Boasting one of the world’s fastest growing economies, Brazil is receiving worldwide commercial attention. Its medical device industry does not escape this newfound focus and is experiencing growth in several of its sectors, one of which is the orthopaedic trauma device market. Growing at twice the rate of the European market, and at a rate comparable to that in the United States, the Brazilian orthopaedic trauma devices market is steadily expanding due to the country’s demographics, health insurance policies, and laws. Instituted after the 1988 constitution, Brazil’s Unified Health System (Sistema Único de Saúde (SUS)) governs more than half of the trauma products used in the country, but corresponds to less than a third of total market revenues. This structure explains why Synthes continues to be a leading competitor in the Brazilian trauma device market even though it does not participate in the public sector. The disparity between SUS and private pricing has lead to a gradual decline in average selling prices, where SUS pricing remains stable while private pricing declines due to increasing competition and pressure. However, despite declining prices, the market will continue to thrive due to other factors, such as Brazil’s rapidly growing economy, its aging population, and an increase in motor accidents.

Orthopaedic emergency centers in Brazil often see a large influx of patients suffering from injuries related to traffic accidents, the highest incidences involving motorcyclists. Traffic accidents represent the main cause of hospitalization through Brazil’s SUS. According to the Brazilian Ministry of Health, traffic accidents cost more than R$100 million per year; this is more than 30% of the budget that the Ministry allocates to accidents derived from external causes. Traffic accidents are the greatest cause of multiple fracture injuries, which require immediate emergency assistance and often, highly specialized treatment.

 

The highest incidence of these trauma fractures happens to the inferior members of the body, followed by the superior members, head, and spine, according to studies conducted in Brazilian states. This might explain the high growth rate of proximal femoral intramedulary nail usage as well as plate and screw systems that tend to the tibia and femur. In 2011, the femoral and tibial intramedullary nail unit sales, as well as the large fracture plate and screws saw an increase of more than 8% over the previous year. In addition, the hip intramedullary nail market experienced double digit growth. It is predicted that as the population in metropolitan centers increases and more people are able to afford motorcycles, so will the incidences of trauma injuries.

More than 70% of Brazilians today rely on the SUS.  The system’s mission is to make healthcare available to everyone in the country irrespective of their class or social status. Out of all the hospitals in Brazil, nearly 75% operate under the SUS. It is estimated that 65% of the total trauma market is controlled by manufacturers selling under the SUS standard pricing. The prices of procedures and equipment set by the SUS are used as a reference when selling to public hospitals, laboratories, blood banks, and other sites, and suffer little variation with time. This standardized pricing scheme limits the market, because distributors and product manufacturers cannot increase their pricing above SUS standards when selling to major hospitals and doctors. Moreover, as the quality of the equipment produced by the companies working under the SUS increases, they are bound to compete with the products marketed in the private sector and will inevitably deteriorate the pricing of those products.

 

In Brazil, there is a large price discrepancy between manufacturers that sell their products through the SUS and the ones insured through private insurance companies. For this reason, it is worth dividing the Brazilian market into public and private sectors. Synthes is the leader in the private market, holding more than 25% of total revenues. The company’s position can be attributed to its lead in both the internal and external fixation market segments within the private sector.

 

Growth in Synthes’s trauma division is attributed to the introduction of new products in the latter part of 2011. In the fourth quarter, the company launched its Dynamic Locking Screw, which features a pin-sleeve design that enables dynamic motion and locking technology. The technology improves bone healing and is ideal for use in fracture bridging. Additionally, in April 2012 the EU approved of DePuy’s $23.1 billion proposed acquisition of Synthes, including its trauma business. Although Synthes was a market leader in 2011, its presence will be merged with DePuy in 2012 (the acquisition was finalized at the end of June).

 

In 2011, the Brazilian company Hexagon was the number one competitor in the public market and the third-leading competitor in the total Brazilian orthopaedic trauma market (public and private). Hexagon’s large share in the market can be linked to several factors. It carries most types of internal and external trauma devices and hasthe largest stock of raw material in Brazil. The company’s products are also available in all of the country’s major hospitals and trauma care centers. Manufacturing more than one million implants per year, Hexagon occupies the premium end of the market and has a strong sales force. The company has been growing steadily for more than 20 years and continues to solidify its presence in Brazil’s trauma device market.