A Trip to the Orthopedics Capital of the World?

Located two hours north of Indianapolis, with a population of 15,000, Warsaw, Indiana has developed one of the most concentrated life sciences clusters in the U.S. and is known as the Orthopedics Capital of the World?. Approximately 10,000 workers are employed by orthopedics companies in the Warsaw region, and five publicly traded companies have a presence in Kosciusko County. The orthopedics sector is a key contributor to our state’s economy and its regional economic impact is critical to the health of north central Indiana.

BioCrossroads president Patty Martin and I traveled to Warsaw in late 2021 to meet with local business, political and community leaders, and we brought back some important learnings:

Industry consolidation has impacted the industry and region

Through discussions with local business leaders, we validated what we had heard: the orthopedics industry, like much of the medical device and broader life sciences sector, is consolidating. The result is fewer, larger companies in Warsaw. The merger of Zimmer with Biomet and DePuy with Synthes has reduced employment in Warsaw and led to senior management teams based out of state. The recent announcement of Medtronic closing its spinal implant factory in 2023, which will impact 300 employees, will further reduce the number of large companies in the region. While the closing will be a loss to the community, several leaders believe that these employees will have employment opportunities at other orthopedic manufacturers in the region.

New leaders with new business models

One exciting development in Warsaw is the evolution of the orthopedics business model. Small, nimble companies have created a business model that delivers innovative products to its multinational clients based on mere ideas. Rod Mayer and his team at Nextremity Solutions create and deliver products that are “Revenue Ready? Solutions”. Working with a team of surgeons, Nextremity can evaluate, design and manufacture products for their clients. Companies or individuals with ideas for new orthopedic products can access Nextremity’s network of experts. Nextremity will then quickly evaluate a product’s commercial potential and design and develop it for commercialization. The entire process is executed by Nextremity - not just a single activity such as manufacturing. This business model, which is attracting attention for its speed and flexibility, could represent the future of innovation in this competitive industry.

STEM education and training

While Warsaw is the national leader in orthopedics, the town and its leaders are not resting on their laurels. Over the past five years, OrthoWorx - a community-based initiative that works strategically and collaboratively with regional stakeholders to advance the orthopedic industry - and its industry partners have supported activities to build and retain talent. Examples include:

• The introduction of DePuy Synthes’ Bridge to Employment (BTE) program to Warsaw. BTE is a collaborative effort between schools, employers, parents, and community groups to provide a diverse population of students with academic enrichment, career exploration, and higher education preparation.
• Thousands of middle and high school students from Kosciusko County are exposed to careers in the advanced manufacturing industry during National Manufacturing Week events.
• Local students can now participate in summer camps that introduce robotics and related programming competitions to grades 7 to 12.
• Ivy Tech Community College revamped its training programs with industry feedback.

Commitment to the region

We met with several community leaders – key orthopedics industry, philanthropic and political stakeholders – all of whom were acutely aware of the industry’s consolidation and its importance to the region. Each person that we talked to had unique ideas on how to support this industry – from creating new housing options for local workers to supporting local arts organizations. Warsaw is focused on quality-of-life initiatives and projects that will help attract talent to the region. One orthopedics veteran said it best. He stated: “You need a Warsaw address” to gain the respect of other companies in this sector.

Thoughts on the Future

Warsaw is the center of the orthopedics industry and will be for the foreseeable future. Its ecosystem of suppliers, manufacturers and experienced talent will enable the region to continue to design, engineer and manufacture products. Its leaders are actively working to address hurdles that impact the region such as improving its STEM programs to prepare local students for working in the industry. However, Warsaw will be impacted by forces beyond its control such as industry consolidation, changes to healthcare pricing and policies, overseas competition, and new technologies such as regenerative medicine. As the environment evolves, Indiana’s government, industry, academic and non-profit leaders should continue to fund programs that help maintain our national leadership in this industry.