„By combining the biomechanically proven energy efficient and dynamic carbon-fiber foot blade technology with advanced ankle technology, we launched more adaptive feet solutions during the year.“

Markets


Össur‘s business is influenced by various global macro trends that can impact both sales and profitability across our business segments. We have selected six trends that are impacting Össur’s business:

INDUSTRY TRENDS ARE CREATING OPPORTUNITIES

Aging and more active population

Aging and more active population

  1. The global population of 65 and older is increasing, and so is the amputee population
  2. Growing number of people afflicted by vascular disease, the leading cause of amputation
  3. Increased amount of fractures, joint instability and joint afflictions
Growing middle class in emerging markets

Growing middle class in emerging markets

  1. Global economic growth will be powered by emerging markets
  2. Disposable income increasing in emerging markets, willingness to pay out-of-pocket
  3. Increasing healthcare coverage in emerging markets
Increased pressure on healthcare budgets

Increased pressure on healthcare budgets

  1. Healthcare providers increasing efforts to manage cost
  2. Demand for cost effective solutions without compromising quality
  3. Consolidation in patient care
Increased penetration of new technologies and high-end products

Increased penetration of new technologies and high-end products

  1. New innovative technologies being accepted for reimbursement
  2. Gradual transition from volume to value-based payment in healthcare
  3. Increased acknowledgement of total healthcare economic benefits of bionics and OA bracing
Increasing regulatory requirements

Increasing regulatory requirements

  1. Investments in people and processes to adapt to changing healthcare requirements
  2. Product development to meet prevailing regulatory requirements
  3. Increasing importance of digital and personal data security
Improved treatment options

Improved treatment options

  1. Earlier diabetic detection, limb salvage and alternative treatment options
  2. Surgery, wound care and easily accessible pain medication provide alternatives to bracing
  3. Increasing healthcare coverage and better access to patients

Össur operates within the global non-invasive orthopaedic industry, delivering advanced and innovative solutions within the prosthetics and bracing & supports markets.

MEDICAL DEVICE MARKET

Cardio-
vascular

Ophthalmology

General
Surgery

Neurological
Products

Orthopaedics

Diagnostics

Imaging
and Other

Urology

Commodity
Supplies

Arthroscopy

Reconstructive

Spinal

Trauma

Bracing &
Supports

Prosthetics

Pain
Management

Ancillary
Products

Bone
Growth

MEDICAL DEVICE MARKET

  • Cardio vascular
  • Ophthalmology
  • General Surgery
  • Orthopaedics
    • Arthroscopy
    • Reconstructive
    • Spinal
    • Trauma
    • Bracing & Supports
    • Prosthetics
    • Pain Management
    • Ancillary Products
    • Bone Growth
  • Diagnostics
  • Imaging and Other
  • Urology
  • Commodity Supplies

The prosthetics market

Prosthetics include artificial limbs and related products for individuals who were born without limbs or who have had limbs amputated. Össur offers a full range of premium lower- and upper-limb prosthetics, including feet, knees, hands, liners, and other components.

The size of the global prosthetics component market is estimated to be approximately USD 1.2-1.3 billion. Össur is the second largest company operating in prosthetics with a market share estimated at ~22%.

The growth rate of the prosthetics market is estimated to be 3-5%. Volume growth in the market is estimated to be moderate. Volume growth is determined by a relatively stable global amputee population and a moderate increase in the number of new amputees that get fitted with a prosthesis every year. Pricing in the prosthetics market is determined by reimbursement which is on average relatively stable. Growth in the prosthetics industry is mainly driven by increased utilization of higher quality prosthetics that lead to increased mobility and quality of life for the users.

