CBS CDN Imported Surgical and Dental Allograft Allograft Substitute and Acellular Dermal Matrix Study 2010

Canadian Blood Services
Canadian Imported Surgical & Dental Allograft, Allograft Substitute, & Acellular Dermal Matrix Study 2010
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CANADIANIMPORTEDSURGICAL&DENTALALLOGRAFT,ALLOGRAFTSUBSTITUTE,& ACELLULARDERMALMATRIXSTUDY2010 RFP1630 2010MillenniumResearchGroup,Inc. PublishedMarch2010by MillenniumResearchGroup,Inc. 175BloorSt.East,SouthTower,Suite701 Toronto,Ontario M4W3R8 Canada T:4163647776 F:4163648246 Information for this Study has been obtained from numerous sources that Millennium Research Group considers reliable; however, Millennium Research Group does not guarantee that the information in the Study (including, without limitation, any forecasts, estimates, projections, or opinions)isaccurateorcomplete.THESTUDYISPROVIDEDASIS.MillenniumResearchGroup disclaims all warranties of any kind (express, implied or otherwise) regarding the Study including but not limited to any implied warranties of merchantability or fitness for a particular purpose. By receivingandusingthisStudy,youagreethatinnoeventshallMillenniumResearchGroupbeliable toyouforanyclaims,liabilities,losses,damages,costsandexpensesarisingoutoforrelatedtoyour use of or reliance on the Study. The Study may not be reproduced, distributed, transmitted, displayed, or modified, in whole or in part, by any means, without the prior written consent of MillenniumResearchGroup. Canadian Blood Services assumes no responsibility or liability for any consequences, losses or injuries, foreseen or unforeseen, whatsoever or howsoever occurring, which might result from the implementation, use, or misuse of any information or recommendations in the report, Canadian Imported Surgical & Dental Allograft, Allograft Substitute, & Acellular Dermal Matrix Study 2010. TheviewsexpressedhereindonotnecessarilyrepresenttheviewsofCanadianBloodServicesand/or thefederal,provincialorterritorialgovernmentsofCanada. Productionofthisadvice/reporthasbeenmadepossibleinpartthroughafinancialcontributionfrom HealthCanada.
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CANADIANIMPORTEDSURGICAL&DENTALALLOGRAFT,ALLOGRAFTSUBSTITUTE,&ADMSTUDY2010
CanadianImportedSurgical&Dental Allograft,AllograftSubstitute,& AcellularDermalMatrixStudy2010
Methodology
ResearchMethodology
Thefollowingreportusesanumberofmethodologiestogatherandpresentdataand analysis. At the outset, a large survey of secondary sources is conducted. These sources act as the basis for the primary research stage, which builds and enhances the quantitative and qualitative attributes of the early research. Secondary sources include: GovernmentSources: SecuritiesandExchangeCommissionfilings CanadianInstituteforHealthInformation HealthCanadaWebsite
Allograft,allograftsubstitute,andacellulardermalmatrix(ADM)companies: Annualreports,productbrochures,corporateprofiles,etc.
InternalDatabasesandReports: Previousreportsonsimilar/relatedsources
GeneralInternetSearches,MedicalLiterature,andNewspaper/MagazineSearches: Identifying various centers of specialization and articles that might provide leadsforprimaryresearch.
The secondary research stage builds the foundation for the primary research. The primaryresearchmethodologyhasfoursteps:
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Step 1: The first step involves an impartial scan of all the information gathered during the secondary research stage to determine its utility based on the specific requirements of this report. Each piece of information is, thus, either discarded or markedashighorlowpriority.Itisthenorganizedappropriatelyasdeterminedby thestructureandsectioningofthereport. Step 2: At this stage, early assumptions are formed as to the implications of the information for the various allograft, allograft substitute, and ADM market segments. These assumptions are then used to determine hypotheses using both inductive and deductive approaches. On the quantitative front, these hypotheses resultinfullhistoricalandprojectedmarketdatasets(marketsizes[unitsandCA$] andmarketshares). Step 3: At this stage, the research is in position for its most important primary phaseexpertinterviews.Throughoutthesecondaryresearch,industryandmedical experts are identified. These experts are now contacted by telephone and asked to participate in interviews on recent trends and developments in the industry. Interviews are either conducted at the time of the initial call or scheduled at the convenience of the expert. Interview questions are tailored to the expertise of the particular interviewee, although in most cases, the most important questions are asked of all experts. The questions are largely based on the assumptions and hypotheses developed in Step 2, which are then either augmented, discarded, or adjusted,basedontheviewsandpositionsputforth.Attemptsaremade,whenever possible, to crosscheck the views of various experts against each other and reach positionsofconsensusonissuesandmarketnumbers. In addition, a sample of relevant physicians is also interviewed by telephone. Physiciansareaskedtocommentonvariousissues/trends,bothintheirownpractice and in the overall market. The responses provided are then used to strengthen or augment the assumptions and hypotheses developed during the primary research phase. Step4:Thefinalstageofprimaryresearchinvolvesindividualandgroupanalysisby Millennium Research Group. All research results are assessed and crosschecked thoroughly to determine their validity, relevance, and weight. From this process, qualitativeconclusionsarereachedanddatapointsfinalized.
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ForecastMethodology
In addition to Steps 1 through 4 (as outlined above), the following bottomup methodologywasfollowedindevelopingforecastassumptionsforthisreport. A comprehensive breakdown of various allograft, allograft substitute, and ADM procedures was prepared using data from several sources including professional associations, government statistics, and private research/media sources. Industry experts and practitioners were consulted to ensure accuracy and verify observed trends.Asacrosscheck,totalindustryrevenuesavailablethrough10Ksandother sourceswerecomparedagainstmodeledindustryrevenues. Using the best estimates of industry experts, practitioners, private research/media sources,andinhouseexperts,yearbyyeargrowthratesandaveragesellingprices were applied individually to each subcategory to derive forecasts. These estimates were crosschecked by industry experts (marketing managers, product managers, CEOs,etc.)andfurtherrefined. Overall findings were compared against market and procedure forecasts published byothersourcestoensurereasonableestimates.
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CanadianImportedSurgical&Dental Allograft,AllograftSubstitute,& AcellularDermalMatrixStudy2010

