Regeneration Technologies Continues To Break Its Chains
BY HUYEN NGUYEN, SEPTEMBER 12, 2006
After the market closed yesterday, Regeneration Technologies (RTI) announced it amended a prior distribution agreement with its largest distributor, Medtronic Sofamor Danek USA, Inc. (MSD) regarding domestic spinal allograft distribution. Currently, RTI derives 60% of its annual revenues (~$45 million) from MSD spinal and other general orthopedic allograft sales. Prior contractual agreements with MSD prevented RTI from distributing its allograft spinal implants in the U.S. through other channels and according to the Company, the buyout of the exclusivity agreement cost $3 million. This is another step forward in RTI's transition from an OEM to a full-service orthopedic device manufacturing and distribution company.
Amendments to the contract allows RTI to:
Process spinal implants for other distributors, however, MSD orders will have priority.
Review and negotiate prices on an annual basis.
Use jointly owned (RTI/MSD) and RTI owned spine related intellectual property for processing and development of RTI new products.
Make adjustments to its processing schedule of MSD exclusive spinal implants.
Increase the reimbursement fee for certain RTI implants.
Establish a non-exclusive long-term supply contract between MSD and RTI for RTI's Sterling line (xenograft) spinal implant.