Prosthetic market

Market size

USD billion
1.2 - 1.3

Market share

#2 Worldwide
~22%

Market growth

3-5%
Moderate volume growth
Relatively stable pricing
Positive product mix*

Primary Sales Channels

Orthotic & Prosthetic clinics (O&P)

Source: Össur management estimates
Note: Estimates only account for component sales from providers to suppliers, i.e. not clinical services
* Increased penetration of high-end innovative products

The bracing & supports market

Bracing & supports (B&S) include products used to support joints and other body parts for therapeutic and preventative purposes. The B&S market includes devices supporting spinal, knee, hip, foot, ankle, and hands. Össur offers a comprehensive line of customer made and off-the-shelf products with primary focus on osteoarthritis and injury solutions.

The size of the global B&S product market is estimated to be approximately USD 2.7-3.0 billion. Össur is the second largest company operating in B&S with a market share estimated between 6-8%.

The growth rate of the B&S market is estimated to be 3-5%. We observe a healthy volume growth in the B&S market supported by global healthcare trends such as an aging and more active population. Price levels are relatively stable as B&S products are fully reimbursed in most of the markets that Össur operates in. For some markets, there is moderate price pressure for selected product categories, mainly products of a lower innovation level. Increased utilization of high-end innovative products such as Unloader bracing supports market growth in B&S.

Bracing & Supports market

Market size

USD billion
2.7 - 3.0

Market share

#2 Worldwide
6 - 8%

Market growth

3-5%
Healthy volume growth
Moderate stable pressure
Positive product mix*

Primary Sales Channels

Orthotic & Prosthetic clinics (O&P)
Hospitals
Orthopaedic clinics

Source: Össur management estimates
Note: Estimates only account for component sales from providers to suppliers, i.e. not clinical services
* Increased penetration of high-end innovative products

Orthopaedic industry stakeholders

In the orthopaedic industry, many stakeholders and decision makers are involved in the purchasing decision. Stakeholders can be categorized into five groups.

Orthopaedic industry stakeholders

End-Users
Individuals that use the products.

Prescribers
Healthcare professionals who prescribe the products, based on the condition/clinical indication of the user.

Providers
Healthcare professionals who provide users with products, such as CPO's, doctors, podiatrists.

Payers
Public and private insurance companies. About 95% of Össur products are reimbursed by a third party.

Influencers
Healthcare systems, insurance companies, medical associations, end-users and their families.

In the spotlight

Partnership services that create value for our customers and end-users

Össur has for several years been offering and investing in partnership services to customers (O&P clinics) through our Orthotic & Prosthetic Services (OPS). The services include professional education and business resources, solutions to ease the reimbursement claim process, tools to enhance clinical outcomes and clinic efficiency, and outsourced fabrication. By signing up for the services, it allows our customers to focus on their core competencies; providing patient care.

As part of the OPS offering, Össur can support customers with the reimbursement process to reduce their financial risk and enhance their ability to provide high-end innovative solutions to end-users. Additionally, it gives our customers access to systems and processes that enables a more efficient operating model. The benefits of the services therefore include the potential for our customers to increase their sales and for them to leverage on the economies of scale a larger components manufacturer like Össur has to offer.

In sum, the services are aimed to streamline the value chain, so we can together improve the mobility of the end-users in the most effective manner. The OPS Division and its partnership services are therefore an effort that are aimed to grow the overall prosthetics market, and consequently sales for Össur.

Business model


Össur’s business model in brief

Össur manufactures a wide range of prosthetics and bracing & supports solutions with high standards of quality and excellence. These high-end products are developed with the objective to improve the mobility of end-users. The products are delivered to the end-users through customers (healthcare providers) who specialize in assisting individuals who suffer from movement impairment. Össur’s products are in more than 95% of the cases reimbursed by public or private insurance (payers). Össur makes a significant investment every year in R&D to further advance products and technologies for the benefit of all stakeholders.

