor Sales at AGA Medical Corporation. Prior to AGA, he spent more than 15 years at Cordis, a Johnson & Johnson company, starting as an angiographic sales representative.

"Jack's broad base of experience in the interventional space and combination drug-device products will greatly complement our patient-focused goals for the interventional business," said Medrad President and CEO Sam Liang." With the support of his leadership, we plan to extend our product innovation and customer satisfaction footprint within this growing, global market."

For 2012, the company kicked off the new year with expansion in the medical device space. In January, Bayer HealthCare opened a new, expanded facility for the Interventional franchise within its Medical Cafe's Radiology and Interventional business. Located at its Coon Rapids, Minn., headquarters site, the new facility features research and development laboratories as well as manufacturing clean rooms. The Interventional franchise discovers, markets and manufactures therapeutic medical devices for the treatment of vascular occlusions. The expansion nearly doubles the company's infrastructure in Minnesota, home of its Interventional franchise, and provides room for future growth in cardiovascular and peripheral vascular disease device lines.

The new building comprises roughly 80,000 square feet of space. Scientists and research technicians now are working in new laboratory space and the company plans to use new clean rooms to expand production of the Cotavance drug eluting balloon.

"This facility embodies the spirit of Bayer's mission--'Science for a Better Life'--through design that encourages employees to collaborate on new product ideas and work efficiently to manufacture interventional devices that provide physicians with less-invasive solutions--alternatives to surgery--for a growing number of medical conditions," said Darby.

The facility employs approximately 225 people.

28. C.R. Bard

$2.9 Billion


Timothy Ring, Chairman & CEO

John H. Weiland, President & Chief Operating Officer

Christopher S. Holland, Chief Financial Officer

Gary D. Dolch, Ph.D., Sr.VP, Quality,

Regulatory & Medical Affairs



According to a financial report released by Zacks Research Group in December 2010, "C.R. Bard's well-diversified end-markets and vast product portfolio (used in life-saving, less-invasive surgical procedures) insulate it from fluctuations in any single therapeutic category." The company's performance for fiscal 2011 (ended Dec. 31) seemed to prove the research correct. Bard develops medical devices in four categories: vascular, urology, oncology and surgical specialties. Products range from devices that treat hernias, to stents that prevent blood clots from traveling to the lungs, catheters that reduce hospital-acquired infections, and ports that deliver chemotherapy, reducing frequent needle sticks for children and adults.

Net sales for the year were $2.9 billion, an increase of 6 percent compared with fiscal 2010. Net income attributable to common shareholders was $328 million and diluted earnings per share available to common shareholders was $3.69, a decrease of 36 percent and 31 percent, respectively, compared with 2010 re suits. Adjusting for items that affect comparability between periods, 2011 net income attributable to common shareholders was $568.9 million and diluted earnings per share available to common shareholders was $6.40, an increase of 6 percent and 14 percent, respectively, as compared with 2010 results.

Out of net sales of $2.9 billion, the Vascular unit generated the largest percentage of sales at 29 percent. A close second was Oncology at 27 percent, after which was Urology with 25 percent and Surgical Specialties at 16 percent.

In the third quarter, Bard released the Encor Enspire biopsy system under the Vascular umbrella. The device is a next-generation version of the company's existing console based vacuum assisted breast biopsy technology that it acquired in 2010. The new platform has a touch screen interface, real-time visualization of the biopsy needle, and is adjustable while in the breast tissue. It also features a single-insertion, multiple-sample capability with local anesthesia delivery. The device was well-received by the market, John H. Weiland, company president and chief operating officer, and Timothy M. Ring, chairman and CEO, said in the company's 2011 annual report.

Another new device that pumped up Vascular sales was the newest addition to the Finesse Ultra breast biopsy family, the Finesse Ultra 10 probe. The device is a hand held system that performs vacuum assisted biopsies, and is designed to take multiple samples via a single insertion method while also delivering larger tissue samples.

New products were not the only trick up Bard's Vascular sleeve, though. There was significant growth in the peripheral stent business, driven by advancements in the treatment of lesions in the superficial femoral artery (SFA). According to the company's annual report, Bard's LifeStent device is the only stent on the market indicated for SFA. The company's Crosser CTO Recanalization Catheter that was purchased in 2010 has filled an unmet need in the lower limb arterial disease space. According to the company, the catheter enables physicians to penetrate hardened blockages in blood vessels, restoring blood flow with the help of angioplasty.

