Biomet is the world’s leading provider of Bone Growth Stimulators for non union fractures and External Fixation medical devices for serious orthopedic trauma. The customers include orthopedic surgeons, hospitals, insurance companies and patients. The Orthopedic surgeon is the primary buying decision maker.
EBI had a strategic distribution partnership with Orthofix an Italian manufacturer of EBI’s External Fixation product line for 10 years and Orthofix was not negotiating actively to extend the agreement. EBI’s external fixation business was growing steadily and represented 30% of EBI’s revenue. Orthofix announced a month before the agreement expired that they were purchasing EBI’s main competitor in the bone growth stimulator market and would be distributing their external fixation products directly through EBI’s major competitor of its core bone growth stimulation business. Historically, agreements had been negotiated and signed 12 to 24 months before expiration so it was obvious that Orthofix had other plans.
As Senior Vice President of Worldwide Marketing, Sales and Business Development, now a Chief Outsider, Marshall Perez was charged with creating a product replacement and market conversion strategy for the external fixation product line. This product development and conversion strategy started approximately 12 months before the contract expired.
Perez quickly recruited key opinion leaders to assist EBI in developing a superior replacement product line focusing major effort on the highest volume sku’s. He also started an intensive search for similar technology that was either patented or could be patented. His team successfully found and licensed a patented product from another Italian manufacturer that could be modified to compete effectively with the Orthofix products. The development had to be done in a very confidential manner as EBI did not want to spook the sales force, the internal staff or its customers. The gaant charts were developed to meet a launch date concurrent with the expiration date of the Orthofix agreement. The forecast supported stock pilling certain sku’s of the Orthofix product to coincide with product release of the EBI replacement which was branded by Perez as Dynafix. EBI also was charged with setting up manufacturing of the Dynafix and successfully purchased a local FDA compliant manufacturing facility.
Strategic actions required
- Design and obtain FDA approval for a class II replacement product and launch in 12 months.
- Secure manufacturing capability and build launch inventory.
- Work with key opinion leaders to involve them in the design, clinical evaluation, podium marketing and training activities.
- Keep sales, marketing and operations teams actively involved in supporting the Orthofix product until the Dynafix product was ready to be launched.
- Position the Dynafix product as an improvement over the Orthofix product.
- Train and equip the sales team to convert their customers and sell to new customers.
- Converted 95% of the customers within three months of the launch delivering a 50% improvement in gross profit margins.
- Invigorated a "can do" spirit throughout the organization.
- Developed capability to design, manufacture and market additional external fixation products to address new indications to expand the market.
- Protected and increased core bone growth stimulation business while converting the market and bringing in new users of the Dynafix product.
- Higher margins and more products provided resources to add more sales representatives. The sales team grew so there were more feet on the street selling all the EBI products.
- Legal battle with Orthofix on patent infringement was thrown out.
- Legal battle with Orthofix on breach of contract resulted in the jury finding both EBI and Orthofix having breached the agreement.
- EBI won the real battle in the market place.