Incorporated: 2004
NAIC: 339113 Surgical Appliance and Supplies Manufacturing; 551112 Offices of Other Holding Companies
SIC: 3842 Surgical Appliances & Supplies; 6719 Holding Companies Nec
Synthes, Inc., is one of the world's leading osteosynthesis specialists, developing implants, instruments, biomaterials, and systems for the treatment and/or regeneration of the human skeleton and related soft tissues. The Solothurn, Switzerland-based company is the world leader in the traumatology sector, and has long played a prominent role in the treatment of bone fractures. Synthes is also a top producer of implants, including plats, screws, rods, and hooks used to treat spinal column injuries and conditions. Among the company's products in this area is its Prodisc system, which allows for the complete replacement of intervertebral discs. The company's cranio-maxillofacial division is a leading developer of treatments specifically for facial, jaw, and skull conditions. Synthes has also been developing new technologies, such as resorbable implants and bone graft substitutes.
Synthes's product development is conducted in partnership with the AO Foundation, founded in order to pioneer the research and development of treatments for bone fractures and conditions. The company operates on a worldwide scale, with subsidiaries in 35 countries. The North American market is the company's largest, accounting for nearly 64 percent of its turnover of $2.4 billion in 2006. Europe is the group's next largest market, at nearly 22 percent. Synthes is listed on the Swiss stock exchange. The company is led by CEO Hansjoerg Wyss.
Pioneering Osteosynthesis
Synthes, Inc., represented the culmination of nearly 60 years of cooperation between members of Switzerland's medical and industrial sectors, and played a pioneering role in the creation and development of osteosynthesis techniques. Bone fractures had long been an area of interest for the medical community; since the advent of modern medicine in the 19th century, various efforts had been made to improve on bone setting and healing techniques. Yet these efforts remained largely mechanical, involved the use of casts and other devices to immobilize the broken bone, and indicated a general lack of understanding of the process involved in the healing of fractures. The result was that the setting of fractures continued to be at best a cumbersome process, and at worse, potentially crippling.
In the 1940s, a number of surgeons had begun investigating the use of various types of fixation devices to aid recovery. These efforts also included the use of implants, as well as various rehabilitation techniques. Toward the end of that decade, the medical community began to make progress toward understanding the mechanisms involved in fracture healing and functional recovery. A major proponent in this effort was Belgian surgeon Robert Danis, who published his Théorie et Pratique de l'Osteosynthèse in 1949.
The book caught the attention of Maurice Müller, a surgeon in Switzerland, who met with Danis, then brought his theories back to Switzerland. There, Müller formed an association with three other surgeons, Robert Schneider, Martin Allgöwer, and Hans Willenegger, in order to explore and develop the techniques described by Danis's work. In 1950, the four partners created the Arbeitsgemeinschaft für Osteosynthese (Association for the Study of Osteosynthesis), or AO.
Over the next several years, AO emerged as a pioneering force in the development of new osteosynthesis techniques and treatments. By the late 1950s, the association began seeking out industrial partners to help develop its technologies into marketable products. For this, the association turned to Bettlach-based Mathys AG, founded as a manufacturer of machines and machine components in 1946 by Robert Mathys. Through the 1950s, Mathys had developed expertise in working with special non-corrosive and acid-resistant stainless steels. This expertise made Mathys an attractive partner for AO, and in 1958, Mathys agreed to manufacture the implants and other instruments designed by AO.
With Mathys providing the funding, the partnership quickly resulted in a new range of bone fixation products. Mathys soon grew into an internationally operating company, developing a wide range of medical products, including surgical tools and equipment, as well as implants and other devices and materials produced under license from AO.
AO interests also turned toward developing internal fixation products. The company founded a research laboratory for the creation of new surgical techniques in 1959. At the same time, the success of the partnership with Mathys encouraged AO to seek additional partnerships to assist it in manufacturing products using its technologies. In particular, the company sought out a partner capable of producing a new range of internal fixation devices under its development.
This led AO to the Straumann Institute in 1960. That company had been founded in 1920 by Reinhard Straumann, a metallurgical engineer who developed a range of specialty alloys for use by the Swiss watchmaking industry, particularly by the Rolex and IWC watch companies. In 1954, Straumann founded a new company, Dr. Ing. R. Straumann Research Institute, focused on the creation of specialized metal alloys. In the late 1950s, then under the direction of Straumann's son Fritz Straumann, the company began seeking a means to put its alloy expertise to practical use. In 1960, Straumann contacted AO, forming a partnership that led to the production of the first Synthes-branded internal fixation products.
North American Entry in 1974
By the end of the 1960s, Straumann and AO had successfully developed a new generation of non-corroding alloy that could be used for internal implants. This breakthrough enabled the company to emerge as a global leader in the fast-growing osteosynthesis field. Through the 1970s, Straumann put into place an international sales and marketing network. For the U.S. market, an entirely new company was created, called Synthes USA, Inc., located in West Chester, Pennsylvania. Synthes became the third licensee for AO's technologies, operating as an independent company. Over the next decade, Synthes USA, which also expanded in Canada, became the largest of the three AO licensees.
