Orthotics business development

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September 2005

http://biomech.com/showArticle.jhtml?articleID=170701861

Current business developments in the biomechanics mainstream

By: Jordana Bieze

Ossur expands orthotic presence with purchase of Royce Medical

One of the biggest fish in the orthotics and prosthetics pond packed

on more muscle in July, as Ossur acquired Royce Medical in a

transaction valued at $216 million.

In dealing for the Camarillo, CA-based company, Reykjavik-based Ossur

continued to make good on its commitment to enhancing its presence on

the orthotics end of the O & P spectrum, a process that began in

September 2003 with the acquisition of the Generation II Group

(see " Ossur makes leap into orthotics with purchase of Generation

II, " November/December 2003, page 86).

" The acquisition of Royce Medical will move Ossur significantly

closer to realizing its strategic objectives in the orthotics market.

Together, Ossur and Royce Medical will be greater than the sum of

their parts, and the transaction will position Ossur as one of the

leading orthotics companies in the U.S. market, " said Jon Sigurdsson,

president and CEO of Ossur. " For years, Ossur has been a leading

company in the design and manufacture of prosthetics and we now

intend to gain the same footing in orthotics. "

Royce Medical reported sales of approximately $68 million for the one-

year period ending June 30; combined sales for the two companies are

estimated at $196 million. Royce had been owned by Cortec Group, a

private equity fund, since 2003.

The Ossur-Royce acquisition marks the second significant O & P

consolidation in the span of a month. On July 1, , MI-based

Camp Healthcare purchased Poulsbo, WA-based Seattle Systems

(see " Acquisition of Seattle Systems makes Camp a top O & P player, "

August, page 70).

Meanwhile, on the prosthetic side of Ossur's business, the Rheo knee

compared favorably to Otto Bock's C-Leg in a study published in the

August issue of the American Journal of Physical Medicine and

Rehabilitation. In eight unilateral transfemoral amputees walking at

self-selected speeds, Boston researchers found that the average

metabolic rate seen with the Rheo was 3% less than with the C-Leg and

5% less than with the Mauch SNS. The researchers also found that the

two variable-damping knees, the Rheo and C-Leg, were associated with

smoother gait, decreased hip work production, lower peak hip flexion

moment at terminal stance, and reduced peak hip power generation at

toe-off than the mechanically passive Mauch knee.