Furthermore, Bard purchased Lutonix Inc. in December just before the close of the financial year. Lutonix is the manufacturer of Lutonix DCB, a new drug coated balloon catheter (DCB) for peripheral and coronary interventions. "Its drug coated balloon technology could ultimately be a game-changer in [the vascular] area," said Weiland and Ring in their letter to shareholders, noting that the Lutonix DCB is the first and only DCB under an investigational device exemption from the U.S. Food and Drug Administration (FDA)--meaning the device is permitted to be used in a clinical study in order to collect safety and effectiveness data required to support a premarket approval application or a 510(k) submission to the agency.

Bard's second most profitable segment, Urology, saw most of its growth and impact outside the United States. There were few new devices to boost Urology in FY2011, with the unit gaining its strength from previously released, strong performing devices. Since its release in 2009, the DigniCare Stool Management System has performed well. Bard expects the new product in this family, the DigniShield SMS device, to perform well for 2012.

In the fourth quarter of FY2011, Bard purchased Medivance Inc., which manufactures therapeutic hypothermia devices. This is a new product space for Bard, and is a growing market segment in general. The American Heart Association, the American Stroke Association, the Brain Trauma Foundation and various international medical associations have issued therapeutic hypothermia guidelines as the clinical data supporting targeted temperature management has grown.

As for Oncology, Bard rolled out the Sapiens Tip Confirmation System, which purportedly eliminates the need for X-rays to confirm the proper placement of peripherally inserted central catheters (PICCs) for medication infusion. The Sapiens Tip is de signed to use the patient's real-time cardiac electrical activity to help the nurse accurately place the PICC. The device had a 91 percent adoption rate among accounts that evaluated the technology and made a final purchase decision, according to Bard. The system will officially be on the market in 2012.

Surgical Specialties launched the Echo PS Positioning System in FY 2011. The device is used in ventral hernia repairs as a la paroscopic delivery technology. Along with this device, Bard's Ventralight ST mesh with the Sepra resorbable barrier worked together to boost the growth of the ventral repair space.

In FY2011, the company named Todd W. Garner to the position of vice president of investor relations in February. He succeeded Eric J. Shick, who was named vice president of operations strategic programs. Garner earned his bachelor's degree in ac counting from Brigham Young University in Provo, Utah, and his MBA from the University of Texas--Pan American in Edinburg, Texas. Prior to this appointment, he was director of corporate financial reporting and analysis and vice president and controller of Bard Medical Division. Garner started his career with Arthur Andersen LLP and before joining Bard was corporate controller at Echopass Inc.

Bard executive T. Kevin Dunnigan, the company's longest-5tenured director, retired in 2011. He began his time at Bard in 1994 when he joined the Audit, Executive and Finance Committees. G. Mason Morfit, a partner of ValueAct Capital, took his place on the board of directors. ValueAct is one of Bard's largest investors. Also retiring in 2011 were Christopher D. Ganser, vice president of quality, environmental services and safety; James M. Howard II, vice president of regulatory and quality systems excellence; and Robert L. Mellon, vice president of strategic planning and business development.

Bard named a new senior vice president and chief financial officer in April 2012, Christopher S. Holland. He joined Bard from Aramark Corp., where he served as senior vice president of finance and treasurer.

Kicking off the 2012 fiscal year, CEO Ring said of the company's first-quarter performance (period ended March 31):"The results this quarter reflect a good start to the year. While we haven't seen much change in the U.S. environment, our increased focus and investments in international markets have provided rapid returns and strengthened our growth profile. We remain focused on daily execution of our product leadership strategy to take advantage of current opportunities while positioning ourselves for stronger growth in the future."

29. Biomet

$2.7 Billion


Jeffrey R. Binder, President & CEO

Daniel P. Florin, Sr. VP & Chief Financial Officer

Glen A. Kashuba, Sr. VP, President, Spine & Bone Healing Technologies

Jon C. Serbousek, Sr. VP,, Group President, Orthopedics

Maggie Anderson, Sr. VP, President, Biomet 3i

Renaat Vermeulen, Sr. VP, President, Europe, Middle East and Africa

Robin T. Barney, Sr. VP, World Wide Operations



"Those who fail to learn from history are doomed to repeat it."

--Sir Winston Churchill

Some history is worth emulating. The post-World War II economic expansion, for instance, might be a suitable candidate, particularly considering the world's financial troubles of late. Another potential contender could be the technological revolution that created such modern marvels as the Internet (though an argument theoretically could be made against revisiting that part of the past), the electric automobile and human genome mapping.

But some bits of history--specifically those involving war, civil unrest, political instability and of course, natural disasters--should be left to fade into memory and relived only through discussion and/or recollection.

