Aging Boomers means boffo business for orthopedic device and replacement companies

The orthopedic device/replacement market is as competitive as any in the medical world. Biomet, Inc. (NASDAQ:BMET) is going private; Stryker Corp. (NYSE:SYK) and Smith and Nephew plc (ADR) (NYSE:SNN) both have impressive margins. As we baby Boomers age, but want to remain active, we'll need new hips, elbows, knees, etc. So the demographic shift is playing to all of these companies' sweet spot.

The long-term winner however is Zimmer Holdings, Inc. (NYSE:ZMH). This Warsaw, Indiana-based company figured early on that the key decision maker in whose knee or hip goes into a patient belongs with the surgeon. ZMH perfected a minimally invasive surgical (MIS) technology and has trained thousands of surgeons with the technique. Of course, with the technique comes Zimmer products and devices.

The orthopedic game is different from the cardiac device game in that the doctor chooses the device of preference. In the cardiac game, usually the hospital administrator chooses the devices. ZMH aggressively marketed and trained the surgeons, by-passing the hospital buying staff. The MIS techniques benefit first and foremost the patient, then of course comes the insurance companies absorbing less costly procedures and hospital stays. ZMH should be looking for top-line and bottom-line growth in the 15% per year range for the foreseeable future.

Georges Yared is the author of "Baby Boomer Investing...Where do we go from here?" and "Stop Losing Money Today." For more info visit his website here.