Business Model

Innovation

  • Technology trade-up
  • High-end products

Manufacturing

  • Consolidated footprint
  • High quality and sustainability

Sales

  • Direct Sales
  • Distribution

Prescribers

  • Surgeons
  • Physicians
  • Doctors

Providers

  • O&P clinics
  • Hospitals
  • Retail

Payers

  • Healthcare systems
  • Insurance companies
  • Out-of-pocket

End-user

  • OA
  • Amputation
  • Injuries

Business Model

Innovation

  • Technology trade-up
  • High-end products

Manufacturing

  • Consolidated footprint
  • High quality and sustainability

Sales

  • Direct Sales
  • Distribution

Prescribers

  • Surgeons
  • Physicians
  • Doctors

Providers

  • O&P clinics
  • Hospitals
  • Retail

Payers

  • Healthcare systems
  • Insurance companies
  • Out-of-pocket

End-user

  • OA
  • Amputation
  • Injury

The end-users

End-users include lower and upper extremity amputees who have lost a limb due to, for example, vascular diseases including diabetes, trauma, and cancer. Össur also helps individuals who require support as they may have, for example, developed osteoarthritis in knee or hip ligaments, incurred temporary immobilization, or require enhanced healing after surgery.

By collaborating closely with the end-users, Össur gains a better understanding of their needs and challenges. In turn, Össur helps them to improve their mobility by providing new technologically advanced products to achieve their goals. The involvement with the end-user is not limited to research and development as there is also an aim to provide them with quality services, directly through clinics operated by Össur or indirectly through customer service programs.

Prosthetic Users

> 750,000

new lower limb amputees per year

65-70

is the average age of the amputee population

30-40%

of new leg amputees are fitted with prosthetic solutions

Source: Össur Managament Estimates

Research & Development

Össur develops prosthetics and bracing & supports, from an idea to a finished product. With every product, the aim is to deliver cost effective medical solutions that provide value for end-users and the healthcare system. When a product is designed, Össur accumulates medical and biomechanical data during the development process to verify product safety and efficacy before launch. Also, to obtain independent clinical evidence for product outcomes as well as health economic data, Össur initiates and promotes clinical studies in cooperation with leading scientists, institutions, and healthcare professionals in the field.

Össur supports open collaboration within the industry and academia. An example of such an initiative is the recent joint investment by Össur and Comau in IUVO, a spin-off company of The BioRobotics Institute (Scuola Superiore Sant’Anna) in the field of wearable technologies. The objective of IUVO is to create wearable, intelligent and active tools for a better quality of life. The first concrete examples are bionic bracing (robotic exoskeletons) capable of aiding and improving the quality of life for workers in industrial and service fields, and for end-users in need of improved mobility.

Indication based innovation approach

1

Assess incidence treatable with prosthetics and bracing

2

Select high potential indication

3

Develop products and solutions for end-users

4

Provide medical evidence for the efficacy of the products

5

Enable cost savings and value creation for the end-user and healthcare system

Manufacturing & Quality

Össur maintains a strong global manufacturing function. Manufacturing of advanced prosthetic solutions, including bionics, takes place in Iceland and Scotland. Manufacturing of other prosthetics solutions, components and premium bracing solutions takes place in Mexico. Össur also manufactures some bracing and support products in France and outsources the manufacturing of soft goods to China. At Össur there is a continuous strive for profitability improvements, which includes finding ways to optimize the manufacturing process.

As a healthcare company, a great emphasis is placed on quality and it is highly important that quality is an intrinsic part of processes whereby Össur has had a certified quality system in place since 1993. Össur complies with various global quality and regulatory requirements for medical devices and is currently certified with the ISO9001:2008/2015, ISO14001:2015 and ISO13485:2016 standards.

Manufacturing Locations

Sales & Marketing

Össur operates within a highly specialized industry where the primary customers are specialized healthcare providers who provide and fit individuals with Össur products. In prosthetics these customers are orthopaedic and prosthetic (O&P) clinics and in bracing & supports it is a combination of O&P clinics, hospitals, and surgery centers. In a few selected markets, Össur operates its own O&P clinics. In most cases, when a user has been fitted with a product, Össur’s customers claim reimbursement from the relevant public institutions or private insurance companies. Össur sells its products through its own direct sales network, and in some cases through distributors, with operations in more than 26 countries.

