Icelandic Ossur hf Lends its Support to Neuroprosthetics Market
by David Pope, editorial director
In less than a decade, Ossur hf, headquartered in Reykjavik, Iceland, has grown to become the world’s second largest manufacturer of prosthetic devices and a major player in the orthopedic bracing and support marketplace. The company devotes a considerable amount of its R&D effort to bionic technology with its research focused on implanting load-bearing devices directly to a bone (osteointegration), developing more effective ways for connecting prosthetic devices to the neural system (bidirectional neurosensing), and to enable prosthetic devices to learn and to adapt to changing conditions by incorporating artificial intelligence into them. On its website the company states: “In prosthetics, our goal ultimately is to replicate the natural function of the lost limb, restoring normal sensory and motor control functions to the amputee.”
Ossur has launched three neurotech products—Power Knee, Rheo Knee, and Proprio Foot. All three are being used by the U.S. Department of Defense and the Department of Veterans Affairs to restore function to servicemen who have lost lower limbs in the Iraq and Afghanistan conflicts.
Power Knee, the world’s first powered lower-limb prosthesis, was developed by Stephane Bedard at Victhom Human Bionics, Inc., based in Quebec, Canada, which partnered with Ossur to bring the product to market. A variety of sensors, including gyroscopes, pressure cells, load cells, and angle sensors, are housed in the Power Knee module and in the proprioception module on the sound leg. Artificial intelligence software matches the kinematics of gait and maintains symmetry between the two legs. The power from an electric motor automatically adjusts to different walking conditions such as going up stairs or walking on level ground. It also assists in standing up from a chair.
Rheo Knee was developed at the Massachusetts Institute of Technology by Hugh Herr, director of the Biomechatronics Group. The knee responds to walking style and recognizes differences in terrain. Sensors measure gait, pressure, and acceleration, and artificial intelligence predicts the next movement. Swing speed is controlled by using electricity to alter the viscosity of a magnetorheological fluid in the knee hinge. When abnormal movement is detected, the rheological fluid instantly locks the knee to prevent a stumble or fall.
Proprio Foot is a motor-powered foot module with active ankle flexion. Sensors provide proprioception information to the artificial intelligence module that controls response of the foot to changing terrain. For instance, after the first step on a sloping gradient or a stair, the ankle position is automatically adjusted for the next step. When walking, the toe is raised in phase with the forward swing to allow for ground clearance. Proprio Foot was developed in-house by Ossur’s R&D department.
Ossur was founded in 1971 by Ossur Kristinsson, an Icelander born with a deformed leg. He went to Sweden to study prosthetics and when he returned to Iceland he started his own company. Initially, Ossur made silicon liners for leg prostheses for the domestic market and began exporting in 1986. Kristinsson served as the managing director until 1989. Jon Sigurdsson, who had been the commercial counselor in New York for the Icelandic Trade Council, was recruited in 1996 to revitalize the family-run business, which at that time generated about $4 million in revenue. Sigurdsson took the company public, listing it in 1999 on the Icelandic Stock Exchange and raised $70 million in two years.
In 2000 Ossur acquired Flex-Foot, Inc. of Aliso Viejo, CA for $72 million and three other prosthetic companies for $37 million to become the second largest (after Otto Bock) in the $500 million global prosthetics market. From 2003 through 2006 Ossur spent $434 million to acquire eight orthopedic companies and now claims to be the second largest supplier of bracing and supports worldwide and the largest in Europe.
Acquisitions were funded primarily by $255.5 million in long-term loans taken out between 2005 and 2007. These loans are due in annual stages through 2012. At the end of 2008 Ossur had $203 million in long-term loans outstanding and an additional $82 million in bridge loans and other borrowings. Ossur stock held its value throughout 2008 in spite of the worldwide credit crisis, but in March 2009 the stock plummeted by 25 percent.
At the end of 2008, two investment firms owned 54 percent of Ossur outstanding stock. William Demant Invest A/S held a 34 percent stake and Eyrir Invest ehf had 20 percent. Chairman of Ossur’s board of directors is Demant’s president and CEO, Niels Jacobsen. Vice chairman of the board is Thordur Magnusson, a major shareholder of Eyrir. Both men joined the Ossur board in 2005.
The founder Kristinsson and his family retain 9 percent of the company’s stock, and Sigurdsson, president and CEO, over the years acquired 6 percent of the company; however, in March 2009 he had to sell most of stake in order to repay loans that financed the purchase of the stock. William Demant Invest purchased his shares and also some from other senior management, increasing its holding in Ossur to 40 percent. Seven pension funds own about 14 percent of the stock. There are 423 million shares outstanding.
Revenue in 2008 amounted to $350 million, up from $336 in 2007. Net income in 2008 was $24.5 million compared to $7.6 million in 2007. Europe accounted for 50 percent of sales revenue, the U.S. 46 percent, and Asia 4 percent. Bracing and support products generated 51 percent of the revenue, prosthetics 41 percent, and compression therapy and other products 8 percent. No acquisitions were made in 2008 and Ossur divested its advanced wound care product line to BSN Medical GmbH. In September 2008 Sigurdsson replaced the company’s matrix organizational structure with functional structure with four units: sales and marketing, manufacturing and operations, research and development, and corporate finance.
R&D expenditure in 2008 was $21 million, about 6 percent of revenue. The company has four R&D departments in four countries with a total staff of about 75. Most of the basic research is carried out by a staff of 50 at headquarters in Iceland. In 2005 Ossur and Victhom Human Bionics signed an agreement for the development and commercialization of new products based on Victhom’s bionic technologies. Ossur agreed to support all development costs up to a total of about $20 million and to pay royalties on the products. All products arising from the collaboration are exclusively licensed to Ossur. Victhom currently receives about $2 million a year from Ossur.
Ossur’s vice president of research and development is Hilmar Janusson who has been with the company since 1993. He formerly was a researcher at the Technological Institute of Iceland. Other senior executives at Ossur are Egill Jonsson, vice president of manufacturing and operations, Hjorleifur Palsson, chief financial officer, and Olafur Gylfason, managing director of Ossur Europe.
Ossur has about 1600 employees in the Americas, Europe, and Asia. The company has 14 subsidiaries in nine countries. Sales are handled by a direct sales force and through distributors. In the U.S. direct sales at workshops generate most of the prosthetics sales, and to increase its reach into the orthotics and prosthetics market Ossur Americas has signed a distribution agreement with the Hanger Orthopedic Group, which operates one of the largest O&P workshop networks in the U.S.
In June 2008 Sigurdsson appointed Mahesh Mansukhani president of Ossur Americas, replacing Eythor Bendor. Mansukhani had served as global business director or DuPont Tyvek from 2005 to 2007. In February 2009 he announced a reorganization of the sales and marketing teams at Ossur Americas, promoting Tim McCarthy from vice president of prosthetics to vice president of sales, and hiring Otto Fernandez as vice president of marketing. Fernandez comes to Ossur after 15 years of sales and marketing at DuPont. Ossur Americas is headquartered in Aliso Viejo, CA.
Ossur’s motto is “Life without limitations.” To highlight the possibilities the company supports the Paralympics and sponsors Team Ossur, a group of athletes who use Ossur’s prosthetics. Among stars at the September 2008 Paralympics in Beijing, China, was Oscar Pistorius, a bilateral amputee sprinter, who had been banned from the 2008 Olympics on the grounds that his Flex-Foot artificial legs gave him an advantage over the other athletes.