Europe, however, is in danger of reincarnating a dark part of its history as it wrestles with a debt crisis that threatens to drag the world into another debilitating recession. Europe's peripheral economies already appear to be in depression: According to the International Monetary Fund, gross domestic product will contract this year by 4.7 percent in Greece and 3.3 percent in Portugal. Earlier this summer, unemployment reached 24 percent in Spain, 22 percent in Greece and 15 percent in Portugal. Public debt, which already exceeds 100 percent of gross domestic product in Greece, Ireland, Italy and Portugal, is only adding to the pecuniary misery.

"Those of us who repeatedly warned in the 1990s that the experiment of monetary union would end badly would be gloating now--if we were not so troubled by the prospect of history repeating itself," British historian/Harvard University professor Niall Ferguson and U.S. economist/New York University professor Nouriel Roubini wrote in a commentary that recently appeared in newspapers worldwide. "The EU [European Union] was created to avoid repeating the disasters of the 1930s. It is time Europe's leaders ... understood how perilously close they are to doing just that."

Such a scenario would be calamitous for businesses that depend on the European market for a significant portion of their sales. The unfolding crisis already has curtailed profits at Biomet Inc., an orthopedic manufacturer in Warsaw, Ind., that has long been considered a bellwether for the U.S. orthopedic market. Losses at the firm soared during the fourth quarter and fiscal 2011, due largely to a $941.1 million writedown related to its reassessment of the European market.

The writedown was necessitated by "the continued market slowdown in Europe relative to the original purchase accounting assumptions" when a private equity consortium took Biomet private in 2007, according to a company news release.

"During our fiscal fourth quarter, our sales results continued to be challenged by industry volume and price pressures that affected our sales throughout fiscal 2011,'President/CEO Jeffrey R. Binder said in prepared remarks." In addition, we have not been executing to our standard of above-market growth in most of our businesses. We are working hard to return to that standard as quickly as possible."

Biomet posted net losses of $806.5 million on sales of $715.2 million for the three months ended May 31, 2011. The figure represents a net loss increase of roughly 5,462 percent, despite top-line growth of 1.8 percent, compared with the same period in 2010.

For the full year, Biomet logged net losses of $849.8 million (nearly an 18-fold increase) on $2.73 billion in sales (up 1.3 percent). Gross profit barely budged, moving up 0.8 percent to $1.8 billion. International sales were solid, jumping 14 percent to $374.4 million, but domestic (U.S.) revenue remained essentially flat, going from $1.64 billion in FY2010 to $1.66 billion in fiscal 2011 (year ended May 31, 2011). European sales took the biggest hit, falling 4 percent to $697.8 million, according to Biomet's fiscal 2011 annum report.

Reconstructive products generated the most revenue for Biomet in fiscal 2011, boosting worldwide sales 2 percent to $2 billion, or 76 percent of the firm's overall net sales. Global knee sales slowed significantly, rising a meager I percent worldwide and remaining flat in the United States. The sluggish sales are somewhat troubling for the company, considering the impressive performance turned in by knee products in fiscal 2010, when revenue surged 13 percent worldwide and 11 percent in the United States. Executives attributed the stagnant growth to a sputtering global economy, high unemployment rates, a reluctance among patients to undergo elective surgical procedures, increased medical deductibles and co-pays, and the expiration of COBRA subsidies.

In both of the most recent fiscal years, the main growth driver in knee products was the firm's Vanguard Complete Knee System with E1 antioxidant infused tibial bearings. The Vanguard System accommodates up to 145 degrees of flexion and is supported by five instrument platforms that can adapt to various workflows and techinques: Microplasty, Premier, Microplasty Elite, Vanguard Tensor and Vanguard Anterior Referencing.

During FY2011, the company began the clinical evaluation of its newest revision knee offering, the Vanguard SSK 360 Revision System. Biomet also received clearance to market the Signature System, which uses magnetic resonance imaging or computed tomography scan to produce patient-specific positioning guides for surgery. The Signature System was developed through a partnership with Materialise, a Belgian provider of rapid prototyping and CAD software development for medical and industrial applications.

Global hip implant sales rose 1 percent worldwide and domestically in fiscal 2011. During the year, the company introduced its Active Articulating E1 System and Active Articulation ArcomXL System--dual-mobility acetabular devices designed to provide the benefits of a large head design, including low wear. Also added to the company's hip product lineup was the Arcos Modular Femoral Revision System, a comprehensive system that provides surgeons with 117 proximal/distal combinations, multiple auxiliary fixation options and one basic instrumentation platform.