TheCanadianmusculoskeletalandsofttissueimportedallograft,allograftsubstitute, and acellular dermal matrix (ADM) market comprises nonproprietary (NP) allografts, proprietary allografts (including demineralized bone matrices [DBMs]), machined bone, other allografts (such as bone morphogenetic proteins [BMPs]), allograftsubstitutes(synthetic,xenograft,andautologousbased),andADMs.Forthe purposes of the surgical market, ADMs include those that are allograft based, but also encompass allograft substitutes that can be used in place of allograftbased ADMs. Synthetic ADMs, although not commonly referred to as synthetic ADMs, have been classified as such for the purpose of this report and include synthetic products/meshes.Withregardtothedentalmarket,thetermADMreferstohuman derived dental membranes (soft tissue), while all dental membranes that are not derived from cadaveric tissue (soft tissue) are included in the dental allograft substitute market. Procedures that involve the use of imported allograft, allograft substitutes, and ADMs include all surgical and dental proceduresexcept cardiovascular and ocular proceduresperformed across Canada, excluding Quebec. The overall Canadian imported musculoskeletal and soft tissue allograft, allograft substitute, and ADM market is expected to grow at a steady compound annual growthrate(CAGR)of9.5%through2014andwillbedrivenprimarilybytherisein adoption of allograft substitutes and DBMs. The uptake of these materials will be supported by an increase in surgeon awareness due to more marketing from the competitorsinthesesegments.TheagingdemographicinCanadawillfueldemand for the use of all allograft and allograft substitutes by spurring growth in the incidence of disease that is treated with musculoskeletal and soft tissue grafts. Additionally, the use of autogenous tissue can lead to donor site complications, rangingfromprolongedwounddrainagetopermanentgaitdisturbancesincasesof iliaccrestharvesting.Nevertheless,thehighpricesassociatedwithmanyallografts, allograft substitutes, and ADMs will hinder adoption of these materials to some extentashospitalsattempttooperatewithincostconstraints. Thedecreaseingrowthfrom2009to2010inthesurgicalmarket(asshowninExhibit 1)wasdueinlargeparttotheintroductionofallograftbasedADMsin2009.Because ofthis,syntheticADMswhicharethemostwidelyusedtypeofsurgicalADMin Canadaexperienced a larger decrease in pricing growth that year as companies reduced prices in order to maintain a competitive advantage. This drop in average selling prices (ASPs) was the primary cause of the decline in market growth from
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2009 to 2010. Restricted ASP growth for synthetics will likely continue for the first few years that allograft ADM products are available but are expected to begin to approach previous rates near the end of the forecast period. This will occur as the noveltyofthenewlyavailableallograftswearsoff.Thecombinationofbothdriving and limiting factors in the imported musculoskeletal and soft tissue allograft, allograft substitute, and ADM market is nonetheless projected to result in modest marketexpansiongoingforward. Exhibit 1: Imported Musculoskeletal and Soft Tissue Allograft, Allograft Substitute, andADMMarket,byType,Canada(CA$),20082014
Source:MillenniumResearchGroup.
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MarketDefinitions
TheCanadiansurgical(nondental)importedallograft,allograftsubstitute,andADM marketcomprisesthefollowing:NPallografts(includingboneandsofttissuegrafts), proprietary allografts (including DBMs and cancellous/corticocancellous chips, powders,etc.),machinedbonegrafts,BMPs,plateletconcentratesystems(PCS),bone marrow aspirate (BMA) systems, synthetic bone graft substitutes, synthetic soft tissueproducts,xenograftbonegraftsubstitutes,xenograftsofttissueproducts,and ADMs. This study focuses primarily on imported products that are used across Canada,excludingQuebec,anddoesnotincludematerialsutilizedincardiovascular orocularprocedures. The Canadian market for imported dental allografts and allograft substitutes comprises sales of dental allograftsmusculoskeletal allografts and ADMsand allograftsubstitutes.Forthepurposeofthisreport,ADMsusedinthedentalmarket refer to dental membranes. Musculoskeletal allografts can be further broken down into NP and proprietary grafts; however, due to Canadian Blood Services and Millennium Research Groups agreed upon definition of what constitutes an NP allograft,therearenoimportedNPallograftsinCanadafordentalapplications.Asa result, dental NP allografts are not included in the valuations in this report. Cancellous/corticocancellouschips,powders,cubes,granules,pellets,andinjectables are defined as proprietary allografts. Allograft substitutes for dental applications includexenograftsandsyntheticsinthehardtissuespaceandnonhumanderived dental membranes in the soft tissue space. The Canadian dental allograft and allograft substitute market is composed entirely of imported products sold throughoutCanada,excludingQuebec.
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ImportedSurgicalMusculoskeletal&SoftTissueAllograft, AllograftSubstitute,&AcellularDermalMatrixMarket
TheCanadiansurgicalallograft,allograftsubstitute,andADMmarketisanticipated toundergostronggrowththrough2014.Thiswillbeduetoariseinthenumberof procedures performed, such as spinal fusions and largejoint reconstructions stemming mostly from the aging populationthat often require the use of these materials. Additionally, the increasing shift away from the use of autograft, which mitigatestheneedforaseconddonormorbiditysite,willalsoencourageadoptionof allografts, allograft substitutes, and ADMs. Compared to the allograft segment, revenue expansion in the Canadian allograft substitute market will be more robust becausecompaniesinthelattersegmentheavilypromotetheuseoftheirproducts. The imported allograft market will not grow as quickly because imported tissue is mostoftenusedwhenthereisalackofsupplyofdomestictissue,whichisseldom. Furthermore,competitorsintheimportedallograftsegment,whichtypicallyconsist of US tissue banks with limited promotional budgets, engage in fewer marketing initiatives,thuscontributingtolesserrevenuegrowth.SomeCanadiantissuebanks, particularlythoseresponsiblefortissuewithintheirowninstitutionorsurrounding areas, are also increasingly working oneonone with surgeons and hospitals to ensurethatneedsarebeingmet.Thiswillbeachievedbyinformingphysiciansand facilities of the availability of more donor tissue or by recommending the use of alternative donor tissue available domestically (in cases where a type of tissue is unavailable). This will thus mitigate the need for imported allograft tissue in some cases.Despitethefactorslimitingtheimportedallograftsegment,theoverallsurgical allograft,allograftsubstitute,andADMmarketisexpectedtogrowrobustlyoverthe forecastperiodtoreachavalueofnearly$75millionby2014(seeExhibit2). Exhibit 2: Imported Surgical Musculoskeletal and Soft Tissue Allograft, Allograft Substitute,andADMMarket,bySegment,Canada(CA$),20082014
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ImportedSurgicalAllograftMarketbyTissueType
The imported surgical allograft market was smaller than the allograft substitute market in Canada in 2009 due to the presence of domestically available products, which limited the number of imported NP allograft units sold in the country. AlthoughthereissometimesalackofsupplyofdomestictissueinCanada,overall surgical procedure volumes where NP allografts are used are still very low in the countrycomparedtootherdevelopedcountries,suchastheUS,basedonpercapita usage. Consequently, the amount of NP allograft available domestically is often sufficient and imports are not required. Additionally, allograft substitutes are availabletosurgeonswhenthereislimitedavailabilityofothermaterials. AlmostallimportedsurgicalNPallografttissuecomefromtheUS(oneprovideris locatedinFrance).Someofthesecompanies,suchassmall,regionalAmericantissue banks,onlyprovide tissue to Canada if it is requested specificallyandifthey have sufficientquantitiesofmaterialorthematerialhasbeenontheshelfforalongperiod of time. Industry sources have indicated that most of these small USbased tissue banks give US facilities and surgeons first priority for their tissue. US tissue banks that have a larger presence in Canada through wide distribution networks and partnerships with medical device companies still indicate that the market for imported NP allografts in the country is very small due to the availability of domestically sourced allografts. Furthermore, many physicians are willing to use lowerpriceddomesticallograftsandtoprocessthesematerialstosuittheirsurgical andbudgetaryneeds.Forinstance,ifgroundcancellouschipsandgranulesarenot manufactured at local tissue banks, a surgeoncan takeother pieces of NPallograft boneandcutitthemselves.Overall,thedemandforimportedtissueremainslimited duetothesmallnumberofproceduresrelativetotheUSthatrequiretheuseofthese NPallografts. Nevertheless, imported allograft market revenues are projected to expand over the forecast period partly due to overall increases in Canadian surgical procedure volumes, which predominantly comprise orthopedic procedures. Most surgeons who work with imported allograft tissue are satisfied with the imported allografts they are using and are unlikely to drastically change their usage of imported products.Thiswillhelpsustainimportedallograftsalestosomeextentthrough2014. Theimportedallograftmarketwill,however,beslightlyrestrictedbytheexpanding domesticallograftmarketinCanadabecauseanumberofdomestictissuebanksare developing their businesses and providing more tissue to their clients, thus decreasing the need for imported tissue. This will encourage greater collaboration between Canadian tissue banks and health care facilities in the country. In cases wherematerialsareunavailableorlimitedinsupplylocally,tissuebankscansuggest alternatives,suchasothersimilartissuetypes. Across the country, downward pressure will be exerted on ASPs due to budgetary concernsamonghealthcarefacilities.HospitalsinCanadareceiveabudgetfromthe governmentfortheentireyearandasofMarch2010,mosthospitalswereoperating
