Zimmer Holdings - Acquisition of Centerpulse, Switzerland - Essay Example

In the late 1990s, many orthopedic suppliers and distributors were acquired in large takeovers. With the industry experiencing a large boom in business, an increase in research and development followed. This allowed orthopedic companies to lower costs due to greater technology. Zimmer pioneered minimally invasive surgeries (MIS), which lowered surgical times, lessened pain, and improved recovery. The industry was forecasted to grow at 23 percent annually, but much of this growth was to occur in the spinal product segment. Zimmer did not cater to this market at all and instead focused on the knee and hip segments.

Zimmer Holdings was founded in 1926 after Justin Zimmer, the original founder, could not convince his employer to sell aluminum splints. Zimmer left his job and created his own company. Over the next few years, Zimmer expanded and became a major domestic player in the orthopedic industry. In 1972 Zimmer was bought out by Bristol-Myers, which had designs on Zimmer reaching a global market. In 1989 Bristol-Myers merged with Squibb to form Bristol-Myers Squibb (BMS). In 2001, with the company already a major global pharmaceutical company, a decision was made to turn Zimmer into an independent publicly-traded company.

BMS appointed several individuals in management positions so as to smooth the transition to the NYSE. By the following year, Zimmer was second in the knee market worldwide, third in the hip market, and fourth in the trauma market. The president of Zimmer Incorporated, J. Raymond Elliott, quickly assessed where the company was at and decided to expand the company into Europe. Also, Elliott wanted to do something about the spine market, where Zimmer had no presence at all.

Sulzer Corporation was founded in 1834 as a Swiss manufacturing cast-iron company. Throughout the years Sulzer expanded and acquired many medical technologies. By the new millennium, Sulzer Medica (SM), as it was known by then, was a global player in the biomedical implant business. After going through some legal troubles, the company was rebranded as Centerpulse Orthopedics.

Zimmer was interested in forming a partnership with Centerpulse Orthopedics, despite all of the difficulties that the company was going through during that time. Centerpulse Orthopedics had access to vast supply chains and brand loyalty, something which Zimmer did not have in Europe at all. It seemed like a match made in heaven. Zimmer would help prop up the flailing Centerpulse Orthopedics, while in return Zimmer could establish itself in the European market in a relatively short space of time. Zimmer's first offer to Centerpulse Orthopedics was turned down, but discussions were ongoing as to how this proposed takeover would occur and which company would retain control. Read More