Rachel Ellingson, Zimmer Biomet’s SVP and chief strategy officer since 2018 [Image courtesy of Zimmer Biomet]
Zimmer Biomet has transformed and reinvented itself through various partnerships and product innovations, and Chief Strategy Officer Rachel Ellingson has been a driving force behind the success.
Zimmer Biomet has been one of the leading orthopedic companies in the medical device industry for many years. With $6.8 billion in revenue for its most recently reported fiscal year and $435.9 million in R&D spending, the company is ramping up its portfolio.
Chief Strategy Officer and SVP Rachel Ellingson has played a significant role in Zimmer Biomet’s revitalization. She joined the orthopedic company in 2018 from St. Jude Medical, where she was the VP of corporate strategy until its acquisition by Abbott. Ellingson started as St. Jude’s senior director of corporate strategy and planning in 2006 and moved her way up to VP of investor relations and corporate communications , then VP of corporate relations, VP of global communications and ultimately VP of corporate strategy.
Zimmer Biomet has launched many innovative products since 2018, including the ZBEdge Connected Intelligence Suite, Persona Revision Knee, the Persona IQ smart knee and Rosa Robotics, and divested its spine and dental businesses in the process. But Ellingson says the company is just getting started.
“Our strategy at the core is about how are we going to drive the growth so that we can help reach more patients,” Ellingson told Medical Design & Outsourcing. “It’s that virtuous cycle of revenue growth to achieve your mission.”
Ellingson “has served a critical role in the ongoing transformation of Zimmer Biomet,” Zimmer Biomet President and CEO Bryan Hanson told MDO.
“As a result of her vision and hard work to drive forward our active portfolio management strategy, we have forged key partnerships with technology leaders inside and outside of healthcare, driven growth through business development efforts to advance our portfolio, and completed the spinoff of ZimVie – allowing us to increase our focus on our core areas of growth and strengthen our position as a global leader in the medtech space,” Hanson said. “Personally, I value her perspective, counsel and friendship. She consistently demonstrates a commitment to our mission to improve the quality of life for patients in all that she does.”
The three-step approach
Innovation on Zimmer Biomet’s digital side is in part, driven by the desire to grow revenue faster in its lower core markets. Now the company is focused on transforming for the future through active portfolio management, which means deploying resources into innovations or mergers and acquisitions to drive growth in its most attractive markets.
“My team spends a lot of time evaluating our end markets and submarkets to determine the most attractive areas for growth,” Ellingson said. “We then rank them in terms of prioritization and consider how best to build those businesses through internal and external opportunities. Robotics as an example, was initially an acquisition, and then with that as our base, we invested our R&D dollars to bring this exciting innovation to the knee space.”
First, Zimmer Biomet wants to drive growth in its lower growth core markets, including hip and knees. Zimmer recently announced a partnership with Surgical Planning Associates to commercialize HipInsight, which is the first FDA-cleared, mixed-reality navigation system for total hip replacement. It is customized for Zimmer Biomet’s hip implant portfolio.
Second, the company wants to generate more revenue in its higher growth markets. The company’s ZBEdge portfolio, for example, was a combination of finding the right attractive markets and submarkets to invest in. ZBEdge is the company’s connected intelligence suite of digital and robotic technologies. It includes the Rosa robotic surgery platform, anatomical visualization and guidance systems such as the Signature One, the iAssist knee alignment system and optical navigation tools.
Strategic acquisitions are also part of generating revenue in those higher growth markets. The A&E Medical acquisition in 2020 added A&E’s sternal closure devices, including sternal sutures, cable systems and rigid fixation and single-use complementary temporary pacing wire and surgical punch products, to Zimmer Biomet’s portfolio. That $250 million acquisition added more scale in those higher-growth markets and submarkets.
The third approach to transforming Zimmer Biomet is divesting non-core, low-growth businesses where the company doesn’t have a clear path to leadership, or a right to win. That resulted in the ZimVie spinoff of the company’s spine and dental businesses, which was completed in March 2022.
“It’s interesting because I find a lot of people say to me, ‘How does that align to our strategy?’ Because our strategy is to drive growth. And I always tell people, it’s not about the size, it’s about the growth. Because that’s the vitality of that virtuous circle to continue to invest in your mission,” Ellingson said.
Partnerships to drive revenue
Driving growth goes beyond allocating R&D dollars in attractive markets. Sometimes it means bringing in the right partnerships.
Zimmer Biomet’s recent partnerships have brought major gains for the company. For example, its collaboration with Canary Medical led to the development of one of the industry’s first “smart” orthopedic implants.
Canary Medical and Zimmer Biomet have a long-term partnership in which the startup provides proprietary use of its Canary Health Implantable Reporting Processor (CHIRP) smart sensor technology for all areas where Zimmer Biomet is active, including its Persona IQ smart knee implants. Persona IQ knee implants capture gait metrics, including functional knee range of motion, step count and sampled average walking speed using sensor-based technology. The technology allows physicians and care teams to collect more patient-specific data during the course of patient monitoring.
Zimmer Biomet’s Mymobility app connects joint surgery patients with their care team before and after surgery. [Image from Zimmer Biomet]
Zimmer Biomet continues to speed up investments in other companies, such as NeuroOne, which is developing sEEG electrode technology for temporary recording, monitoring and stimulation of electrical signals at the subsurface level of the brain. Zimmer Biomet has exclusive rights to sell the Evo sEEG device to neurosurgeons, pending FDA review.
Opportunities on the horizon
The COVID-19 pandemic hit most orthopedic companies by postponing or canceling elective procedures like knee replacements, but Zimmer Biomet managed through the crisis, Ellingson said. She credited the various partnerships Zimmer Biomet built prior to the pandemic because it allowed the company to drive more growth and bring innovative technology in a time when capital was constrained.
Ellingson also said that many of the digital health technologies that have been leading Zimmer Biomet’s innovation in the last few years are still in their earliest stages, so there is still significant room to transform orthopedics care.
Whether it’s changing care through innovation or bringing what Zimmer Biomet has into new markets, the company is going to continue on the path of digital health innovation in orthopedics.
“I also am personally really excited about the opportunity to look at how do we get bigger in some of our new markets as well,” Ellingson said. “Whether they are some of our current adjacency spaces, or just looking at what are the different and new ways we can take, whether it’s our technologies or everything that we’ve built in the last couple of years, and deploy it into some new markets, that’s really interesting to me too.”