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at a deficit. As a result, industry sources indicate that Canadian hospitals are increasinglypressuringcompaniestolowerproductpricingornegotiatingdiscounts on single items as well as bundled product purchases in order to curb costs. This trendwilllikelyoffsetsomeofthegrowthintheimportedallograftmarketoverthe forecast period. Nevertheless, steady surgical procedure volumes will continue to supportdemandfortheuseofimportedallografts,whichisprojectedtofuelstrong expansionofrevenuesthrough2014. In2009,thevastmajorityofsaleswithintheimportedsurgicalallograftmarketwas generatedthroughotherallografts(seeExhibit3andExhibit4),whichencompasses bothBMPsandallograftbasedrotatorcuffreinforcementgrafts.BMPs,inparticular, have been well received in the Canadian market because of their osteogenic propertiesandduetostrongmarketingbyMedtronicSpinal&BiologicsandStryker, leaders in the BMP space. Only two BMPs are available in Canada: Strykers Osteogenic Protein1 (OP1), which is indicated for longbone nonunions, and Medtronic Spinal & Biologics INFUSE, which is indicated for lumbar fusions. Canadian surgeon acceptance of BMPs has been positive due to their osteogenic properties,whichpromoteahighlysuccessfulfusion.Becauseofthis,bothINFUSE and OP1 are commonly used offlabel and in a large variety of procedures across Canada. The products high success rates, coupled with their high ASPs have enabledBMPstobetheprimaryrevenuegeneratorfortheotherallograftsegmentin Canada. At the same time, however, a significant limiter of BMP unit sales in the Canadianmarketwillbetheproductsconsiderablecost,whichisespeciallyhighin comparison to less expensive allograft substitutes and autograft tissue. Because many Canadian hospitals must operate within strict budgets, purchasing higher priced products such as BMPs is often unfeasible. Because less costly options are available, most uses of BMPs are only approved by the hospital if a surgeon has made a case for their usetypically cases involving older patients with poor bone qualityorwhenthepatientiswillingtopayfortheproductthemselves. In addition to BMPs, allograftbased rotator cuff reinforcement grafts are also includedintheotherallograftmarket.Theallograftbasedrotatorcuffreinforcement graftsegmentismadeupsolelyofWrightMedicalTechnologysGRAFTJACKET.In general, the use of reinforcement grafts for rotator cuff repairs remains a relatively new concept among surgeons in Canada; however, when a reinforcement graft is used, it is most often an allograftbased graft. Synthetic and xenograft rotator cuff reinforcement grafts are also available, but some surgeons dislike using these materials because synthetics do not resorb and xenografts are associated with the potentialriskfordiseasetransmission.Thehighpopularityofallograftbasedrotator cuff reinforcement grafts is also due primarily to the leading competitor in the rotator cuff reinforcement graft market, Wright Medical Technology, which has successfullypromotedandmarketeditsproductamongitslargeclientbaseofsports medicinesurgeons. ProprietaryallograftssuchasDBMsandcancellouschipsandblocksalsomadeupa largeportionoftotalimportedallograftunitssoldinCanadain2009.Themajorityof
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these sales were accounted for by DBMs because there are few cancellous or corticocancellous chips, powders, and granules imported into the country. Many surgeonsfavortheuseofDBMsduetothematerialseasierhandlingcharacteristics in comparison to NP allografts and other proprietary allografts. The popularity of DBMs has resulted in the material being more heavily marketed in Canada by medical device companies such as Synthes and Wright Medical Technology. As of 2009,mostimportedproprietaryallograftchipsandNPallograftsweresoldthrough US tissue banks, such as the Musculoskeletal Transplant Foundation (MTF), which do not actively market the availability of these products. There are a couple of domestic companies, one of which is RegenMed, that have expressed interest in manufacturinganddistributinglocallymadeDBMsandexpecttobeproducingthe material in Canada by the middle of the forecast period. The presence of domestic banksthatofferDBMswilllimittheimportedDBMmarkettosomeextentoverthe forecast period. This is because locally produced products will likely be sold at a reduced price due to lower overhead costs and the lack of other associated import expensesthatarefactoredintoforeignproducedproducts. InCanada,allmachinedboneallograftsusedaremanufacturedexclusivelyoutside of the country. The units of machined bone allograft sold are the lowest of all allograftsegmentsduetothehigherpricingassociatedwithpurchasingtheproducts fromasourceoutsideofthecountry.Despitethis,machinedboneallograftunitswill grow in line with increases in overall spinal fusion volumes in Canada. This is becauseanumberofsurgeonspreferboneovermetalorplasticininterbodyfusions duetothebeliefthatmachinedbonefacilitatesamoresuccessfulfusion.
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Exhibit3:ImportedSurgicalAllograftUnits,byTissueType,Canada,20082014
Notes: (1) NP allografts include products for the femoral head, femoral condyle, whole or parts of proximal or distal bone shafts (femur, tibia, humerus), hemipelvis, cancellous bone, corticocancellous bone, cortical strut/screw/pin, bicortical strip, tricortical wedge, whole joint (knee, ankle, shoulder, elbow), patellar ligament, Achillestendon,tibialistendon,semitendinosustendon,gracillustendon,peroneous longus tendon, fascia lata, rotator cuff, meniscus, meniscus with tibial plateau, osteochondralplug,femoralhemicondyle,mandible,andduramater. (2) Proprietary allografts include DBM paste, putty, and gel, as well as cancellous/corticocancellouschips,powders,cubes,granules,pellets,andinjectables. (3)Machinedboneincludesbonescrews,cages(cervicalandthoracolumbaranterior lumbarinterbodyfusion,posteriorlumbarinterbodyfusion,transforaminallumbar interbody fusion, and lateral lumbar interbody fusion), and other machined products. (4)OtherallograftsincludeosteobiologicssuchasBMPsandallograftbasedrotator cuffreinforcementgrafts. Source:MillenniumResearchGroup.
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Exhibit4:ImportedSurgicalAllograftMarket,byTissueType,Canada(CA$),2008 2014
Notes: (1) NP allografts include products for the femoral head, femoral condyle, whole or parts of proximal or distal bone shafts (femur, tibia, humerus), hemipelvis, cancellous bone, corticocancellous bone, cortical strut/screw/pin, bicortical strip, tricortical wedge, whole joint (knee, ankle, shoulder, elbow), patellar ligament, Achillestendon,tibialistendon,semitendinosustendon,gracillustendon,peroneous longus tendon, fascia lata, rotator cuff, meniscus, meniscus with tibial plateau, osteochondralplug,femoralhemicondyle,mandible,andduramater. (2) Proprietary allografts include DBM paste, putty, and gel, as well as cancellous/corticocancellouschips,powders,cubes,granules,pellets,andinjectables. (3)Machinedboneincludesbonescrews,cages(cervicalandthoracolumbaranterior lumbarinterbodyfusion,posteriorlumbarinterbodyfusion,transforaminallumbar interbody fusion, and lateral lumbar interbody fusion), and other machined products. (4)OtherallograftsincludeosteobiologicssuchasBMPsandallograftbasedrotator cuffreinforcementgrafts. Source:MillenniumResearchGroup.
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ImportedSurgicalAllograftSubstituteMarketbyTissue Type
InCanada,allograftsubstitutessoldincludesynthetics,xenografts,andautologous based products that can be used as an alternative to autografts. Compared to imported allografts, a significantly higher volume of imported allograft substitutes weresoldinCanadain2009.Goingforward,salesofimportedallograftsubstitutes are anticipated to expand at a faster rate than imported allograft units due to the growing trend toward the use of substitute materials in many surgical procedures. Although allografts are generally lower in price compared to most allograft substitutesavailable,somesurgeonsarehesitanttousecadavertissueduetotherisk of disease transmission and foreign body reactions, complications that have been historically associated with the use of some of these products.This will lead to the adoptionofmoreallograftsubstitutesinCanadathrough2014.Additionally,many allograft substitutesespecially newer material types such as injectable synthetic bone graft substituteshave better handling characteristics than traditional allografts,suchasNPallografts.Forinstance,manysurgeonsfavorusingputtiesand injectables that are easy to mold and distribute, particularly in minimally invasive proceduresthataregrowinginpopularity.Asthesenovelmaterialsarereleasedand promoted by manufacturers, more surgeons will be aware of the benefits of they provide. Overtheforecastperiod,itisexpectedthatthemajorityofallograftsubstituteunits sold in Canada will be synthetic hard tissue products; sales of these products are projected to generate the bulk of allograft substitute revenues (see Exhibit 5 and Exhibit 6). In the country, a wide range of synthetic bone graft substitute products and sizes are available from the leading orthopedic and spine companies, such as Synthes and Stryker. These companies have heavily marketed their synthetic products, especially as graft extenders, which has facilitated unit sales. Synthetic bone graft substitutes can also be used in a wide variety of orthopedic procedures, rangingfromspinalfusionstojointreplacementstotraumasurgerytocraniotomies, providingalargenumberofpotentialsurgeriesthematerialcanbeusedin. Several different types of synthetic soft tissue are available in Canada. One is the LARS ligament, or ligament augmentation device, which is composed of polyester fibers. The LARS ligament can be used in the knee, shoulder, elbow, or ankle, althoughkneesurgeriesaccountforthemostcommonuseofthisdeviceinCanada. AlmosthalfofalltheLARSligamentssoldinCanadaoccurinQuebec(whichisnot covered in this report). Surgeons outside of Quebec have been very wary of the products use due to negative publicity surrounding other similar devices. Poor resultsregardingligamentaugmentationdevicesweredocumentedintheUS,which caused the eventual discontinuation of most of these products in both the US and Canada. Because Canadian surgeons remain hesitant to adopt synthetic ligaments due to concerns regarding their efficacy and the sole competitor in the market is primarilyintheQuebecmarket,unitsalesinthissegmentwillremainlowoverthe
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forecastperiod.Meshesforrotatorcuffrepair,suchasBiometsSportMesh,represent another type of synthetic soft tissue. Synthetic meshes are often preferred by some surgeons because there is no risk of disease transmission from synthetic materials. Unitsalesofsyntheticmesheswill,however,likelybelimitedduetothepresenceof allograftbased meshes, which are popular due to the strong promotional efforts madebytheleadingcompetitorinthissegment,WrightMedicalTechnology. Theuseofautologousbasedallograftsubstitutes,suchasplateletrichplasma(PRP) andBMA,isgrowingintheUS,butingeneral,Canadiansurgeonshaveshownlittle interest.Theseproductsusethepatientsownbloodorbonemarrowtocreateafast acting product that promotes bone growth and heals wounds. Many Canadian surgeons are, however, still unconvinced by the available supporting clinical data anddonotviewthemasbeingabsolutelynecessary.Asaresult,fewsurgeonshave worked with competitors to promote the use of autologousbased allograft substitutesortolobbythegovernmentforcoverage. SomeCanadiansurgeonsarehesitantaboutusingxenograftbasedproductsdueto past reports of disease transmission and inflammatory responses associated with these materials. For spinal fusions, xenografts are rarely used. The material is considered antiquated compared to the many alternatives available and surgeons indicate that it is not often used anymore. For rotator cuff repair, a couple of large companies have xenograft products available in Canada, such as DePuys Restore; however,asof2009,xenograftswerenotstronglyadoptedinthecountry,partially due to the perceived potential risk of bovine spongiform encephalopathy (BSE) (or madcowdisease)andotherpotentialdiseasetransmissionsthatcanoccurwiththe useofanimalbasedtissue.Despitethislimitingfactor,itisprojectedthattherewill be an increase in the number of imported xenograft units sold in Canada over the forecastperiod,mainlyfromadoptionofrotatorcuffreinforcementgrafts.Thiswill occurascompetitorsinthatsegmentincreasethemarketinganddistributionoftheir products and work to supply additional clinical data to ease surgeon concerns regardingthepotentialissuesassociatedwiththeuseofxenografts.
