Stryker Corporation'is a leader in the worldwide orthopaedic market and is one
of the worlds largest medical device companies.'Stryker delivers results through
a wide range of capabilities including joint replacements, trauma, spine and micro
implant systems, orthobiologics, powered surgical instruments, surgical navigation
systems and endoscopic products as well as patient handling and emergency medical
equipment.'Stryker also provides outpatient physical therapy services in the United
States.'Stryker was incorporated in Michigan in 1946 as the successor company
to a business founded in 1941 by Dr. Homer H. Stryker, a leading orthopaedic surgeon
and the inventor of several orthopaedic products.
The Company segregates its operations into two reportable business segments:
Orthopaedic Implants and MedSurg Equipment.'The Orthopaedic Implants segment
sells orthopaedic reconstructive (hip, knee and shoulder), trauma and spinal
implants, bone cement and the bone growth factor osteogenic protein-1 ("OP-1").'
The MedSurg Equipment segment sells powered surgical instruments, endoscopic
products, hospital beds and stretchers and micro implant and surgical navigation
systems.'
Most of the Companys products and product improvements have been developed
internally.'The Company maintains close working relationships with physicians
and medical personnel in hospitals and universities who assist in product research
and development.'New and improved products play a critical role in the Companys
sales growth.'The Company continues to place emphasis on the development of
proprietary products and product improvements to complement and expand its existing
product lines.'The Company has a decentralized research and development focus,
with manufacturing locations responsible for new product development and product
improvements.'Research, development and engineering functions at the manufacturing
locations maintain relationships with distribution locations and customers to
understand changes in the market and product needs.
In the United States, most of the Companys products are marketed directly
to more than 6,000 hospitals and to other health-care facilities and doctors
by approximately 2,100 sales and marketing personnel.'Stryker primarily maintains
separate and dedicated sales forces for each of its principal product lines
to provide focus and a high level of expertise to each medical specialty served.
The Companys manufacturing processes consist primarily of precision machining,
metal fabrication and assembly operations; the forging and investment casting
of cobalt chrome; and the finishing of cobalt chrome and titanium.'In addition,
the Company is the sole manufacturer of its OP-1 product.'The principal raw
materials used by the Company are stainless steel, aluminum, cobalt chrome and
titanium alloys.'
COMPETITION
The Company is one of four leading competitors in the United States for orthopaedic
reconstructive products.'The three other leading competitors are DePuy Orthopaedics,
Inc. (a subsidiary of Johnson & Johnson), Zimmer Holdings, Inc., and Biomet,
Inc. While competition abroad varies from area to area, the Company believes
it is also a leading player in the international markets with these same companies
as its principal competitors.
In the trauma implant segment, Stryker is one of five leaders competing principally
with Synthes-Stratec, Smith & Nephew Orthopaedics (a division of Smith &
Nephew plc), Zimmer Holdings, Inc., and DePuy Orthopaedics, Inc.
In the spinal implant segment, the Company is one of four leaders, including
the principal competitors Medtronic SofamorDanek, Inc. (a subsidiary of Medtronic,
Inc.), DePuyAcroMed, Inc. (a subsidiary of Johnson & Johnson), and Synthes-Stratec.
The Company believes that several companies are engaged in the research and
development of morphogenic proteins for the repair of hard and soft tissues
that would compete with the Companys OP-1 product.'Wyeth has completed human
clinical trials of a recombinant bone morphogenetic protein ("rhBMP-2")
for repair of orthopaedic and other skeletal defects and has awarded certain
distribution rights to Medtronic SofamorDanek for rhBMP-2 in the United States
and Europe.'A number of companies currently provide various other therapies,
including allografts, bone fillers and electrical stimulation devices for the
treatment, repair or replacement of bone and joint tissue.'The Company believes
that its OP-1 product, which is approved for limited trauma indications in certain
markets and is currently in clinical trials for other indications, would ultimately
compete with these products and with traditional therapies, such as autograft.
In the powered surgical instruments segment, Stryker is one of three leaders,
together with the principal domestic competitors Medtronic Midas Rex, Inc. (a
subsidiary of Medtronic, Inc.), and Linvatec, Inc. (a subsidiary of CONMED Corporation).'
These companies are also competitors in the international segments, along with
Aesculap-Werke AG (a division of B. Braun Melsungen AG), a large European manufacturer.
In the arthroscopy segment, the Company is one of four leaders, together with
the principal competitors Smith & Nephew Endoscopy (a division of Smith
& Nephew plc), Linvatec, Inc., and Arthrex, Inc.'In the laparoscopic imaging
products segment, the Company is one of four leaders, together with the principal
competitors Karl Storz GmbH & Co. (a German company), ACMI Corporation and
Olympus Optical Co. Ltd. (a Japanese company).
In the craniomaxillofacial segment, Stryker is one of four leaders, together
with the principal competitors Synthes-Stratec, Walter Lorenz Surgical, Inc.
(a subsidiary of Biomet, Inc.), and KLS Martin L.P.
In the surgical navigation segment, Stryker is one of five principal competitors
including Medtronic Surgical Navigation Technologies (a division of Medtronic,
Inc.), BrainLAB Inc. (a subsidiary of BrainLAB AG), AESCULAP AG & Co. KG
(a division of B. Braun Melsungen AG), Radionics, Inc. (a subsidiary of Tyco
International Ltd.), and GE Medical Systems Navigation and Visualization, Inc.
(a subsidiary of General Electric Company).
The Companys primary competitor in the patient-handling segment is Hill-Rom
Company, Inc. (a division of Hillenbrand Industries, Inc.).'In the specialty
stretcher segment, the primary competitors are Hausted, Inc. (a subsidiary of
STERIS Corporation), Hill-Rom Company, Inc., and Midmark Hospital Products Group
(a subsidiary of Ohio Medical Instrument Company, Inc.).'In the ambulance cot
segment, Ferno-Washington, Inc. is the Companys principal competitor.
In the United States outpatient physical and occupational rehabilitation segment,
the Companys primary competitors are independent therapist-owned practices
and hospital-based services, in addition to other national rehabilitation companies,
including HEALTHSOUTH Corporation and NovaCare Rehabilitation (a division of
Select Medical Corporation).
The principal factors that the Company believes differentiate it in these highly
competitive market segments and enable it to compete effectively are innovation,
reliability, service and reputation.'The Company is not able to predict the
effect that continuing efforts to reduce health-care expenses generally and
hospital costs in particular will have on the future sales of its products or
its competitive position.'The Company believes that its competitive position
in the future will depend to a large degree on its ability to develop new products
and make improvements in existing products.'While the Company does not consider
patents a major factor in its overall competitive success, patents and trademarks
are significant to the extent that a product or attribute of a product represents
a unique design or process.'Patent or trademark protection of such products
restricts competitors from duplicating these unique designs and features.'Stryker
seeks to obtain patent protection on its products whenever possible.'The Company
currently has approximately 840 United States patents and 1,240 international
patents.