Prosthetic Users

Above knee ~30%

Below knee ~45%

Partial foot ~25%

Source: Össur Managament Estimates

Payers, providers, and prescribers

Prescribers include healthcare professionals who prescribe products based on the clinical indication of the users. These include orthopaedic surgeons, non-surgical physicians, and emergency physicians as well as other professionals providing medical diagnosis.

Providers are healthcare professionals who provide users with prosthetic and bracing products, and related services. These include certified prosthetists and orthotists (CPOs) working at O&P clinics, durable medical equipment (DME) clinics, orthopaedic clinics, and hospitals. Many providers not only recommend specific products but also fit and tailor-make certain products. For non-reimbursed products, a provider can be a pharmacy or sports store.

Payers include government reimbursement plans or insurance companies, where over 95% of Össur’s products are estimated to be reimbursed by a third party. It should be noted that reimbursement systems vary substantially between countries. In other cases, the end-user would pay for the products out of pocket.

Innovation


Innovation is one of the key pillars of Össur’s strategy. The R&D department is responsible for maintaining Össur’s position as an innovation leader in the O&P industry by developing high-end innovative products with demonstrated value for the user. R&D departments are strategically positioned close to marketing and manufacturing in order to leverage synergies and optimize efficiency. Össur invested the equivalent of 5% of sales in R&D efforts in 2018

Highlights of technological advancements in 2018

Prosthetics

Over the past years, Össur has expanded its modular prosthetic feet portfolio by offering functionally upgraded solutions based on its advanced technological platforms. In 2018, Össur launched two new high-end feet products that are expected to strengthen Össur’s leading position, the mechanical Pro-Flex® LP Align foot and bionic PROPRIO FOOT®. By combining the biomechanically proven energy efficient and dynamic carbon-fiber foot blade technology with advanced ankle technology, more adaptive and aesthetically pleasing feet solutions emerged.

In the spotlight

The Pro-Flex® LP Align features heel height adjustability and leverages a hydraulic ankle unit to allow users the freedom to choose footwear that best suits their activities, without having to compromise alignment, posture, dynamics or functionality. The proprietary heel height adjustment feature is quick and easy to use.

The bionic PROPRIO FOOT® makes use of a motor-powered micro-processor-controlled ankle to adjust the foot position of the user. The foot therefore addresses variations in terrain better than other prosthetic feet. The PROPRIO FOOT® provides a stable foot placement on stairs and inclined surfaces while reducing the risk of trips and falls by lifting the toe in every step. The integration of the battery technology and the update of the electronics to the newest standard have resulted in a robust, dynamic and aesthetically pleasing bionic foot.

Össur possesses the technology and expertise to better serve the aging population. The average age of the amputee population is estimated to be 65-70 years old and expanding the bionic prosthetic product portfolio will increase offerings to this large population of elderly amputees who rarely receive advanced prosthetic solutions. Elderly people require devices that can substitute lost muscle power in order to feel confident and maintain an independent lifestyle. Össur has the technology to better serve their needs and is currently investing in such development projects to improve their functionality and their quality of life.

Bracing & supports

Össur provides bracing & supports solutions that blend seamlessly into the user’s life. In 2018, a comprehensive collection of quality support solutions was released, including the Formfit® range. This precision-engineered proprietary 3D knit technology delivers professional-grade compression, with added support where needed, while remaining low-profile, easy to use, and lightweight. The new product range is expected to increase the adoption of bracing solutions for various conditions and indications.

In 2017, Össur and Comau, a leader in the field of industrial automation and robotics, teamed up and together with the start-up company IUVO, are cooperating on the development of augmenting systems to foster the wide adoption of wearable robotic technologies. In 2018, a first product resulted from that joint venture; an industrial exoskeleton named Mate which is being commercialized by Comau. The wearable ergonomic exoskeleton device aims to reduce the physical effort of workers who work for longer periods of time with their arms in an upright position.