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Exhibit 5: Imported Surgical Allograft Substitute Units, by Tissue Type, Canada, 20082014
Notes: (1)Syntheticsofttissueincludessyntheticligamentsandsyntheticdura. (2)Xenograftsincludeanimalbasedmaterialsforrotatorcuffrepair,thespine,and dura. (3) All units in this graph are defined as the overall average size of each material used, except for synthetic hard tissue (where one unit is taken to be 9.3 cc) and xenograftsforthespine(whereoneunitistakentobe10cc). Source:MillenniumResearchGroup.
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Exhibit 6: Imported Surgical Allograft Substitute Market, by Tissue Type, Canada (CA$),20082014
Notes: (1)Syntheticsofttissueincludessyntheticligamentsandsyntheticdura. (2)Xenograftsincludeanimalbasedmaterialsforrotatorcuffrepair,thespine,and dura. (3) All units in this graph are defined as the overall average size of each material used, except for synthetic hard tissue (where one unit is taken to be 9.3 cc) and xenograftsforthespine(whereoneunitistakentobe10cc). Source:MillenniumResearchGroup.
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ImportedSurgicalADMMarketbyTissueType
For the purpose of this study, all surgical ADM revenues are attributed to general applications.AllograftbasedADMsarecomposedofcadavertissueandsubstitutes thatcanbeusedinplaceofallograftbasedADMsarecomposedofeitherxenograft or synthetic materials. Allograftbased ADMs are used mostly in hernia repair, although they can also be utilized in breast reconstruction. Both synthetic and xenograftADMsareonlyusedinherniarepair. Through 2014, the general surgical ADM marketwhich for the purpose of this reportisgroupedundertheorthopedicapplicationisexpectedtoundergorobust growth (see Exhibit 7 and Exhibit 8). The first two allograftbased ADMs became availableinCanadainearly2009.ThesewereSynthesDermaMatrixandLifeCells AlloDerm,whicharebothcomposedofcadaverskintissue.Overtheforecastperiod, allograftbasedADMrevenuesareanticipatedtoincreaserapidlyduetoanumberof reasons. First, allograft tissue provides the most natural alternative to tissue repair otherthanthepatientsowntissue.Itisresorbableandisnotassociatedwitharisk ofanimaldiseasetransmission(althoughthereissomepotentialforhumandisease transmissionandinfection).Becauseofthis,manysurgeonsperceiveallograftbased ADMstobeanidealsolutionforherniarepair.Second,Canadiansurgeonsarenot big users of xenograftbased ADMs due to the potential of disease transmission; therefore,somesurgeonsusesyntheticsbecauseitistheonlyotheroptionandisfar lessexpensive.Ideally,however,theywouldgenerallyprefertouseamaterialthatis not synthetic but more natural. Consequently, a number of surgeons will be more likelytoshiftawayfromxenograftandsyntheticusagewhengiventhechoiceofan allograft alternative. Thirdly, because allograft ADMs did not enter the Canadian marketuntiljustrecentlyin2009,therewilllikelybefasteradoptioninearlieryears of the forecast period as early adopters and new surgeons begin to use the newest products available. Finally, companies with allograftbased ADMs will be implementing significant marketing initiatives in the hopes of expanding their presenceacrossCanadaovertheforecastperiod.Thenetresultofallofthesefactors is anticipated to contribute to considerable growth in the surgical allograft ADM marketthrough2014. BothSynthesandLifeCellareaimingtoincreasetheirpresenceacrossCanadaover theforecastperiodinordertopromotetheirnewlyreleasedproductsandtoexpand theirrevenues.Asof2009,however,mostoftheseproductswereusedsolelyforuse in hernia repair and mostly in large city centers in Ontario, British Columbia, and Alberta. As these companies expand their sales forces and promotional efforts to targetsurgeonsinotherspecialties,suchasplasticsurgery,andinotherprovinces, unitgrowthwilllikelyberecognized. In 2009, xenografts were the secondmost commonly used type of ADM for hernia repairinCanada.LeadingproductsinthiscategoryincludeSurgisis(CookMedical), CollaMend(C.R.Bard),andPermacol(Covidien).Thistrendisexpectedtocontinue
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formostoftheforecastperioduntil2013,whenallograftbasedproductsisprojected to surpass xenografts in total units sold. This is because in Canada, xenografts are generallynotaswellreceivedasallograftsorsyntheticsduetothepotentialriskof developing diseases such as mad cow disease. The concerns regarding the use of animalderived materials will likely dampen unit growth in the xenograft segment over the forecast period. By 2011, however, LifeCell is expected to release a new product,Strattice,intheCanadianADMmarket.Stratticeisaxenograftbasedmesh forherniarepairthatreactsmoresimilarlytohumantissue.Duetothemorenatural compositionofthisproduct,adoptionofxenograftsisprojectedtorise,helpingboost unitgrowththrough2014. Synthetic meshes are by far the most often implanted in hernia repairs. Large companies,suchasW.L.Gore,CookMedical,andETHICON,havebeeninvolvedin thismarketformanyyearsandwillcontinuetoutilizetheirvastresourcestoexpand theirclienteleandtoincreaseunitsalesovertheforecastperiod.Despitethis,growth in the sales of synthetic meshes will be more modest compared to xenografts and allograftbased materials. This is because some surgeons, especially younger surgeonswhoaregenerallymoreopentotryingnewmaterials,willbeinterestedin incorporating the use of newer products that offer benefits, such as allograftbased meshesthatresorbnaturallyinthepatientsbody. Exhibit7:ImportedGeneralADMUnits,byTissueType,Canada,20082014
50,000 40,000 Units 30,000 20,000 10,000 0 2008 2009 2010 2011 Year Allograft
2012
2013
2014
Xenograft
Synthetic
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Exhibit8:ImportedGeneralADMMarket,byTissueType,Canada(CA$),20082014
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ImportedSurgicalAllograft,AllograftSubstitute,andADM MarketbyApplication
In2009,generalorthopedicsaccountedforthemajorityofsurgicalallograft,allograft substitute, and ADM procedures performed in Canada, followed by neurosurgery, sports medicine, and craniomaxillofacial (CMF) surgery. The primary driver of overall surgical procedures performed will be attributed to the high number of orthopedicprocedures,suchasjointreconstructionandspinalfusion,performedin Canada each year. This is because these procedures require the most amount of tissuecomparedtoothertypesofprocedures.Becauseorthopedicsurgeonsperform almostallorthopedicprocedureswiththeexceptionofsomespineproceduresthat areperformedbyneurosurgeonsthisgroupperformsalmostalloftheprocedures thatuseimportedallografts,allograftsubstitutes,andADMs.Asaresult,in2009,the vastmajorityoftherevenuesearnedfromthesematerialsinCanadawerecomposed of sales for general orthopedics applications (see Exhibit 9 and Exhibit 10). Also contributing to the large amount of revenue earned in the general orthopedics segment is the high price point associated with some of the newer available materials, such as BMPs, machined bone allografts, DBMs, and synthetics. Many orthopedic surgeons frequently use these materials because a number of the manufacturers of these products are orthopedic device companies and often target theirpromotionaleffortstothisspecialty. Neurosurgeonsperformbothspinalfusionsandsomecranialproceduresthatutilize allograft, allograft substitutes, and ADMs; this group contributed to the second highestnumberofproceduresperformedusingallografts,allograftsubstitutes,and ADMs in 2009. Accordingly, neurosurgical applications accounted for the second largestamountofimportedallograft,allograftsubstitute,andADMrevenuesearned that year. This is mainly the result of the high number of spinal fusions and dural repairsperformedthatcommonlyusethesematerials.Importedtissueismoreoften used in spinal fusions and dural repairs compared to nearly all other applications becausetheproductsoftenusedintheseproceduressuchasallograftchipsanda widerangeofallograftsandalternatives,suchasDBMs,BMPs,andxenograftsare only available through importation. Nevertheless, the neurosurgical market is projectedtoexhibitthelowestrevenuegrowththrough2014becauseneurosurgery volumes,especiallyspinalfusions,areexpectedtoonlygrowmodestly. Sportsmedicineprocedures,suchaskneeligamentandmeniscusrepairs,involvethe useofsofttissueallografts,allograftsubstitutes,andADMs,butarenotperformed as frequently in Canada compared to general orthopedic and neurosurgical procedures. This is because sports medicine procedures are applicable to a smaller subset of patients who sustain sportsrelated trauma and injury. Also, many sports medicine surgeons prefer to use autograft tissue for their procedures and do not frequently employ the use of imported allografts, allograft substitutes, or ADMs, thus resulting in lower procedure volumes involving the use of these materials. Furthermore, procedures that sport medicine surgeons specialize in are soft tissue
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surgeries that do not often require bone graft substitutes, which represent a large portion of the Canadian imported allograft, allograft substitute, and ADM market. While sports medicine physicians do use allografts, they are often available from domestictissuebanks.Nonetheless,importedunitsaleswillbesustainedbythehigh numberofproceduresrequiringNPallografts,suchasimportedallograftsforrotator cuff reinforcement. As a result, revenue growth in the sports medicine segment is expected to be the second fastest in the Canadian surgical imported allograft, allograftsubstitute,andADMmarketthrough2014. InCanada,revenuesforimportedallografts,allograftsubstitutes,andADMsusedin CMF applications were the lowest of all applications in 2009. Like sports medicine procedures, CMF surgeries are relegated to a limited number of trauma or cancer cases, which encompass a small subset of the national population. CMF surgeries involving the use of imported allografts, allograft substitutes, and ADMs will also likely be restricted through 2014 due to autografts being more commonly used for CMFprocedures.OverallASPsformaterialsinthisapplicationarealsonotashigh as other applications because often, a lower volume of tissue is required for CMF procedures. Because the vast majority of procedures performed by CMF surgeons arecausedbytraumaortumors,andonlyafinitenumberoftraumaandtumorcases occureachyear,nosignificantchangesareanticipatedtooccurintermsofunitsales orrevenuegrowthovertheforecastperiod.Marketgrowthis,however,projectedto riseslightlyduetotheagingdemographicinCanada.Asindividualsgrowolder,the risk of accidents and falls increases; greater age is also associated with a higher incidenceofcancer.TheagingCanadianpopulationwillthuscontributetotheneed for CMF surgeries, some of which will require the use of allograft, allograft substitutes, and ADMs. This driver will, however, be somewhat countered by ongoingpubliccampaignstoraiseawarenessofthesignsandsymptomsofcancers, aneurysms, and other diseases, which will enable earlier diagnosis and treatment, sometimeseliminatingtheneedforsurgery.
