The Golden Bear is teeing off for Stryker Corp.

By Daniel Rosenberg
Courtesy of Dow Jones Newswire

Four years after receiving a precursor to Stryker's Trident ceramic-on-ceramic replacement hip as part of a clinical trial, golf legend Jack Nicklaus wants the world to know about his experience, and he's appearing in a new set of Stryker magazine ads and a television commercial to talk about it.

"There are 70 million people with joint pain, and we're saying, 'Go see your doctor; don't wait,' " Nicklaus said in a telephone interview Monday. "I'm saying, 'This is what I had, and this is what it's done for me.' It will raise awareness."

Stryker wouldn't say what it's paying Nicklaus for the ads, which will appear first in national newspapers and then in targeted publications such as Arthritis Today, Golf Digest and Women's World. Nicklaus filmed the television commercial for Stryker recently, and appeared on morning talk shows Monday to discuss his hip replacement.

Though pharmaceutical companies have used celebrity spokespeople to promote their products for years (Bob Dole pitching Viagra, for example), medical device companies haven't made much of a pitch. That may be because patients have so little say in what kind of replacement joint or cardiac pacemaker they receive.

Stryker Chief Executive John Brown acknowledges that, but says patients today are better educated than ever and may be able to exert some influence.

"Maybe they won't remember the name of the company or the product," Brown said. "But they may come in to their doctor and say, 'Tell me about the hip Jack Nicklaus had.' Patients are becoming so much more sophisticated. People are going on the Internet and checking out products."

Nicklaus finished tied for sixth in the Masters tournament in 1998, but soon afterward could hardly walk due to his deteriorating hip. Less than four months after his operation in January 1999, he was back playing tournaments.

Fear, he said, might keep some patients from having the surgery. "People are scared to death and they wait as long as they can, but it's not that big a deal," Nicklaus said. "The pain went away right away. It was a godsend for me."

Nicklaus seems quite sincere in his accolades for the Stryker hip. When it was pointed out that he's getting paid by Stryker for the ads, he replied, "I had the hip long before they paid me."

Longer Lasting Hips

The U.S. Food and Drug Administration approved Stryker's Trident ceramic-on-ceramic hip in February. Stryker promotes the hip as longer lasting than traditional replacement hips, and stresses its utility for younger patients, who need their replacement joints to last many years. Nicklaus said his doctor told him that with a traditional hip replacement, he'd be back to the surgeon in four or five years. He expects his hip to last the rest of his life. Nicklaus is 63.

About 300,000 hip replacement procedures are performed each year in the U.S., representing a $1.2 billion market. Hip replacements are often performed on patients who have a painful, disabling joint disease of the hip resulting from a severe form of arthritis. Other causes for hip replacement include falls, bone tumors, bony fractures of the hip joint and certain diseases such as Paget's disease and avascular necrosis.

Traditional replacement hips use a metal-on-polyethylene technology. Polyethylene is a polymer made of plastic. But about 5% of the time, patients develop a condition called osteolysis, in which tiny particles of polyethylene accumulate and create inflammation, resulting in bone destruction.

These patients typically need another operation. Damage usually occurs eight to 12 years after implantation, but can begin within just five years.

Stryker, a company with $3 billion in annual revenue, is No. 1 in the U.S. hip market, but its hip sales late last year and early this year before the introduction of Trident had been growing below the market average. Analysts say the Trident, which is reimbursed by Medicare, should help it regain traction in a very competitive area. And because the product carries a price premium of around 30% from the typical hip replacement cost of $3,800 to $4,300, it should help the company's gross margins.

That may explain why Stryker launched this ad campaign, an example of which features a T-shirt-wearing Nicklaus and one of his 15 grandchildren playing football on a tennis court with palm trees in the background. "There's some question about price sustainability" for the hip and knee replacement industry, said Bruce Jacobs, analyst with Deutsche Bank-North America. If Stryker can promote its higher gross margin product with a big splash of celebrity ads, it might attract more buyers to the device - not unlike BMW trying to steer customers toward its more luxurious 7-series model.

Patients usually don't have much say in choosing a replacement hip, but Jacobs doesn't think it will hurt if they come to their doctors waving around Stryker's Nicklaus ads.

"Bottom line, if a patient really wants a certain implant, he or she can get one," Jacobs said. "This campaign is encouraging them to assert their influence. It's a proactive measure to drive market demand."

Jacobs rates Stryker stock at buy and doesn't own shares. There isn't any investment banking relationship between his firm and Stryker.