Strong portfolio of Intellectual Property

Össur’s proprietary technologies and products are protected with intellectual property (IP), such as patents, design registrations and, trade secrets. The IP portfolio is well diversified and representative of the business areas and markets in which Össur operates. In 2018 alone, Össur was granted about 100 new patents in addition to filing about 130 new patent applications. At year-end 2018, Össur had around 1,500 granted patents and about 350 pending patent applications. In addition, Össur’s brand is protected by more than 500 trademark registrations.

Patent Portfolio

Strategy


Össur is a pioneer of advanced technology and by listening to people’s needs and pushing the boundaries of technology, continues to create some of the best products and services available in the fields of prosthetics and bracing & supports. In the end, we strive to create a Life Without Limitations for all our users. Össur’s mission is to improve people’s mobility and its vision is to be a leading company in the non-invasive orthopaedics market.

Össur will continue to generate value for individuals and healthcare systems by focusing our business strategy on successful product innovation, sustainable growth and efficiency.

Main focus areas

Innovation

Innovation

Execute Ideas that add Value

We embrace innovation in all our actions by creating value for our customers. We will be at the forefront of indication-related innovation to ensure our consistently strong position in the market.

In 2018, Össur continued to increase its investments level...


Read more about our innovation in 2018

In 2018, Össur continued to increase its investments level in research & development which currently stands at 5% of sales or USD 31 million. Össur launched a total of 25 new products in addition to several incremental updates to products already in the market.

In prosthetics, Össur introduced a new Pro-Flex® LP Align prosthetic foot, which features heel height adjustability. The product features a quick and easy to use, tool-free, user-controlled heel height adjustability, enabling users to change from sneakers to heels, as desired throughout the day. The product is the first of its kind to enter the prosthetics market as historically lower limb amputees have had to sacrifice the functionality of their prosthesis for heel height.

In bracing & supports, Össur introduced the Rebound® Post-Op Knee, a simple, versatile post-operative knee bracing solution that is easy to use. Össur also launched the FormFit Pro Knee OA brace which offers a unique support designed to unload the knee compartment and enhance the sense of movement. The brace is a cost effective and low-profile option for patients with early or mild osteoarthritis.

During the year, good progress continued to be made in research & development in new technological solutions for our users. Such as, for example, mind-controlled prosthetics and wearable exoskeletons which are being developing together with Comau and IUVO.

Growth

Growth

Maintain Sustainable Growth

We will achieve growth by successfully commercializing our innovation through our local go-to-market strategy and commitment to our customers’ needs. We will further develop our business and leverage untapped market opportunities.

Organic sales growth amounted to 5% in 2018, driven...


Read more about our growth in 2018

Organic sales growth amounted to 5% in 2018, driven by a strong performance in prosthetics and high-end innovative products in both business segments. These products include bionics, high-end mechanical feet such as the Pro-Flex solutions and OA bracing, for example.

One of the growth opportunities is within emerging markets where penetration of prosthetics and bracing is still relatively low. In 2017, Össur changed its sales approach from a distribution model to direct sales in China with very good success. In a similar fashion, Össur continued to invest in selected emerging markets during the year 2018 by establishing direct sales and infrastructure. The goal in these markets is to drive conversion, technology trade-up, and offer partnership services.

Össur made good progress during the year with its partnership service model. These services include professional education, solutions to ease the reimbursement claim process, tools to enhance clinical outcomes, and outsourced fabrication.

Our strategy also includes exploring growth opportunities through acquisitions. During the year Össur acquired four companies with combined full-year sales of about USD 70 million. Two of the companies began to contributed to sales in the fourth quarter of 2018 but the others will begin to contribute to sales in the first quarter of 2019.