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Exhibit 9: Imported Surgical Musculoskeletal and Soft Tissue Allograft, Allograft Substitute,andADMUnits,byApplication,Canada,20082014
Source:MillenniumResearchGroup. Exhibit 10: Imported Surgical Musculoskeletal and Soft Tissue Allograft, Allograft Substitute,andADMMarket,byApplication,Canada(CA$),20082014
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ImportedSurgicalAllograft,AllograftSubstitute,andADM MarketbyProvince/Territory
The distribution of imported surgicalallograft,allograft substitute, and ADM units varies according to the distribution of surgical procedures performed across the Canadian provinces and territories (excluding Quebec) (see Exhibit 11 through Exhibit18).Theavailabilityanduseofthesematerialsisprimarilydependentonthe province/territoryspopulation,accesstodomesticallyavailableallografttissue,and presence of sales representatives from the major distributors of these products. Provinces such as Ontario, British Columbia, and Alberta generally have the best access to these products due to the provinces size and subsequent large hospital centersandregionaltissuebanks.Becausethepresenceofsalesrepresentativesfrom the leading competitors of imported allografts, allograft substitutes, and ADMs is limitedacrossthecountryduetothesmallsizeoftheoverallCanadianmarket,sales representatives who are in the country focus on the large city centers, such as Toronto and Ottawa. This enables them to maximize sales without increasing the coststhatwouldbeassociatedwithtravelingtoallhospitalsacrossthecountry.Also, the majority of Canadian hospitals do not perform the procedures that utilize allografts, allograft substitutes, and ADMs; those that do typically use very low volumes of the materials. The potential to market these products to Canadian hospitals is thus limited. Consequently, this provides little incentive for sales representatives to target hospitals and Canada unless a facility specifically asks a companyforproducts.
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Exhibit 11: Imported Surgical Musculoskeletal and Soft Tissue Allograft, Allograft Substitute,andADMUnits,byProvince/Territory,Canada,2009
Source:MillenniumResearchGroup. Exhibit 12: Imported Surgical Musculoskeletal and Soft Tissue Allograft, Allograft Substitute,andADMMarket,byProvince/Territory,Canada(CA$),2009
Note:RevenueswerecalculatedassumingthatASPswereequalacrossallprovinces. Source:MillenniumResearchGroup.
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Exhibit13:ImportedSurgicalAllograftUnits,byProvince/Territory,Canada,2009
Note: These figures are derived from the total number of imported surgical musculoskeletal and soft tissue allograft, allograft substitute, and ADM units (as showninExhibit11)andextrapolatedfromthetotalsurgicalprocedurevolumesand proportions by province/territory. These figures do not take into account how the useofdifferenttissuetypesvariesbyprovince/territory. Source:MillenniumResearchGroup.
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Exhibit 14: Imported Surgical Allograft Market, by Province/Territory, Canada (CA$),2009
Notes: (1) These figures are derived from the total market value of imported surgical musculoskeletalandsofttissueallografts,allograftsubstitutes,andADMs(asshown in Exhibit 12) and extrapolated from the total surgical procedure volumes and proportions by province/territory. These figures do not take into account how the useofdifferenttissuetypesvariesbyprovince/territory. (2)RevenueswerecalculatedassumingthatASPswereequalacrossallprovinces. Source:MillenniumResearchGroup.
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Exhibit 15: Imported Surgical Allograft Substitute Units, by Province/Territory, Canada,2009
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Exhibit 16: Imported Surgical Allograft Substitute Market, by Province/Territory, Canada(CA$),2009
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Exhibit 17: Imported General Surgical ADM Units, by Province/Territory, Canada, 2009
22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Ontario Manitoba New Brunswick Northwest Territories 1 Province British Columbia Saskatchewan Newfoundland and Labrador Northwest Territories Alberta Nova Scotia Prince Edward Island Yukon Units
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Exhibit18:ImportedGeneralSurgicalADMMarket,byProvince/Territory,Canada (CA$),2009
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ImportedSurgicalAllograft,AllograftSubstitute,andADM MarketCompetitiveAnalysis
The Canadian imported surgical musculoskeletal and soft tissue allograft, allograft substitute,andADMmarketcomprisesawidevarietyofmaterialsforanumberof differentprocedures,whichhasledtoanarrayofcompetitorswithinthemarket(see Exhibit 19 through Exhibit 22). The major competitors are, however, either large international tissue banks, such as RTI Biologics, or medical device companies that haveastronginternationalpresence,suchasStrykerorBiomet.Manyofthemajor US tissue banks also distribute through exclusive agreements, such as MTF and Synthes,orthroughnonexclusiveagreementswithavarietyofcompaniesinCanada, such as AlloSource, which collaborates with Medtronic Spinal & Biologics and Zimmer. In a few cases, foreign competitors distribute solely through Canadian companies,suchasIntegraLifeSciences,whichdistributesthroughCitagenix. A large number of competitors in the imported allograft, allograft substitute, and ADM market are orthopedic focused. Most of the leading competitors, such as Synthes, Medtronic Spinal & Biologics, and Wright Medical Technology, have a strongpresenceinthegeneralorthopedicsandspineindustriesinCanada.Assuch, thesecompaniesareabletobundletheirhardwareandimplantswiththeirbiologics in order to increase sales and boost market share. Consequently, companies have invested more resources to provide greater awareness, training, and education amongsurgeonsinthisspace. Asof2009,industrysourcesindicatedthattheCanadianbiologicsmarketasawhole remained a considerably undermarketed segment in contrast to the US. Most companies sales representatives do not focus heavily on promoting their biologic products but more on the hardware due to the higher commissions recognized by the latter products. While it is possible to bundle both types of products together, manysalespeoplestillfocusonsellingitemsthathaveahigherprofitmargin,such astotalreconstructivejointorspinalfusionimplants.Asaresult,evenwiththelarge number of companies in the general orthopedic market, the focus on the imported allograft,allograftsubstitute,andADMmarketasawholeremainssomewhatlow.
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Exhibit19:LeadingCompetitorsintheImportedSurgicalMusculoskeletalandSoft Tissue Allograft, Allograft Substitute, and ADM Market, as a % of Total, Canada,2009
Note: Other includes AlloSource, Arteriocyte Medical Systems (through its distributor 3T Medical Systems), Arthrex, Atrium Medical, Bacterin International, BioMimetic Therapeutics (through its distributor Joint Solutions Alliance), Cascade Medical Enterprises, Citagenix, Codman, Community Tissue Services, GfE Medizintechnik, Harvest Technologies, Integra LifeSciences, J. K. Orthomedic, LifeCell, LifeNet Health, LifeLink Tissue Bank, MTF, Puget Sound Blood Center, RegenMed, Rocky Mountain Tissue Bank, RTI Biologics, Sorin Group, Synovis Life Technologies,TissueBankManitoba,TissueNet,W.L.Gore,andZimmer. Source:MillenniumResearchGroup.
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Exhibit20:LeadingCompetitorsintheImportedSurgicalMusculoskeletalandSoft TissueAllograftMarket,asa%ofTotal,Canada,2009
Note:OtherincludesAlloSource,Biomet,BacterinInternational,CommunityTissue Services, DePuy, LifeNet Health, LifeLink Tissue Bank, Puget Sound Blood Center, RegenMed,RockyMountainTissueBank,RTIBiologics,TissueBankManitoba,and TissueNet. Source:MillenniumResearchGroup.
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Exhibit21:LeadingCompetitorsintheImportedSurgicalMusculoskeletalandSoft TissueAllograftSubstituteMarket,asa%ofTotal,Canada,2009
Note: Other includes Arteriocyte Medical Systems (through its distributor 3T Medical Systems), Arthrex, BioMimetic Therapeutics (through its distributor Joint Solutions Alliance), Cascade Medical, Citagenix, Codman, Cook Medical, J.K. Orthomedic,RTIBiologics,SorinGroup,SynovisLifeTechnologies,W.L.Gore,and Zimmer. Source:MillenniumResearchGroup.
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Exhibit22:LeadingCompetitorsintheImportedSurgicalMusculoskeletalandSoft TissueADMMarket,asa%ofTotal,Canada,2009
Note:OtherincludesAtriumMedicalandGfEMedizintechnik. Source:MillenniumResearchGroup.
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ImportedDentalMusculoskeletal&SoftTissueAllograft& AllograftSubstituteMarket
The market for dental musculoskeletal and soft tissue allografts and allograft substitutes in Canada (excluding Quebec) comprises sales of dental allografts musculoskeletalallograftsandADMsandallograftsubstitutes.Forthepurposeof this report, ADMs used in the dental market refer to dental membranes. Musculoskeletal allografts can be further broken down into NP and proprietary grafts;however,duetoCanadianBloodServicesandMillenniumResearchGroups agreedupondefinitionofwhatconstitutesanNPallograft,therearenoimportedNP allograftsinCanadafordentalapplications.Asaresult,dentalNPallograftsarenot included in the valuations in this report. Cancellous/corticocancellous chips, powders, cubes, granules, pellets, and injectables are defined as proprietary allografts. Allograft substitutes for dental applications include xenografts and syntheticsinthehardtissuespaceandnonhumanderiveddentalmembranesinthe softtissuespace.AlldentalallograftsandallograftsubstitutesavailableinCanadaas of 2009 were imported, and the first domestic provider of these products intended fordentalapplicationsisexpectedtoenterthemarketbythemiddleoftheforecast period.SalesofBMPproductssuchasMedtronicSpinal&BiologicsINFUSE,which arealsohumanderivedallografts,representanemergingmarket,althoughindustry experts believe that Canadian dental professionals will not adopt products like INFUSEinlargenumbersforanother10yearsorsoduetotheirhighcost. Through2014,marketexpansionwillbedrivenprimarilybygrowthinthenumber ofproceduresinvolvingdentalbonegraftsanddentalmembranes.Thisprocedural growthwillbesupportedbytheincreasingnumberofdentalimplantplacementsa result of the aging population, greater patient desire for improved aesthetics, and wider public awareness of dental implant proceduresbecause a growing proportion of dental implant treatments involve a supplementary grafting procedure.ThemarketwillbefurtherbolsteredbymoderateASPincreasesassome manufacturersliftpricefreezesthathadbeeninplacetostabilizeorderingvolumes during the recession. Improving product technology is also projected to promote annual expansion of the number of dental implant treatments performed over the forecastperiodbyincreasingthefeasibilityofcomplexcases,thusspurringgrowth inrelateddentalbonegraftproceduresanddentalbonegraftunitsales. Limiting the market for dental bone grafts will be the growing awareness of oral health among the general population in Canada over the forecast period; as an increasing number of people become aware of the importance of oral health and more frequently visit their dentists, the severity of periodontal defect cases will decline,leadingtofewerproceduresrequiringtheuseofdentalbonegraftmaterials. Industry sources noted that dental bone graft procedure volumes were also negativelyaffectedbytheglobaleconomicslowdownin2008and2009.Procedures suchasdentalimplantplacementsareoftenelective,andmanyindividualsoptedto curbtheirspendingbypostponingorforgoingdentalproceduresuntiltheeconomy
