ZMH Acquires NORMED

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Global orthopedic and surgical products company - Zimmer Holdings (ZMH) recently announced the acquisition of NORMED Medizin-Technik GmbH, a Germany-based medical company. However, financial terms of the deal were not disclosed.

NORMED currently provides a comprehensive product line of specialized plates, screws and instruments. This includes systems for bone reconstruction and fracture repair, fusion procedures and external fixation.  According to Zimmer, with its advanced technologies, especially for foot and ankle, hand and wrist reconstruction and trauma markets, NORMED will strengthen Zimmer's Extremities and Trauma product portfolios in these fast growing market segments.

Zimmer offers a broad line of reconstructive implant and trauma products, as well as orthopedic surgical instruments and supplies. The Reconstructive Implant division, the largest at Zimmer, manufactures joint replacement devices for knee, hips, shoulders and elbows (extremities).

At present, the company is strengthening its product portfolio to drive its top line. Moreover, the ongoing shift in demand to premium products, such as Prolong and Vivacit-EHighly Crosslinked Polyethylene, Trabecular MetalTM Technology products, high-flex knees, porous hip stems and the introduction of patient specific devices, is expected to continue to positively affect sales growth. Along with the focus to drive Reconstructive and emerging businesses, Zimmer is exploring opportunities to expand its reach into early intervention products.

We are also encouraged with the favorable long-term trend for Zimmer that points toward sustained growth driven by obesity, wear and tear of joints from more active lifestyles, growth in emerging markets, new material technologies, advances in surgical techniques and proven clinical benefits of joint replacement procedures.

More importantly, the percentage of population over age 65 in the U.S., Europe, Japan and other developed regions is expected to nearly double by the year 2030. In the U.S., the oldest baby boomers are now pushing retirement age. We believe that Zimmer is benefiting from this aging demography since knee and hip joints tend to wear out with age and therefore require replacement.

Meanwhile, in order to streamline its business, Zimmer plans to continue with its global restructuring program. Several new products are slated for launch that will have a positive impact on the top line.However, macroeconomic uncertainties and unfavorable currency adversely impacted sales during the last reported quarter.

Zimmer currently carries a Zacks Rank #3 (Hold). Other medical sector stocks that warrant a look are Conceptus Inc. (CPTS), Haemonetics Inc. (HAE) and Cyberonics Inc. (CYBX). All the stocks carry a Zacks Rank #1 (Strong Buy).

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