1、Medical InstrumentsNeuroSciencesOrthopedics 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Annual Report 2009Celebrating 20 Years76%14%5%5%Total RevenuesOperating Cash FlowDiluted Earnings Per ShareSelected Financial Data:Company at a GlanCeFo
2、undedin1989andheadquarteredinPlainsboro,NJGrowingshareinspineandextremityreconstructionwithintheorthopedicmarketMarketleadershipinneurosurgeryandmedicalinstrumentsEmploysapproximately3,000worldwideSellsdirectintheU.S.,Canada,majorEuropeanmarketsandAustraliawithdistributorsinover100countries2009 Reve
3、nues by Geographic Area 2009 Revenues Region($in Millions)United States$519.2Europe$93.4Asia Pacific$32.8Other Foreign$37.12009 Revenues by Product Category24%38%38%Product Category%of Total Revenues Key Product Areas 2009 RevenuesOrthopedics 38%MIS spine system,traditional spine fusion,$262 Million
4、 extremity reconstruction,orthobiologics,skin&woundNeuroSciences 38%Dural graft,cranial closure,$257 Million CSF management,ultrasonic aspiration,neuromonitoringMedical Instruments 24%General and specialty hand-held surgical$164 Million instruments in the hospital and office-based,settings surgical
5、headlight To our Stockholders:In 2009,we saw our business diversify and our customer relationships grow as we guided the companyeffectively through a year in which many companies were not so fortunate.We turned challenges intoopportunities.We reduced our debt and focused our acquisition strategy.We
6、invested in infrastructureto prime our business for growth when the economy strengthens.Because of our strategic efforts,we have been able to enter more markets worldwide,introduce newproducts that fulfilled important needs,and increase our bottom-line successfully.With 2009 as a base,the coming yea
7、r represents even more opportunity as we continue to learn about the customers weserve,what they want and what drives them,as well as what additional possibilities exist in the market.Here are some of the adaptations we made in 2009 that helped us to succeed and will fuel success in theyears to come
8、:Cost Control:We ran lean by devoting attention to reducing expenses.We arecontributing resources to new systems and making our processes less time-consuming.Cash Management:We reduced our total debt by more than$180 million,andgenerated over$140 million in operating cash flow.We reduced days of acc
9、ountsreceivable and better managed our inventory.Looking to 2010,we plan to continue toreduce our debt.Transactions:We focused our acquisition strategy on smaller targets,both as a resultoftheavailable strategicopportunitiesandinanefforttoconserveourcash.Weacquireda minimally invasive surgery techno
10、logy for our spine group,and our distributor ofextremities products in the United Kingdom.In 2010,we remain focused on orthope-dics,neurosurgery and medical instruments and plan to seek out additional businessopportunities to extend our reach in those markets.Retain Talent:Because we run lean we did
11、 not have to reduce the size of ourworkforce.In fact,we grew headcount in 2009.We were able to retain talent andacquire it from other medical device companies.Business AccomplishmentsIn 2009,we met several important strategic goals and achieved a number of milestones,including:Nearly doubling operat
12、ing cash flows;Increasing EBITDA,on an adjusted basis,by 9%;Increasing earnings per share,on an adjusted basis,by 5%;Opening our new EMEA headquarters facility in Lyon,France;andLaunching over 20 new products throughout our sales organizations.Business Unit HighlightsOrthopedics:ExtremityReconstruct
13、ion:In2009,wesuccessfullylaunchedfivenewproductsandachieved record revenue.We invested in our team by adding and training salesprofessionals,growing it into one of the largest direct extremities sales forces in theUnited States.Spine&OrthoBiologics:We completed our first full year in the spinal hard
14、waremarket,and we acquired a new minimally invasive surgery technology,theParamount System.In 2009,we focused on further expanding our distributionnetwork and leveraging the combined portfolio of implants and orthobiologics.Inparallel with distribution activities,we focused internal resources on the
15、 developmentand acquisition of innovative technologies.We launched a total of ten new internallydeveloped implants.NeuroSciences:We continued to gain share as the market leader in neurosurgery,withthe largest direct sales force in the United States.We successfully launched four newproducts through t
16、his sales channel,including the CUSA NXTTMnext-generationultrasonic tissue ablation system.While the economy affected the capital equipmentlines in this group,we were pleased with the growth of our implants and disposables.Medical Instruments:This sales organization faced a number of challenges in 2
17、009,including unprecedented hospital budget cuts and customer inventory reductions.However,the economics of this category remain strong,contributing to our recordcash flow in 2009.We continue to renew our GPO contracts and provide the highestquality instruments to our customers.Investments in Future
