Zimmer Provides More Info: DOJ Investigating Price-Fixing
BY ARIELLA P. GOLOMB, MD, JULY 27, 2006
In yesterday's quarterly report press release Zimmer shared more information on the nature of the recent DOJ investigations into the Orthopedics Industry. The ongoing investigation is related to a price-fixing scheme, initiated by one of Zimmer's competitors at a specific hospital.
According to Zimmer: "In the fall of 2005, a single hospital conducted a bid process for orthopaedic implant pricing. As part of that process, a representative of the hospital sent an e-mail containing the hospital's proposal to the local representatives of various orthopaedic companies, including Zimmer's local independent distributor. Upon receipt of that e-mail, a representative of one of Zimmer's competitors sent an unsolicited message to the same group of competitors that received the hospital's original message. The competitor's e-mail proposed that the orthopaedic companies adopt a uniform pricing strategy in responding to this hospital."
Zimmer had the independent distributor reject the proposal stating "emphatically that neither Zimmer nor its distributors will participate in pricing discussions with competitors and that Zimmer's policies insist on full compliance with the antitrust laws."
This information narrows the scope of the DOJ investigation even further than the information provided by Stryker last week, easing concerns about the impact of the investigation on the orthopedics industry.
For 2Q:06 Zimmer announced net sales of $882 million, an increase of 4% reported and 5% constant currency, below analysts expectations of $889 million. Diluted earnings per share for the quarter were $0.81 reported and $0.83 adjusted, exceeding analyst's estimates of $0.82 adjusted. Constant currency net sales were up 5% and 3% for knees and hips respectively, up 15% for both extremities and dental, and up 12% for trauma and spine.
Today, Zimmer also annouced, that it has entered into a five-year agreement with Brasseler USA that allows Zimmer to sell and distribute Brasseler-manufactured powered surgical instruments (large and small bone) and consumables in the United States.
