Biomet Hip Lawsuits Rise, Company Experiences Revenue Shortfall
As Biomet hip lawsuits moved forward in federal court last week, it was reported that the orthopedic implant maker’s overall earnings took a nose dive this quarter, according to Bloomberg Businessweek.
Specifically, revenue from hip and knee implants fell 1 percent, the company said on Oct. 11. Financial analysts say this may be cause for concern, given the fact that total revenue from joint reconstruction products “slowed sharply” and not because of lower prices. It was because of lower sales volumes, Mizuho Securities analyst, Michael Matson told Bloomberg.
The medical community may be wondering: was this drop prompted by the recent wave of Biomet hip lawsuits that have been filed over the manufacturer’s Biomet M2a Magnum hip implant?
It may be. The day after this statement was released, U.S. District Judge Robert L. Miller, who is overseeing the federal multidistrict litigation (MDL) involving these devices, signed a case management order scheduling its first status conference for Nov. 16.
On Oct. 12, he also announced his plan to appoint a plaintiffs’ liaison counsel and steering committee to help coordinate the impending proceedings. As of Oct. 2, when the multidistrict litigation was created by the U.S. Judicial Panel on Multidistrict Litigation (JPML), there were eight Biomet hip lawsuits pending in federal court, with another 57 potential claims pending in jurisdictions around the country. These have since been transferred to the U.S. District Court for the Northern District of Indiana.
“We think investors will view Biomet’s results as negative for our orthopedic companies particularly given disappointing third-quarter preannouncements from other med tech companies,” Matson added.
Biomet’s M2a Magnum hip implants, in particular, have allegedly been linked to health complications stemming from metallosis—a condition that results when the metal components of the implant rub together and shed metallic debris into the recipient’s bloodstream. Plaintiffs who have already filed lawsuits have reported pain, swelling and even pseudotumors after being implanted with the device. They allege that Biomet has known of the risks associated with the implants for years, but hid it from doctors who used them on patients.
Based on the mounting controversy surrounding metal hip implants manufactured by not only Biomet, but also Wright Medical and Stryker Orthopaedics, analysts are unsure of whether this company’s drop in revenue can be attributed to the weakening orthopaedic implant market as a whole.
For example, Wright Medical Group’s quarterly report showed that the company lost 32 cents to $21.37 in shares. This company manufactures the Wright Conserve and Wright Profemur metal hip replacements, which have also been at the center of lawsuits recently.
William Blair & Co. analyst, Matthew O’Brien, predicts that the markets for hip and knee implants will stay weak through the rest of the year and into 2013.