Joint venture opens doors to lucrative US market

A New Zealand company could soon be designing custom hip and knee replacements for America's multibillion-dollar orthopaedic industry after joining forces with a United States firm.

Christchurch-based Enztec and US company Omni Life Science have become sister companies under a new umbrella grouping called Orthopaedic Synergy which is 75 per cent owned by New Zealanders.

The firm was put together by Auckland private equity player Birnie Capital Partners which owned stakes in Enztec and Omni Life Science.

Stephen Norrie, chief financial officer of Orthopaedic Synergy and a director of Birnie Capital Partners, said the two businesses were complementary. Enztec already had a contract to supply instruments to Omni but Norrie hoped the new relationship would allow the New Zealand business to design more custom implants for the US market.

"There is a real opportunity for that in the US market and before now Enztec really hasn't had a channel to go through."

The orthopaedic market is estimated to be worth US$11 billion ($18.7 billion) worldwide, half of which is spent in the US. "The challenge we see in New Zealand is that we have good products but the difficulty is getting them to market."

Norrie said when Birnie first invested in the US company in 2005 it was a tiny business but it was now gaining critical mass.

Last year its sales doubled to US$15 million and Norrie expected the growth to continue this year.

Its relationship with the New Zealand company would allow it to source custom-made products and design teams from both companies would develop new products.

Norrie also hoped to move Omni's manufacturing to New Zealand: "We believe we can provide competitive manufacturing here."

Enztec mainly exports its orthopaedic designs to Australia and Britain but it was hoped a New Zealand manufacturing operation would allow it to open new markets selling into Asia.

Norrie said the company had planned to float on a stock exchange last year but it turned to private equity to raise the money to bolster its balance sheet and New Zealand firm Pioneer Capital invested US$4.8 million into the business.

An initial public offer was still on the cards once the market picked up again, Norrie said.