18、 GrowthWhile we have carefully managed cash and realized cost savings in several areas during 2009,we havenot withheld investments in much-needed support functions,including research and development andsales and marketing.In 2010,we will continue to invest in these areas and in capital infrastructur
19、e.First,we are investing in a new version of our Enterprise Management Software System across ourorganization.This roughly$30 million capital expenditure commitment over the next three years willhelp us to streamline business processes throughout the company and enable our employees to do theirjobs
20、more efficiently.We are also initiating the nextphase of our capacity expansion program for our collagen manufacturingfacilities in New Jersey and Puerto Rico.We expect to spend approximately$20 million on thisexpansion over the next three years.These upgrades to our existing systems and facilities
21、will help Integra support our revenue growthobjective of$1 billion and more.2010 and BeyondIntegra is still a relatively young company,and we are continuing to learn more about our customers,both quantitatively and qualitatively.As I envision our evolution and growth in the years to come,ourmission
22、is foremost in my mind to produce products and provide support that are essential to thosewho work on the front lines:The surgeons who treat patients and dramatically improve their patientsquality of life.It is through the talents and dedication of our nearly 3,000 employees that we are able tofulfi
23、ll such an important mission.Our team united strongly to meet and address the challenges that theeconomy presented us.In doing so,we emerged as a stronger,more confident company that isdetermined to seize the opportunities before us and thrive in this new environment.Thank you,our stockholders,for y
24、our continued support.Sincerely,Stuart EssigPresident and Chief Executive OfficerThis Page Intentionally Left BlankSTOCK PERFORMANCE GRAPHThe following line graph and table compare,for the period from December 31,2004 throughDecember 31,2009,the yearly change in the cumulative total stockholder retu
25、rn on the Companyscommon stock with the cumulative total return of the Nasdaq Stock Market U.S.Index and theNasdaq Medical Devices,Instruments and Supplies,Manufacturers and Distributors Index.The graphassumes that the value of the investment in the Companys common stock and the relevant index was$1
26、00 at December 31,2004 and that all dividends were reinvested.The closing market price of theCompanys common stock on December 31,2009 was$36.87 per share.Comparison of Five Year Cumulative Total ReturnValue of Investment of$100 on December 31,2004$0$50$100$150$200200420052006200920082007Integra Lif
27、eSciences Holding CorporationNasdaq Medical Devices,Instruments and Supplies,Manufacturers and Distributors IndexNasdaq Stock Market-US IndexComparison of Cumulative Total Return among Integra LifeSciences Holdings Corporation,the Nasdaq Medical Devices,Instruments and Supplies,Manufacturers andDist
28、ributors Index,and the Nasdaq Stock Market U.S.Index12/0412/0512/0612/0712/0812/09Integra LifeSciences Holdings Corporation$100$96$115$114$96$100Nasdaq Medical Devices,Instruments andSupplies,Manufacturers and Distributors Index$100$110$116$147$79$116Nasdaq Stock Market-U.S.Index$100$102$112$122$59$
29、84The graph and table above depict the past performance of the Companys stock price.TheCompany neither makes nor endorses any predictions as to future stock performance.This Page Intentionally Left BlankUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,DC 20549Form 10-K(Mark One)ANNUAL REPO
30、RT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2009nTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period fromtoCOMMISSION FILE NO.0-26224INTEGRA LIFESCIENCES HOLDINGS CORPORATIO
31、N(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)Delaware51-0317849(STATE OR OTHER JURISDICTION OFINCORPORATION OR ORGANIZATION)(I.R.S.EMPLOYERIDENTIFICATION NO.)311 Enterprise Drive08536PLAINSBORO,NEW JERSEY(ZIP CODE)(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)REGISTRANTS TELEPHONE NUMBER,INCLUDI
32、NG AREA CODE:(609)275-0500SECURITIES REGISTERED PURSUANT TO SECTION 12(b)OF THE ACT:Title of Each ClassName of Exchange on Which RegisteredCommon Stock,Par Value$.01 Per ShareThe Nasdaq Stock Market LLCSECURITIES REGISTERED PURSUANT TO SECTION 12(g)OF THE ACT:NONEIndicate by check mark if the regist
33、rant is a well-known seasoned issuer,as defined in Rule 405 of the SecuritiesAct.Yes No nIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the Securities ExchangeAct.Yes nNo Indicate by check mark whether the registrant:(1)has filed all report
34、s required to be filed bySection 13 or15(d)ofthe SecuritiesExchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No nIndicate by check mark whet
35、her the registrant has submitted electronically and posted on its corporate Web site,if any,everyInteractiveDataFilerequiredtobesubmittedandpostedpursuanttoRule405ofRegulationS-T(232.405ofthischapter)duringthepreceding 12 months(or for such shorter period that the registrant was required to submit a
