Feature Article

An Exact Pipeline to Success

Published: March 16, 2011
By: Maria Fontanazza
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Bill Petty
Exactech Inc. (Gainesville, FL) has risen above the challenges that cause so many start-up companies to falter. With products that are available in more than 35 countries, Exactech has been aggressively building on its foundation for long-term growth during the past few years. It made several investments in 2010 and is forecasting 2011 revenue to reach $202—$210 million (10% top-line growth). The company is confident that one day, it will be a global leader in bone and joint restoration surgery.
Exactech has been ramping up sales and marketing efforts in both the United States and overseas, and is initiating a European operational headquarters. “We are continuing to build our direct operations in Germany and Spain that began in 2010, resulting in an international sales organization with direct operations in eight markets,” says David Petty, president of Exactech. “Our investments in international sales organizations are being complemented with investments in our domestic sales channels as well, as we continue to increase the quality of our sales teams and increase the sales per rep.” This year, the company expects sales and marketing costs to increase 10% to 20%.
 
All product segments saw a revenue increase over 2009.
Exactech’s product line goes beyond the hips, knees, shoulders, and spine. It entered into the biologics market 11 years ago and has since developed several products for bone grafts and dental biologics. New product introductions, such as the market approval of the Novation hip replacement last year in Japan, are helping to diversify Exactech’s portfolio on an international level. The approval of the Novation product was significant, because hip replacements have far outpaced knee replacements in the region. “The addition of the Novation hip line in Japan allows us to further leverage our investment into our Japanese distribution operation,” says Bill Petty, MD, chairman and CEO of Exactech. At the time of Novation’s approval, most of Exactech’s revenue in Japan came from its knee products.
 
The company has been experiencing strong growth during a time when the orthopaedics industry as a whole hasn’t seen robust growth. During last year’s second quarter, Exactech’s revenue exceeded the industry growth rate. The launch of six products during this year’s American Academy of Orthopaedic Surgeons annual meeting is helping Exactech further its strategy of maintaining a long development pipeline that is driving both growth and its ability to gain market share.
 
Focus Going Forward
  • Significantly expand direct sales operations outside of United States.
  • Focus on delivering return on investments made over the last year, including a positive cash flow.
  • Launch three internally-developed products in 2011—Octane PEEK interbody system, Proliant polyaxial pedicle screw system, and Gibralt posterior cervical system.
International sales accounted for 31% of total sales in in 2010 and 2009.

Highlights

  • February 2011: Launches new products in the knee, hip, shoulder, spine, and biologics at the American Academy of Orthopaedic Surgeons annual meeting.
  • December 2010: Resolves the government investigation into its consulting arrangements with orthopaedic surgeons.
  • August 2010: Acquires spine product lines from VertiFlex Inc.
  • May 2010: Acquires Brighton Partners Inc., the sole supplier of the polyethylene bearings used in its Optetrak knee replacement system.
  • April 2010: Receives approval to market Novation hip replacement system in Japan.
  • January 2010: Commits more than $100,000 to fund research and grants through the Orthopaedic Research and Education Foundation.

Leadership

  • Bill Petty, MD, chairman and CEO
  • David W. Petty, president and director
  • Joel C. Phillips, CFO Gary J. Miller, PhD, executive vice president of R&D
  • Bruce Thompson, senior vice president, general manager of biologics
  • Betty B. Petty, vice president of administration and corporate secretary

Published in Orthotec, April/May 2011, Volume 2, No. 2


Maria Fontanazza
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