Extremity product sales increased 20 per cent worldwide and 30 percent domestically. Primary growth drivers were the Comprehensive Primary Shoulder and the T.E.S.S. (Total Evolutive Shoulder System), a product the company claims can be used in all shoulder arthroplasty procedures. T.E.S.S. is only available outside the United States.

Dental sales climbed 2 percent worldwide and 3 percent in the United States, bolstered in part by the launches of the pure titanium Tapered Certain Implant and the OSSEOTITE 2 Parallel Walled Dental Implant, a product developed to accommodate patient demands for shorter treatment times and the prevalence of both soft bone dental implant replacement and tooth extractions with immediate placement/loading and earlier loading. The OSSEOTITE 2 product, executives said, is designed for more immediate bone-to-implant contact for primary stability. In addition, Biomet 3i began offering Low Profile Abutments and restorative components during the fiscal year to provide better access to, recovery of, single and multiple-unit dental implant restorations.

Biomet's Spinal and Fixation divisions were the only two segments to lose money in fiscal 2011. Each garnered a similar amount of cash and posted nearly identical losses, though executives gave different reasons for the respective declines. Fixation generated $232.9 million in sales, a 4 percent decrease compared with FY2010, while Spinal revenue slid 3 percent to $224.9 million. Bigwigs blamed the deficit in Fixation on pricing, but said Spinal sales were affected by a general slowdown in procedure volume, a challenging reimbursement environment for some fusion procedures, and a continued trend toward physician-owned distributorships.

Double-digit sales growth in Biomet's sports medicine division helped push sales of "other" products to $190.2 million, a 7 percent increase compared with the $177.6 million those devices brought to the company in fiscal 2010. Top sellers in this category in fiscal 2011 included the Jugger-Knot Soft Anchor, the ComposiTCP Interference Screw, the MaxFire MarXmen Meniscal Repair Device, the Toggle Loc Femoral Fixation Device with ZipLoop technology, and the ALLthread Knotless Suture Anchor.

60% Biomet is the fourth-largest competitor in the U.S. orthopedic reconstructive market. It supplies products to more than 60 percent of U.S. hospitals that perform joint replacement surgery.

30. Varian

$2.6 Billion


Timothy E. Guertin, President & CEO

Elisha W. Finney, Corporate Sr. VP & Chief Financial Officer

Robert H. Kluge, Corporate Sr. VP & President, X-Ray Products

Kolleen Kennedy, Corporate Sr. VP & President, Oncology Systems

Lester Boeh, VP,, Emerging Businesses



Pamela Percival was diagnosed with a high-grade sarcoma in her abdomen, which meant she was at high risk for it metastacizing. The sarcoma being high-grade also meant that she would likely face a combination of surgery, chemotherapy and radiation therapy. Varian Medical was able to provide her with the radiotherapy technology she needed, and today Percival is 1Mng cancer-free. What makes her recovery even sweeter, however, is that she is a Varian employee, and was able to see first hand how the technology her company produces helps real people in very real ways.

"I've always believed in the mission of Varian," she said, "But it's never been so personal as when it's your own life. Seeing that our own machine was treating me gave me a sense of comfort and pride."

Varian's Oncology Systems unit has been enjoying annual market growth of 8 percent over the last five years, and contributed $2 billion to the company's overall reported revenue of $2.6 billion for fiscal year 2011 (ended Sept. 30), an 8.5 percent increase from FY2010. According to the company's annual financial report, Varian received approval from the State Food and Drug Administration in China to market its TrueBeam System there in April 2011. The TrueBeam system is a radiotherapy device that has been on the U.S. market since April 2010, and is designed to treat tumors with elevated speed and accuracy, even if the tumor is difficult to pinpoint due to breathing motions of the patient. In the third quarter of FY2011, the Japanese Ministry of Health, Labor and Welfare granted Varian approval for the device to be marketed in Japan. Through the end of the fiscal year, Varian received more than 380 orders for the system, most orders coming from North America.

In a letter to stockholders, President and CEO Tim Guertin said the Oncology Systems team was able to "improve treatment capacity and patient access to [Varian's] life-saving technology" over the course of FY2011. A range of other products in this portfolio performed well, including Varian's RapidArc, a drug-delivery system that is touted to improve dose conformity while significantly shortening treatment times, which exceeded 2,000 orders.