36、nd post such files).Yes nNo nIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-Kis not contained herein,and willnot be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by reference inPart III of thi
37、s Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smallerreporting company.See the definitions of“large accelerated filer,”“accelerated filer”and“smaller reporting company”in Rul
38、e 12b-2of the Exchange Act.(Check one):Large accelerated filer Accelerated filer nNon-accelerated filer nSmaller reporting company n(Do not check if a smaller reporting company)Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the ExchangeAct).Yes nNo As of
39、 June 30,2009,the aggregate market value of the registrants common stock held by non-affiliates was approximately$541.3 million based upon the closing sales price of the registrants common stock on The Nasdaq Global Market on such date.Thenumber of shares of the registrants Common Stock outstanding
40、as of February 24,2010 was 28,679,106.DOCUMENTS INCORPORATED BY REFERENCE:Certain portions of the registrants definitive proxy statement relating to its scheduled May 19,2010 Annual Meeting ofStockholders are incorporated by reference in Part III of this report.TABLE OF CONTENTSPagePART IItem 1.Busi
41、ness.1Item 1A.Risk Factors.14Item 1B.Unresolved Staff Comments.26Item 2.Properties.26Item 3.Legal Proceedings.26PART IIItem 4.ReservedItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchasesof Equity Securities.27Item 6.Selected Financial Data.28Item 7.Managements
42、 Discussion and Analysis of Financial Condition and Results of Operations.29Item 7A.Quantitative and Qualitative Disclosures About Market Risk.48Item 8.Financial Statements and Supplementary Data.49Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.49Item 9A.
43、Controls and Procedures.49Item 9B.Other Information.49PART IIIItem 10.Directors,Executive Officers and Corporate Governance.50Item 11.Executive Compensation.50Item 12.Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters.50Item 13.Certain Relationships,Related
44、 Transactions,and Director Independence.50Item 14.Principal Accountant Fees and Services.50PART IVItem 15.Exhibits and Financial Statement Schedules.51Signatures.58PART IITEM 1.BUSINESSOVERVIEWThe terms“we,”“our,”“us,”“Company”and“Integra”refer to Integra LifeSciences Holdings Corporation,aDelaware
45、corporation,and its subsidiaries unless the context suggests otherwise.Integra,headquartered in Plainsboro,New Jersey,is a world leader in regenerative medicine.We employapproximately 3,000 people around the world who are dedicated to improving patient quality of life through thedevelopment,manufact
46、uring and marketing of surgical implants and medical instruments.Our products are used totreat millions of patients every year,primarily in neurosurgery,orthopedics and general surgery.Revenues grew to$682.5 million in 2009,an increase of 4%from$654.6 million in 2008.Founded in 1989,Integra has grow
47、n to be a leader in developing medical devices,particularly for neuro-surgery,spinal surgery,and orthopedic surgery,and is one of the largest surgical instrument companies in theUnited States.STRATEGYOur goal is to become a global leader in the development,manufacturing and marketing of medical devi
48、ces,implants and instruments.Key elements of our strategy include:Focusing on ourcustomers.Wework with customers whose time is at a premium.We are committed tolimit uncertainty by ensuring that we have the best trained staff,on-time delivery of our products andresponsive service.Marketing innovative
49、 medical devices.We develop innovative medical devices for orthopedic surgery,neurosurgery and general surgery.Investing in salesdistribution channelsto increase marketpenetration.We havebuilt a large salesteamof approximately 350 sales professionals in the United States.Our European sales force con
50、sists of approx-imately 90 professionals and our rest-of-world sales force consists of approximately 30 professionals.Developing innovative products based on core technologies.We are a leader in regenerative technol-ogy.Our proprietary highly purified collagen scaffold technology provides the founda
51、tion of our products forduraplasty,dermal regeneration,nerve and tendon repair,and bone repair and regeneration.Acquiring products that fit existing sales channels.We acquire new products and businessesto increasethe efficiency and size of our sales force,stimulate the development of new products,an
52、d extend thecommercial lives of existing products.We have completed 10 acquisitions since the beginning of 2007,havedemonstrated that we can quickly and profitably integrate new products and businesses and have an activeprogram to evaluate more such opportunities.Our strategy allowsusto expand ourpr
53、esence in hospitals and other health care facilities,to integrate acquiredproducts effectively,tocreate strongsales platforms andto drive short-and long-term revenue andearnings growth.SALES AND DISTRIBUTIONIn the United States,we have three sales channels Integra Orthopedics,Integra NeuroSciences a
