The use of titanium in a wide variety of medical applications—hip and knee replacements, dental implants, artificial hearts, trauma systems and the like—is a very consistent and structured element of the global titanium marketplace.
Unlike aerospace and tool markets for titanium, medical applications don't experience the peaks and valleys more common to the much larger marketplace segments. "It's a much more stable industry," said Frank Perryman, president and chief executive officer of Houston, Pa.-based Perryman Co. and 2009-10 president of the International Titanium Association. "The medical market isn't cyclic—we don't see drastic swings—but it's immensely smaller than, say, aerospace."
Privately owned Perryman, which has annual revenue of about $100 million, is a small player in an industry dominated by such public companies as Pittsburgh-based RTI International Metals Inc. and Allegheny Technologies Inc. Like most of its competitors, Perryman derives about 70 percent of its revenue from the aerospace industry.
But medical applications have looked to be a much more attractive segment of the titanium industry since the 2008 recession dramatically slowed sales to the aerospace industry. Market prices for titanium dropped last year to their lowest levels since 2004 after reporting healthy increases from 2006 to 2008.
With an estimated 8 million to 10 million joint-replacement surgeries performed in the United States during the past 10 years, titanium has quietly become the metal of choice for orthopedic surgeons. Zimmer Holdings Inc., one of the major orthopedic medical device manufacturers, said that anywhere from 0.5 to 2 pounds of titanium is used in a typical implant. The Warsaw, Ind.-based company uses approximately 800,000 pounds of titanium each year.
Titanium also has made real strides in other medical applications in recent years. Dental posts and other oral prosthetics have been a major medical titanium market for more than a decade, with titanium dental implants one of the fastest-growing segments of the market. Titanium also is frequently used in spinal fusion repairs and in maxillofacial surgery, and following U.S. Food and Drug Administration approval in 2004 of a titanium mesh device for hernia repair, surgeons have relied increasingly on the metal for such uses.
Another major step forward for titanium's medical applications was the 2001 introduction of an artificial heart. Designed to give patients with terminal congestive heart failure extra months of life when there is no chance of a transplant, the implantable titanium and plastic heart was approved by the FDA in 2007.
The dental, mesh and heart applications, however, consume far less titanium than the average hip or knee implant. Dental implants, for example, typically utilize just a few ounces of titanium.
One of the demographic trends that will characterize much of the next quarter-century is the aging of the population, especially in the developed world. In the United States, the first of 30 million baby boomers will get their Medicare cards late this year and the surge of baby boomers will continue unabated until nearly 2030. Japan already has more of an aged population than the United States, and developed countries in Europe aren't far behind the Japanese. Even countries such as China—now 20 years into its "one child" policy—Mexico and Vietnam will inexorably age in the next 25 years.
Studies have shown that candidates for knee and hip replacements are getting younger, which some researchers attribute to the increased popularity of jogging during the past 20 years. In the United States, an estimated half of all hip replacements will be in patients under 65 as early as next year, and as many as 60,000 people a year in the 45-to-54 age group are already seeking knee replacements.
With an increasing number of those knees and hips in need of replacement, both in the United States and the developed world, it's a strong likelihood that demand for medical titanium will increase in the years to come. Some orthopedists estimate that there could be as many as 1 million candidates for knee replacement surgery annually in the United States alone by 2030.
Perryman cautioned, however, that raw numbers don't tell the whole story when it comes to predicting the future for joint replacement—and demand for medical titanium.
For one thing, there's the cost. Adding up surgery, anesthesia, several days' stay in a hospital and weeks of physical therapy can easily lead to a $40,000 to $50,000 tab. The American Academy of Orthopaedic Surgeons recently warned that low insurance and Medicare reimbursements for hip and knee replacements could restrict the number of procedures performed by surgeons. Already, surgeons and clinics as far afield as India and Poland have begun advertising joint replacement surgery for $10,000 or less.
Perryman said there's no question that the governmental and insurance aspect of health care could have a negative impact on the marketplace, but calling himself a "cautious optimist" he noted that the potential market for titanium joint replacements is going to skyrocket. He said he wouldn't be surprised to see medical applications for titanium grow at a 2- to 5-percent annual rate in years to come.
For Perryman, titanium is a "quality-of-life issue. You get a hip implant, and the surgeon gives you your life back."
The Perryman family has been in the titanium business since James T. Perryman Sr. started working in the industry in 1950. Perryman, who had gone to college to study physics, got in on the ground floor of the industry in the 1950s and 1960s, working for a succession of companies. In 1988, he and his two sons, Frank L. Perryman and James Perryman Jr., started Perryman Co. in a Pittsburgh suburb. Today, the company is one of the largest privately owned titanium processors in the United States.