Deutsche Bank Comments On Medical Device Industry

Biomet's results raise two concerns for Deutsche Bank: incremental US pricing and mix pressure; results suggest the US end of year pick-up may not have been that notable. However, it notes Biomet has proven it is not always a good proxy for what to expect from others. Biomet did acknowledge the possibility it may have lost share. Deutsche Bank thinks the market was indeed soft and pricing/mix pressures are likely to be echoed by others. It continues to rate both Stryker

and Zimmer Holdings

Hold. Yesterday Biomet reported F2Q11 results. On a worldwide constant currency basis, total sales were up 2%. Recon sales were up just 3%, a deceleration from F1Q11's up 4% andFY2010's up 8% rate. Hip sales were flat while knees were up 3%. Management attributed the softer results to continued deceleration in procedures as well as incremental pricing and mix pressure, needless to say a concerning trend if it proves to be reflective of the overall market trends. The economy continues to weigh on procedure rates. In the U.S. Biomet did not see any notable change on procedures volumes on a month to month basis, thus there was no deductible-fueled pick-up as some expected. SYK closed Thursday at $54.64 ZMH closed Thursday at $52.60