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appeared more stable. Despite this, the climbing number of imported dental allografts and allograft substitutes sold in Canada is expected to sustain robust market growth over the forecast period, with revenues approaching $20 million by 2014(seeExhibit23). Exhibit23:ImportedDentalAllograftandAllograftSubstituteMarket,bySegment, Canada(CA$),20082014
Note: For the purpose of this report, ADMs refer to dental membranes. ADM products (or soft tissue dental membranes) are included in the imported allograft andallograftsubstitutemarketanalysis. Source:MillenniumResearchGroup.
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ImportedDentalAllograftMarketbyTissueType
For the purpose of this report, proprietary allografts were the only type of dental allograft products in Canada in 2009, supported by strong clinical data demonstrating their success in allowing for bone growth at the treatment site. Furthermore, patented cleansing processes that are used to treat proprietary allografts are mitigating previously held fears of disease transmission and are contributingtogreaterclinicalconfidenceinthematerials.Proprietaryallograftsare commonly favored by clinicians because of their superior handling characteristics and broad range of applicability in various dental bone grafting applicationsfor example, Zimmer Dentals Puros DBM putty is premixed and packaged in a dispenser that allows for convenient delivery of the pliable material. As a result of their continued popularity, proprietary allografts will thus increasingly penetrate and dominate the Canadian dental allograft market, over the forecast period, with revenuesapproaching$6millionby2014(seeExhibit24andExhibit25). Asof2009,therewerenoprovidersofimportedallograftproductsactiveinCanada. Industry experts have suggested that a rising number of US tissue banks will establishapresenceinCanadaovertheforecastperiod,increasingtheavailabilityof proprietarybonegraftmaterialsinthecountryinresponsetothegrowingdemand for bone graft materials in general. Adoption of proprietary allografts will likely remain moderate over the forecast period; although some allograft hard tissues are inexpensive,theyoftenlackdesirablehandlingcharacteristicsandcanbedifficultto pack into defects. These represent disadvantages that will continue to impede unit salesgrowthinthissegmentthrough2014. A limited number of ADM products were available in Canada in 2009, which has restricted unit sales and revenue expansion in this particular segment. More importantly,somedentalprofessionalshavenotedthatthepricepremiumattached toADMproductshasyettobejustifiedbyasignificantdecreaseinthetimerequired for these products to integrate into a patients gingival tissue compared to other resorbable dental membrane substitutes. Consequently, over the forecast period, ADM unit growth is projected to slow as dentists increasingly shift toward substitutesinthesofttissuespace. Despite some of the aforementioned limiters, the overall imported dental allograft marketinCanadaisanticipatedtoexpandataCAGRofapproximately10%overthe forecast period, driven primarily by growing unit sales in the proprietary allograft segment.AnnualincreasesinASPsacrossallsegmentswilllikelyremainmoderate throughouttheforecastperiodandsupportmarketgrowthtoalesserextent.
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Exhibit24:ImportedDentalAllograftUnits,byTissueType,Canada,20082014
30,000 25,000 20,000 Units 15,000 10,000 5,000 0 2008 2009 2010 2011 Year 2012 2013 ADMs 2014
NP Allografts
Proprietary Allografts
Notes: (1)Forthepurposeofthisreport,ADMsrefertodentalmembranes. (2) Under the definition agreed upon between Canadian Blood Services and Millennium Research Group, there are no imported NP allografts in Canada for dental applications. Cancellous/corticocancellous chips, powders, cubes, granules, pellets,andinjectablesaredefinedasproprietaryallografts. Source:MillenniumResearchGroup.
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Exhibit25:ImportedDentalAllograftMarket,byTissueType,Canada(CA$),2008 2014
Notes: (1)Forthepurposeofthisreport,ADMsrefertodentalmembranes. (2) Under the definition agreed upon between Canadian Blood Services and Millennium Research Group, there are no imported NP allografts in Canada for dental applications. Cancellous/corticocancellous chips, powders, cubes, granules, pellets,andinjectablesaredefinedasproprietaryallografts. Source:MillenniumResearchGroup.
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ImportedDentalAllograftSubstituteMarketbyTissueType
Dentalallograftsubstitutesconsideredinthisreportincludexenograftandsynthetic bone graft substitutes in the hard tissue space and nonhumanderived dental membranesinthesofttissuespace.Humanderiveddentalmembranesareincluded inthedentalallograftsegmentasADMs.Through2014,unitgrowthinthexenograft segmentisprojectedtobespurredlargelybytheaffordabilityofxenograftmaterials in comparison to synthetic and proprietary allograft products. Xenografts are, however,associatedwithconcernsoverBSE(ormadcowdisease),whichwilllikely somewhatlimitthedentalxenograftmarketspotentialovertheforecastperiod.The Canadian imported synthetic bone graft substitute market was less than onetenth the size of the xenograft market in 2009 and is expected to continue to be overshadowed by the latter through 2014. This is because a limited number of syntheticswereavailableinCanadaasof2009,andadoptionofthesebrandswasnot widespread because proprietary allografts had penetrated the Canadian market early. Of the dental allograft substitute markets covered, the nonhumanderived dental membranesegmentwasthelargestin2009,withrevenuesexceeding$5million(see Exhibit26andExhibit27).Thisisbecausetheseproductsconstitutethemajorityof dental membranes used in Canada due to the low availability of humanderived dental membranes. Additionally, dental professionals have noted that the price premium attached to dental ADM products has yet to be justified by a significant decreaseinthetimerequiredfortheseproductstointegrateintoapatientsgingival tissue compared to other resorbable dental membranes. Through 2014, the non humanderived dental membrane market is anticipated to expand at a rate that mirrors that of the xenograft market, driven by increasing awareness among cliniciansofthebenefitsofusingdentalmembranesindentalbonegraftprocedures. In contrast, the market for synthetic dental bone graft substitutes is projected to stagnate over the forecast period due to the materials perceived lack of osteoinductive and osteoconductive capabilities compared to xenografts and allografts. Overall, the Canadian dental allograft substitute market is expected to expand significantly through 2014, driven by greater clinician awareness of the benefitsofusingthesematerialsduringdentalprocedures.
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Exhibit 26: Imported Dental Allograft Substitute Units, by Tissue Type, Canada, 20082014
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Exhibit 27: Imported Dental Allograft Substitute Market, by Tissue Type, Canada (CA$),20082014
$10.0 Market Value (CA$M) $8.0 $6.0 $4.0 $2.0 $0.0 2008 2009 2010 2011 Year Synthetic Bone Graft Substitutes Dental Membranes
2012
2013
2014
Xenograft Bone Graft Substitutes
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ImportedDentalAllograftandAllograftSubstituteMarket byApplication
Forthepurposeofthisreport,proceduresthatuseallograftandallograftsubstitutes in the hard and soft tissue space include sinus lifts, ridge expansions, ridge augmentations,socketextractionsandpreservations,periodonticdefectrepairs,and the packing of bone graft substitute materials around a dental implant. The likelihood of each dentist specialty to perform these procedures varies, as does the size and complexity of the individual cases attended to by each. Periodontists typically perform the bulk of periodontic defect repairs and carry out sinus lifts, ridge augmentations, and ridge expansions that are of a moderate extent.Sinus lift proceduresvaryintermsofthevolumeofgraftmaterialusedthiscanrangefrom 0.5 to 4 cc. On average, periodontists address the sinus lift cases that are in the middle of this range, tending to refer patients to an oral maxillofacial surgeon for largerandmorecomplexcases.Becausetheyperformthemajorityoftheextensive grafting procedures in terms of graft volume, oral and maxillofacial surgeons use moreunitsofgraftmaterialwhileperformingcomparativelyfewerproceduresthan periodontistsandgeneralpractitioners(GPs),asshowninExhibit28.Generaldental practitionersperformaverysmallproportionofsinuslifts,ridgeaugmentations,and ridge expansions, and the cases that these practitioners do address are typically minimallycomplexandinvolvevolumesofbonegraftmaterialatthelowerendof therangeonlyapproximately0.5to1cc. Although both periodontists and GPs will increasingly perform complex grafting procedures that involve more material over the forecast period, this trend is not likely to outweigh sheer unit sales for oral and maxillofacial applications, and the majorityofunitsalesintheCanadiandentalallograftandallograftsubstitutemarket willthuscontinuetobegeneratedfromoralandmaxillofacialapplicationsthrough 2014 (see Exhibit 29 and Exhibit 30). Moreover, despite more complex cases being performed by GPs and periodontists, the majority of revenue growth in the periodonticandgeneraldentalsegmentsisexpectedtobegeneratedbyanincrease in smaller grafting proceduressuch as socket extractionsper practitioner rather than a substantial increase in larger or more complex grafting cases, such as extensivesinuslifts.Thisisanticipatedtocontributetothecontinueddominanceof revenuesfromoralmaxillofacialapplications. The market for imported dental membranes is expected to expand in line with the increasing number of dental procedures involving bone graft substitutes that are performed to create ideal conditions for dental implant placement. Because the number of 15 by 20 mm dental membrane units used per procedure does not vary significantlybyapplicationasisthecasewiththevolumeofbonegraftmaterial the majority of imported dental membrane units will likely be attributed to periodonticproceduresduetothegreatervolumesinwhichtheyareperformed.