At the end of the 1970s, Mathys extended its materials expertise to include ceramics, launching its first ceramics-based implants in 1978. That company then added a new range of granulates at the beginning of the 1980s. AO had also been growing as well, and by the early 1980s had expanded far beyond Switzerland to represent a worldwide organization of surgeons, researchers, and other operating room personnel. This led AO to restructure itself as the AO Foundation in 1984, setting up a global headquarters in Davos, Switzerland, that year.
Straumann, meantime, became the first to develop dental implants, which represented a major breakthrough in dental care. The company introduced its first implant in 1974, backed by a one-step surgical procedure. The rapid growth of the dental implant market through the 1980s led Straumann, then under the leadership of Thomas Straumann, to refocus itself on this division at the beginning of the 1990s. The company then spun off its osteosynthesis and joint-replacement operations to a management buyout group led by Rudolf Maag. These operations, which retained the company's AO licenses, were then renamed Stratec Medical. The reformed Straumann then refocused its operation on its dental implant business. That company went public in 1998 as Straumann Holding.
Stratec Medical set out to expand its range of operations. The company had been developing its implant technologies, traditionally focused on the long bone in the arms and legs, to respond to other skeletal areas. The company had launched its first maxillo-facial implants in the 1970s, and by the 1980s had begun developing spine reconstruction, regeneration, and replacement products. Into the early 1990s, Stratec complemented its implant and fixation portfolio with a range of surgical power tools. In 1991, the company also launched a dedicated U.S. subsidiary, Stratec Spine, to develop spinal reconstruction products for the North American market. Toward the middle of the decade, the company's interests in computer-assisted surgical techniques led it to form a dedicated subsidiary for that market, Medivision Ltd., in 1995.
Single AO License Holder for the New Century
Stratec went public in 1996, listing its stock on the Swiss stock exchange. The company continued to develop new surgical procedures, resulting in the launch of the Integra 360 technique, combining several of the company's spinal reconstruction products into a single, standardized surgical platform.
Despite its strong product development during the 1990s, particularly its focus on the maxillo-facial and spinal segments, Stratec's growth nonetheless faced the geographic limitations under its AO license agreement. The company took the first step toward overcoming that limitation when it reached a merger agreement with Synthes USA in 1999. The new company, which retained Stratec's public listing, then took on the name of Stratec-Synthes.
Stratec-Synthes next moved to boost its range of technologies. In 1999, the company acquired Norian Corp., based in the United States, which had been developing artificial bone substances. By 2001, Stratec-Synthes had decided to specialize its operations wholly on the osteosynthesis market, selling its joint-replacement business. This divestment was followed in 2003 by the sell-off of its Medivision unit, to Praxim SA.
In that year, Stratec-Synthes reached a new merger agreement with Mathys, the last of the three AO license holders, to combine their osteosynthesis operations into a single company, renamed Synthes, Inc. That merger was completed in 2004, boosting Synthes into the top three of the global osteosynthesis market.
The unified Synthes sought new growth opportunities as it turned toward the mid-decade. The company boosted its U.S. position with the acquisition of Spine Solutions Inc., which focused on the total spine disc replacement segment. The following year, the company bought another U.S. company, Gelifex, adding its expertise in spinal disc nucleus replacement. These acquisitions helped boost Synthes's revenues past $2 billion by the end of 2005. With more than 60 percent of its sales generated in the United States, Synthes built a new and larger North American headquarters in West Chester that year. In that year, also, Synthes launched a new division, Synthes Vet, to adapt its technologies for the small but growing veterinary market.
Synthes continued to develop both its product lines and its geographic reach in the second half of the first decade of the 2000s. In 2006, the company received U.S. Food and Drug Administration approval for its new Prodisc-L artificial lumbar disc. In that year, also, the company, already present in approximately 35 countries worldwide, boosted its Latin American presence with the creation of a new subsidiary in Costa Rica. As a global leader in the osteosynthesis market, Synthes appeared to have found the right formula for its own growth in the new century.
Principal Subsidiaries
HFSC Company (U.S.A.); Norian Corporation (U.S.A.); SMGT, Inc. (U.S.A.); Spine Solutions, Inc. (U.S.A.); Synthes Asia Pacific (Australia); Synthes GmbH; Synthes LAT, Inc. (U.S.A.); Synthes, Inc. (U.S.A.); Synthes Spine, Inc. (U.S.A.).
Principal Competitors
Stryker Corp.; Biomet Inc.; Zimmer Holdings Inc.; ENCO spol S.R.O.; Smith and Nephew United Inc.; Getinge AB; STERIS Corp.; Centerpulse Orthopedics AG; William Demant Holding A/S; Bacou-Dalloz S.A.; DePuy Inc.
Further Reading
Loyd, Linda, "Spine Product Rivals Now Battle in Court," Philadelphia Inquirer, July 26, 2007.
"Synthes, Globus Settle Suit on Secrets," Philadelphia Inquirer, August 21, 2007.
"Synthes-Stratec Buys Mathys," Swiss News, September 2003, p. 18.
"Synthes-Stratec Most Dynamic," Swiss News, July 2003, p. 2.
— M. L. Cohen