Efficiency

Efficiency

Conduct Business Efficiently

We strive to increase efficiency and drive continuous improvement. We run efficient operations in the most optimal locations, hire passionate employees and deliver strong profit and cash flow.

EBITDA margin before special items amounted to...


Read more about our efficiency in 2018

EBITDA margin before special items amounted to 19% in 2018, compared to 18% the year before. The increase in EBITDA margin can be attributed to positive impact from changes in product mix, scalability in the operating model and savings from the efficiency initiatives.

In 2018, as in recent years, the gross profit margin increased as a result of changes in product mix. The positive development is mainly driven by stronger growth in high-end innovative products than in the remainder of the product portfolio, such as bionics, high-end mechanical feet and OA solutions.

Scalability continued to be a contributor to an increasing profitability in 2018. Total cost increased by 7% while sales growth amounted to 8%. Scalability mainly comes from cost of goods sold and general & administrative expenses.

Good progress was made with the efficiency initatives during the year. Investments were made in various manufacturing equipment, mainly in Mexico, and good progress was made in several categories relating to initiatives within strategic sourcing. The west coast distribution facility in the US was closed and moved to the Mexico manufacturing facility, with savings already being realized.

People


At Össur we nurture a spirit of innovation; we offer an open and vibrant environment where each employee can achieve his or her full potential. We live by a set of values that are the foundation for our strategy and success. Our core values are Honesty, Frugality, and Courage; and these values guide our decisions. We live these values every day in everything that we do—in our interactions with colleagues and customers, and in our work efforts.

We have over 3,100 FTEs working in over 26 countries. While we are a diverse company, we work as one to improve people’s mobility. Different ideas and points of view are beneficial to our business, and we believe in creating an environment where diversity, knowledge, skills, and strengths are fully utilized. As individuals, our employees can expect equal treatment and equal opportunities for growth within Össur. Our employees take responsibility, both for their current job and for their career advancement. We offer various learning opportunities, so employees can build lasting and rewarding careers with us.

We measure our employees’ motivation once a year and we are proud that our employee satisfaction and motivation is high. While we work hard, we also have fun. Our employees’ passion, drive, and capabilities to help our customers are our greatest assets.

In 2018 we rolled out a global competency framework. The Competency Framework allows us to identify the behaviors that drive successful performance. It provides a clear behavioral link to our business strategy and suggested methods for our employees to further develop their competencies.

Össur recruits competent and ambitious individuals that can work on demanding projects, and we are proud that we’ve been able to provide advancement opportunities for our talented employees. Our hiring decisions are based on a potential employee’s skills and abilities. If you are interested in joining our team you can view and apply for an open position on our applicant portal.

Our Values

Össur's core values ensure successful cooperation and partnerships, and are the foundation for our strategy and success.

Honesty

Stay True

We show respect by adhering to facts and reality, fulfilling promises and claims, and admitting failures. We nurture honest communication throughout the Company by sharing information and respecting each other’s time and workload.

Frugality

Make Every Step Count

We use resources wisely. The Company aims to minimize costs across all areas of its business through effective communication, preparedness, planning, and optimized processes.

Courage

Aim Higher

We are open to change and constantly strive for improvement. We challenge unwritten rules, show initiative and take calculated risks, while at the same time taking responsibility for our ideas, decisions, and actions.

Diversity and Equality

Every day we interact with people from a wide range of cultures and backgrounds. We do business in numerous locations around the world, working and communicating with many different colleagues, customers and other stakeholders in our industry.

Diversity and equality are extremely important to us. Different ideas and points of view are beneficial to our business, and we believe in creating an environment where all our knowledge, skills and strengths are dully utilized. As individuals, we can expect equal treatment and equal opportunitues for growth within Össur.

