Synthes – Case Solution

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Synthes Case Answers

Synthes

In 2000, Synthes was the leading manufacturer and distributor of internal fixation devices to orthopedic trauma surgeons to repair fractured bones.

The company acquired nearly 50 percent of the market share in the U.S. due to a successful approach based on outstanding customer service, physician training, and a large product line, which is mainly comprised of plates, rods, and screws, also known as “implants.” These implants were made of stainless steel or titanium, metals that were strong and cost-effective.

Being recognized as the best in the business, Synthes sold over $240 million in trauma implants in the U.S., which were used in more than 300,000 patients. However, these implants represented problems for surgeons, given that about 20 percent of adults and 40 percent of children had to get implants removed. It was a bad scenario for patients to have to go back to the operating room to get a second surgery to remove the implant after fracturing a bone.

The major issues with Synthes products remaining inside people’s bodies included lingering pain, fear of having metal inside, the implant being visible below the skin, and in the case of children, the implant would interfere with the development of the bones or parents would insist in getting the plates removed.

Also, the surgery to remove an implant carries an extra risk for the patients, exposing them to a new fracture, damage of a muscle or nerve, or an infection.

On the other hand, leaving an implant has several potential problems, such as a palpable implant, reduced blood flow to the bone, imagining shadow, loosening of the implant, and difficult procedure if a bone re-fracture.

As it became increasingly difficult to stay ahead of the competition due to the decrease in the time it takes a competitor to copy new products and the constant demand for lower prices from hospitals and HMOs, Synthes encountered a new dilemma with the introduction of the second-generation of bioresorbable.

The company was focusing most of its efforts on a sustainable innovation strategy by constantly improving its current products. The bioresorbable fixation devices were a disruptive innovation that was constantly decreasing its production costs and strengthening its characteristics due to the research of major companies such as Johnson and Johnson that were focusing on the development of these products. If accepted by the market, the bioresorbable implants will threaten the sustainability and longevity of Synthes.

Even though the market for resorbable implants was still small and not fully developed, it was constantly growing. Sales in areas such as sports medicine approached $100 million per year. In contrast, trauma sales had grown to $10 million per year. Research made by the HBS team demonstrated a highly possible acceptance of resorbable implants if these were to be introduced to the market by Synthes.

Synthes is facing an innovator’s dilemma, the bioresorbable implants are a disruptive innovation that was introduced to the market in 1987. The second generation of these implants started to become popular in 2000. The company should pay attention to this technology and make an effort to evolve its business model to meet customers’ future needs better.

Even though resorbable implants still present a lower performance and more defects in the key features valued by the market, these implants satisfy a need that is being neglected by the current market.

If Synthes continues to follow a sustaining innovation path to fulfill its short-term goal, it could doom the company for failure in the future. Synthes would find themselves 5 to 10 years behind their competitor in regard to product development if the market for bioresorbable implants materializes.

Moreover, a $20 million investment loss scenario for research and development of bioresorbable is…