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Exhibit28:ImportedDentalAllograftandAllograftSubstituteProceduresandUnits, byApplication,asa%ofTotal,Canada,2009
19.9% Procedures Units 13.4% 26.7%
54.2% 25.9% 59.9%
Periodontic
Oral Maxillofacial
General Dental
Note:Aunitofdentalallograft/allograftsubstitutehardtissueisdefinedas1cc,and aunitofADM/dentalmembraneisdefinedasone15x20mmdentalmembrane. Source:MillenniumResearchGroup.
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Exhibit 29: Imported Dental Allograft and Allograft Substitute Procedures, by Application,asa%ofTotal,Canada,20082014
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Exhibit30:ImportedDentalAllograftandAllograftSubstituteUnits,byApplication, Canada,20082014
Note:Aunitofdentalallograft/allograftsubstitutehardtissueisdefinedas1cc,and aunitofADM/dentalmembraneisdefinedasone15x20mmdentalmembrane. Source:MillenniumResearchGroup.
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ImportedDentalAllograftandAllograftSubstituteMarket byProvince/Territory
In2009,themajorityofdentalproceduresperformedinCanada(excludingQuebec) involvingimporteddentalallograftsandallograftsubstituteswerecarriedoutinthe provinces of British Columbia and Ontario; over 70% of all procedures counted in Canadawereperformedinthesetwoprovinces(seeExhibit31).Thisisexpectedto continue to be the case over the forecast period. The national market for dental biomaterialsinboththehardandsofttissuespacewaslargelyunderpenetratedasof 2009,meaningthatmuchgrowthpotentialremainstoberealized.Thelargesturban centers in the country lie in British Columbia and Ontario,and these provinces are anticipated to drive much of the procedural growth as a result of their higher population concentrations and the access they provide to dental clinics that offer dental implant services. Exhibit 32 through Exhibit 36 show units and revenues in theimporteddentalallograftandallograftsubstitutemarketbyprovince/territoryin 2009. Althoughthebreakdownbyapplicationdiscussedintheprevioussectionappliesto the overall Canadian dental allograft and allograft substitute market (excluding Quebec),furtherregionaltrendsexist.Inruralareasacrossthecountry,aswellasin certain parts of Western Canada, many general dental practitioners are expanding their service offerings to include dental implant treatment and the bone graft proceduresneededtosupplementmanydentalimplantcases.
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Exhibit 31: Imported Dental Allograft and Allograft Substitute Units, by Province/Territory,Canada,2009
Notes: (1)DentalallograftincludesdentalallografthardtissueandADMs. (2) Dental allograft substitute includes dental allograft substitute hard tissue and dentalmembranes. (3)Aunitofdentalallograft/allograftsubstitutehardtissueisdefinedas1cc,anda unitofADM/dentalmembraneisdefinedasone15x20mmdentalmembrane. Source:MillenniumResearchGroup.
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Exhibit 32: Imported Dental Allograft and Allograft Substitute Market, by Province/Territory,Canada(CA$),2009
Notes: (1)DentalallograftincludesdentalallografthardtissueandADMs. (2) Dental allograft substitute includes dental allograft substitute hard tissue and dentalmembrane. (3)Aunitofdentalallograft/allograftsubstitutehardtissueisdefinedas1cc,anda unitofADM/dentalmembraneisdefinedasone15x20mmdentalmembrane. Source:MillenniumResearchGroup.
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Exhibit33:ImportedDentalAllograftUnits,byProvince/Territory,Canada,2009
Notes: (1)DentalallograftincludesdentalallografthardtissueandADMs. (2)Thesefiguresarederivedfromthetotalnumberofimporteddentalallograft,and allograft substitute units (as shown in Exhibit 31) and extrapolated from the total dental procedure volumes and proportions by province/territory. These figures do not take into account how the use of different tissue types varies by province/territory. (3) A unit of dental allograft hard tissue is defined as 1 cc, and a unit of ADM is definedasone15x20mmdentalmembrane. Source:MillenniumResearchGroup.
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Exhibit34:ImportedDentalAllograftMarket,byProvince/Territory,Canada(CA$), 2009
Notes: (1)DentalallograftincludesdentalallografthardtissueandADMs. (2) These figures are derived from the total market value of imported dental allografts and allograft substitutes (as shown in Exhibit 32) and extrapolated from the total dental procedure volumes and proportions by province/territory. These figures do not take into account how the use of different tissue types varies by province/territory. Source:MillenniumResearchGroup.
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Exhibit 35: Imported Dental Allograft Substitute Units, by Province/Territory, Canada,2009
Notes: (1) Dental allograft substitute includes dental allograft substitute hard tissue and dentalmembrane. (2)Thesefiguresarederivedfromthetotalnumberofimporteddentalallograft,and allograft substitute units (as shown in Exhibit 31) and extrapolated from the total dental procedure volumes and proportions by province/territory. These figures do not take into account how the use of different tissue types varies by province/territory. (3) A unit of dental allograft substitute hard tissue is defined as 1 cc, and a unit of dentalmembraneisdefinedasone15x20mmdentalmembrane. Source:MillenniumResearchGroup.
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Exhibit 36: Imported Dental Allograft Substitute Market, by Province/Territory, Canada(CA$),2009
Notes: (1) Dental allograft substitute includes dental allograft substitute hard tissue and dentalmembrane. (2) These figures are derived from the total market value of imported dental allografts and allograft substitutes (as shown in Exhibit 32) and extrapolated from the total dental procedure volumes and proportions by province/territory. These figures do not take into account how the use of different tissue types varies by province/territory. Source:MillenniumResearchGroup.
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ImportedDentalAllograftandAllograftSubstituteMarket CompetitiveAnalysis
The2009Canadianimporteddentalallograftandallograftsubstitutemarketwasled by Geistlich (through its distributor Osteohealth), ACE Surgical Supply, Zimmer Dental(whichalsodistributesproductsmanufacturedbyRTIBiologicsandIntegra LifeSciences), BioHorizons, and DENTSPLY Tulsa Dental Specialties (which also distributesproductsfortheMTF).Combined,thesefivecompaniesheldover70%of themarketshare.Thetopfourcompetitorsofferedproductsinboththedentalbone graft substitute and dental membrane segments. As of 2009, the number of ADM products available in the dental space in Canada was very limited, including only BioHorizons AlloDerm product and a few pericardium and fascia lata tissues providedbyselecttissuebanks. All competitors in the 2009 Canadian market for imported dental allografts and allograftsubstituteswereUSbased.Despitethis,industryexpertsestimatedthatthis marketremainedlargelyunderpenetratedbymanyUScompaniesandorganizations thathadyettoestablishapresenceinCanadaduetoashortageofallografttissuein theUS.ThoseUStissuebanksthatwereactiveintheCanadianmarketreportedthat they had only a handful of dental clients in Canada. Consequently, the imported dentalallograftmarketinthecountrywasextremelyconcentratedanddominatedby asmallnumberoflargeandinternationallysuccessfuldentalimplantmanufacturers, supplyingtheCanadianmarketwiththevastmajorityoftheallograftsubstituteand ADM products available in the country. These large dental implant manufacturers have a particular competitive advantage in that their sales representatives can promote their companies as onestopshops for both dental implant and dental implantrelated products such as bone graft materials and dental membranes. Moreover,inconjunctionwiththecontinuedlaunchofnewproducts,manufacturers willincreasetheirmarketingeffortstopromotesalesinboththehardandsofttissue space, which will drive awareness, product adoption, and revenue growth. Exhibit 37 through Exhibit 39 display the leading competitors in the Canadian imported dentalallograftandallograftsubstitutemarketin2009.
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Exhibit 37: Leading Competitors in the Imported Dental Musculoskeletal and Soft Tissue Allograft and Allograft Substitute Market, as a % of Total, Canada, 2009
Sybron Implant Solutions W. L. Gore 5.1% 5.1% BIOMET 3i 5.6% DENTSPLY Tulsa Dental Specialties 5.9% BioHorizons 12.4%
Other 11.5%
Geistlich (Osteohealth) 20.2%
ACE Surgical Supply 18.0%
Zimmer Dental 16.2%
Note: Other includes AlloSource, Biocomposites, Citagenix (through its distributor KeystoneDental),CommunityTissueServices,Exactech,Impladent,IMTEC,LifeNet Health,PacificCoastTissueBank,RegenMed,RockyMountainTissueBank,Salvin DentalSpecialties,andStraumann. Source:MillenniumResearchGroup.
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Exhibit 38: Leading Competitors in the Imported Dental Musculoskeletal and Soft TissueAllograftMarket,asa%ofTotal,Canada,2009
Note: Other includes AlloSource, Biocomposites, Community Tissue Services, Exactech, Gore Medical, Impladent, IMTEC, LifeNet Health, Pacific Coast Tissue Bank, RegenMed, Rocky Mountain Tissue Bank, Salvin Dental Specialties, Straumann,andSybronImplantSolutions. Source:MillenniumResearchGroup.
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Exhibit 39: Leading Competitors in the Imported Dental Musculoskeletal and Soft TissueAllograftSubstituteMarket,asa%ofTotal,Canada,2009
Note: Other includes AlloSource, Biocomposites, Citagenix (through its distributor KeystoneDental),CommunityTissueServices,Exactech,Impladent,LifeNetHealth, Pacific Coast Tissue Bank, RegenMed, Rocky Mountain Tissue Bank, Salvin Dental Specialties,andStraumann. Source:MillenniumResearchGroup.
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APPENDIXA
AppendixA
MRGAcronymsand Initialisms
Acronym/Initialism ADM ASP BMA BMP BSE CAGR CMF DBM GP MTF NP OP1 PCS PRP Definition AcellularDermalMatrix AverageSellingPrice BoneMarrowAspirate BoneMorphogeneticProtein BovineSpongiformEncephalopathy CompoundAnnualGrowthRate Craniomaxillofacial DemineralizedBoneMatrix GeneralPractitioner MusculoskeletalTransplantFoundation Nonproprietary OsteogenicProtein1 PlateletConcentrationSystem(s) PlateletRichPlasma
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CBS CDN Imported Surgical and Dental Allograft Allograft Substitute and Acellular Dermal Matrix Study 2010

