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Two Independents Emerge in Orthopedics

The once consolidating orthopedic implant business is, if anything, going in the opposite direction, given the decisions this week by parents of two of the leading companies to create stand-alone companies of their orthopedic businesses. Bristol-Myers confirmed what had been rumored for months: that it will spin off its Zimmer orthopedics business into a public company rather than sell the company to some other player. Earlier, Sulzer announced that it plans to spin off its medical device business, Sulzer Medica, in response to pressure from a large investor who was concerned about the industrial giant's declining stock performance. But these individual deals also represent a surprising industry turnaround--the consolidation of two years ago has largely stabilized pricing, allowing independent companies to thrive once again.

The once consolidating orthopedic implant business is, if anything, going in the opposite direction, given the decisions this week by parents of two of the leading companies to create stand-alone companies of their orthopedic businesses. First, Bristol-Myers Squibb Co. confirmed what had been rumored for months: that it will spin off its Zimmer Inc. orthopedics business into a public company rather than sell the company to some other player [See Deal]. Earlier, Sulzer AG announced that it plans to spin off its medical device business, Sulzer Medica Ltd. , in response to pressure from a large investor who was concerned about the industrial giant's declining stock performance.

The motives for each decision, however, seem to have been different and largely financial—rather than market-driven. According to news reports,...

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