Diversity and Equality

Risk management


Four key risks

Investment in Össur’s shares involves various risks where the business, financial conditions, and results of operations going forward rest upon certain assumptions and could be negatively affected if any of the factors described in this chapter occur. Össur has chosen to highlight four key risks which are currently considered most relevant. Össur cannot ensure that its given assumptions for the description of the risk is correct. Furthermore, additional risks and uncertainties which are listed in the next section, or not presently known to Össur, or that the Company currently deems immaterial, may adversely affect its business operations and financial results, to an even greater extent, than the four risks identified here.

Changes in reimbursement

Description

Most of Össur’s products and services are reimbursed by third-party payers, including both government healthcare programs and private health insurance plans. All third-party payers continue to develop methods of controlling healthcare costs, including review of claims, selective contracting, and competitive bidding.

Potential impact

These cost-control methods may limit or even eliminate the coverage and the amount of payment for which third-party payers may be willing to pay on Össur‘s products and services. As a result, sales may decline significantly, and customers may reduce or eliminate purchases. Reviews of claims may lead to repayment of prior sales.

Mitigative actions

Össur only brings products to the market that have medical indication and are clinically validated. Össur applies its reimbursement knowledge from the earliest stages of product development to the post-sale education of customers. Össur also pursues several strategies to manage the reimbursement of its products and services.

Regulatory requirements

Description

Össur’s products are medical devices that are subject to extensive global regulations by the respective authorities in countries where Össur conducts its business. Such regulations can restrict virtually all aspects of a medical device’s design and testing, manufacturing, safety, labeling, storage, recordkeeping, reporting, clearance and approval, promotion, distribution, and services.

Potential impact

Failure to comply with the regulatory requirements of the applicable authority may subject Össur to sanctions ranging from warning letters to penalties and product withdrawal. Össur’s failure to comply with regulatory requirements or receive regulatory clearance and approval for its products or operations would adversely affect Össur’s sales and potential for future growth.

Mitigative actions

Össur maintains a robust global quality system that complies with international medical device standards and is an intrinsic part of the Company‘s internal processes. Furthermore, employees actively monitor the medical device regulation landscape and stay on top of changes to international and local regulations in the countries where Össur markets and sells medical devices.

Össur may be unable to develop or secure the use of new technologies

Description

Össur operates in markets that are characterized by rapid technological change, driven by extensive research that is carried out by market participants. Technological innovation takes place at various stages in Össur’s value chain and may include individual components, design, and functionalities of Össur products, and patient care.

Potential impact

The development by any suppliers or competitors of substitute products or components that better satisfy market demands could have a material adverse effect on Össur’s business and results of operations. A failure to develop new products or enhance existing products could also have a material adverse effect on Össur’s operations and potential for future growth.

Mitigative actions

Significant reinvestment into R&D and constant strive to find new technologies has resulted in a vast IP portfolio and enables a strong position to compete with potential new entries. External connections and appeal to universities, research institutes and investors provides the opportunity to stay informed and review emerging innovation as part of acquisitions or research cooperation initiatives.

Industry consolidation and forward integration

Description

Major shifts in Össur’s market place include the consolidation of prosthetics manufacturers in recent years and the additional momentum that forward integration is gaining in the industries where the Company operates. Given the nature of acquisitions, it is uncertain to what degree Össur will be able to participate in further consolidation and to what degree forward integration will affect Össur‘s operations.

Potential impact

The consolidation has been a material contributor to the growth of Össur in the past. If Össur were not to participate in further consolidation or forward integration, it might limit Össur‘s potential for future growth. In addition, these shifts may impact the competitive landscape of the industries and the associated market shares. Changes in the industry may furthermore impact Össur’s customers.

Mitigative actions

Össur continuously reviews value enhancing acquisition and investment opportunities in its business segments and keeps a good relationship with the relevant stakeholders in the industry. Össur furthermore operates its own clinics in certain regions and has partnership programs in place with patient care providers to offer end-users quality services.

Other relevant risk factors

For other relevant risk factors please see the Investor Relations section on our corporate website.


Össur 2018 Annual Report