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CBS CDN Imported Surgical and Dental Allograft Allograft Substitute and Acellular Dermal Matrix Study 2010

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CanadianImportedSurgical&Dental Allograft,AllograftSubstitute,& AcellularDermalMatrixStudy2010

CanadianImportedSurgical&Dental Allograft,AllograftSubstitute,& AcellularDermalMatrixStudy2010

Exhibit 14: Imported Surgical Allograft Market, by Province/Territory, Canada (CA$),2009

Exhibit 15: Imported Surgical Allograft Substitute Units, by Province/Territory, Canada,2009

Exhibit 16: Imported Surgical Allograft Substitute Market, by Province/Territory, Canada(CA$),2009

Xenograft Bone Graft Substitutes

19.9% Procedures Units 13.4% 26.7%

54.2% 25.9% 59.9%

Note:Aunitofdentalallograft/allograftsubstitutehardtissueisdefinedas1cc,and aunitofADM/dentalmembraneisdefinedasone15x20mmdentalmembrane. Source:MillenniumResearchGroup.

Note:Aunitofdentalallograft/allograftsubstitutehardtissueisdefinedas1cc,and aunitofADM/dentalmembraneisdefinedasone15x20mmdentalmembrane. Source:MillenniumResearchGroup.

Exhibit 35: Imported Dental Allograft Substitute Units, by Province/Territory, Canada,2009

Exhibit 36: Imported Dental Allograft Substitute Market, by Province/Territory, Canada(CA$),2009

Geistlich (Osteohealth) 20.2%

ACE Surgical Supply 18.0%

Zimmer Dental 16.2%

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