X-ray products didn't disappoint either. X-ray products represented 18 percent of total revenues in FY2011, compared to 17 percent in 2010. They generated $469 million in revenue in FY2011, an increase of $66 million compared with the previous year. Varian produces X-ray tubes for CT scanners, radiographic or fluoroscopic imaging, mammographies and special procedures. Its flat-panel detectors, based on amorphous silicone imaging technologies, have found broader applications as alternatives to image intensifying tubes and X-ray film. These panels have found their way into filmless medical diagnostics, dental, veterinary and industrial applications, which only has translated into more revenue for Varian.

Also included in Varian's revenue were the company's Security and Inspection Products, which provide group cargo screening system manufacturers and others with products for high-energy X-ray imaging. These technologies generated $106 million in revenue in FY2011.

The company posted net income of $399 million, up 10 percent from $360.4 million in 2010.

In terms of acquisitions, Guertin is particularly excited over the agreement Varian reached with Augmenix in May 2011. Varian agreed to make a $15 million minority equity investment in Augrnenix, which is developing hydrogel products to improve outcomes in radiation oncology. "[The technology] could be used to position the prostate away from sensitive tissues for high-dose radiosurgery," Guertin explained in the annual report. The hydrogel, called SpaceOAR, works by solidifying as soon as it is injected into the space between the prostate and rectum in men. The rectum then moves away from the prostate, limiting its exposure to radiation during treatment. Varian's investment includes an option to buy Augrnenix, which hasn't taken place as of time of publication.

In September, just before the close of the fourth quarter, Varian announced an agreement to acquire Calypso Medical Technologies Inc. for $10 million plus a portion of earnings generated from Calypso products during the ensuing 30 months. Calypso is a privately owned, Seattle, Wash.-based developer and supplier of specialized products and software for real-time tumor tracking and motion management during radiosurgery and radiotherapy.

"With Calypso's technology, Varian will be able to offer cancer treatment centers real-time, non-ionizing tumor tracking tools for enhancing the precision of their treatments," Guertin said. "These products are a perfect complement for Varian's motion management technology, including our TrueBeam platform, respiratory gating and dynamic imaging tools for highly focused radiosurgery. These products should enhance Varian's growth as we integrate them and make them more broadly available to the clinical community through our global marketing and sales channels."

Looking to the future, Varian will continue growing its radiation business. In FY2011, the company's particle therapy business booked an $88 million order for a system that is being installed at the new Scripps Proton Therapy Center in San Diego, Calif. Particle therapy is a form of radiotherapy that uses energetic protons, neutrons and ions for cancer treatment. Treatment with the system is scheduled to begin in 2013 for patients with cancers where it particularly is necessary to protect surrounding healthy tissue. Guertin expressed confidence that this would be % catalyst for more accessible financing for future centers."

Editors' note: As you read our report, please take note that while the companies are ranked according to sales reported for FY 2011 (though we do provide some 2012 figures to date where possible), some may include non-device sales within a division, such as combination products, drug delivery, software or device-related services. Not all companies explicitly break out the device portion of total revenues. We consulted numerous public documents and contacted company officials as needed to arrive at the best estimates. Also note that foreign currency conversions were done based on the exchange rate at the end of the fiscal reporting period being discussed.



 1.   Johnson & Johnson      $25.8B
 2.   GE Healthcare          $18.1B
 3.   Siemens Healthcare     $17.0B
 4.   Medtronic              $15.9B
 5.   Baxter International   $13.9B
 6.   Philips Healthcare     $11.4B
 7.   Abbott Laboratories     $9.9B
 8.   Covidien                $9.6B
 9.   Cardinal Health         $8.9B
10.   Stryker                 $8.3B
11.   Becton Dickinson        $7.8B
12.   Boston Scientific       $7.6B
13.   Danaher                 $6.6B
14.   B. Braun                $6.0B
15.   St. Jude Medical        $5.6B
16.   Novartis (Alcon)        $5.3B
17.   3M Healthcare           $5.OB
18.   Toshiba                 $4.6B
19.   Zimmer                  $4.58
20.   Smith & Nephew          $4.3B
21.   Olympus Medical         $4.2B
22.   Hospira                 $4.1B
23.   Terumo                  $4.0B
24.   Synthes                 $3.9B
25.   CareFusion              $3.58
26.   Fresenius Medical       $3.3B
27.   Bayer                   $3.2B
28.   C.R. Bard               $2.98
29.   Biomet                  $2.7B
30.   Varian                  $2.6B
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Article Details
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Title Annotation:p. 98-134
Author:Delporte, Christopher; Barbella, Michael; Arrowsmith, Niki
Publication:Medical Product Outsourcing
Article Type:Cover story
Geographic Code:9CHIN
Date:Jul 1, 2012
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