54、nd IntegraMedical Instruments.Within our Integra Orthopedics sales channel,we sell through a large direct sales organi-zation,and through specialty distributors focused on their respective surgical specialties.Integra NeuroSciencessells products through directly-employed sales representatives.The In
55、tegra Medical Instruments sales channel sellsdirectly and through distributors,and wholesalers.1PRODUCTS OVERVIEWIntegra is a fully integrated medical device company offering thousands of products for the medical specialtieswhich we target.Ourobjective is to develop,acquire orotherwise provideany pr
56、oduct that will improve ourservicetoourcustomers.Theseproductsincludeimplants,instrumentsandequipmentforneurosurgery,orthopedicsurgeryand general surgery.We distinguish ourselves by emphasizing the importance of the relatively new field ofregenerative medicine.In 2009,approximately 22%of our revenue
57、s came from surgical implants derived from our proprietarycollagen matrix technology.While these products vary in composition and structure,they operate under similarprinciples.Webuildourmatrix productsfromcollagen,whichisthebasicstructural proteinthatbindscellstogetherin the body.Our matrices(wheth
58、er for the dura mater,dermis,peripheral nerves,tendon or bone)provide a scaffoldto support the infiltration of the patients own cells and the growth of blood vessels.Eventually,those infiltratingcells consume the collagen of the implanted matrix and lay down new native“extracellular matrix.”In their
59、interaction with the patients body,our collagen matrices inhibit the formation of scar tissue,so the implant isabsorbedovertime,leavinghealthy nativetissueinitsplace.Thisbasictechnology canbeapplied tomanydifferentprocedures.We sell regenerative medicine products through most of our sales channels.O
60、RTHOPEDICS PRODUCT PORTFOLIOOur orthopedics market category includes products sold by our Integra Extremity Reconstruction and ourIntegra Spine and OrthoBiologics sales organizations.Integra Extremity Reconstruction Product PortfolioExtremity reconstruction is a growing area of the orthopedic market
61、.We define extremity reconstruction tomean the repair of soft tissue and the orthopedic reconstruction of bone in the foot,ankle and leg below the knee,and the hand,wrist,elbow and arm below the shoulder.Dermal Regeneration and Engineered Wound Dressings.Our dermal repair and regeneration products(I
62、NTEGRA Dermal Regeneration Template,INTEGRATMBilayer Matrix Wound Dressing,INTEGRATMMatrixWound Dressing,IntegraTMFlowable Wound Matrix)and the INTEGRATMBilayer Wound Matrix are used to treatthe chronic wounds that can form on the foot,ankle and lower leg,severe burns,and scar contractures.Integras
63、matrix wound dressings are indicated for the management of wounds including partial and full-thickness wounds,pressure ulcers,venous ulcers,diabetic ulcers,chronic vascular ulcers,tunneled/underminedwounds,surgical wounds(donor sites/grafts,post-laser surgery,podiatric,and wound dehiscence),trauma w
64、ounds(abrasions,lacerations,second-degree burns,and skin tears)and draining wounds.We estimate that the marketopportunity for products used to treat trauma and chronic wounds in the United States is approximately$1 billion.There are currently 18 million people with diabetes in the United States.Appr
65、oximately 15%of these patientsincur one or more diabetic foot ulcers during their lifetime.This population is also 15 times more likely to suffer anamputation due to non-healing diabetic foot ulcers.However,approximately 85%of all amputations are prevent-able if proper intervention is provided.Appro
66、ximately 500,000 adults seek treatment for venous leg ulcers annuallyin the United States.Nerve and Tendon.Surgeons who specialize in foot or hand orthopedic surgery often have to repair nervesand tendons.To address these needs,we offer the NeuraGen Nerve Guide and the NeuraWrapTMNerve Protectorforp
67、eripheralnerverepairandprotection,andtheTenoGlideTendonProtectorSheet,allofwhicharebasedonourregenerative matrix technology platform.In 2009,we added to this family of products with the launch of theInforce Reinforcement Matrix,which may be used for any type of tendon injury that requires surgical r
68、econ-struction.We estimate that the worldwide market for the repair of severed,injured,compressed and scarredperipheral nerves is between$40 and$70 million.Tendon and ligament injuries are some of the most commonmusculoskeletal disorders.Industry sources estimate that there are approximately 700,000
69、 tendon and ligamentrepair procedures in the United States annually,representing a$1.2 billion market.2Bone and Joint Fixation Devices and Instruments.We offer the extremity reconstruction surgeon a com-prehensive setofboneandjoint fixation devices forupperandlowerextremity reconstruction,including
70、orthopedicimplants and surgical devices for small bone and joint procedures involving the foot,ankle,hand,wrist and elbow.Our products address both the trauma and reconstructive segments of the extremities market,an approximately$900 million market in the United States.We are a leading developer and
71、 manufacturer of specialty implants and instruments specifically designed forfoot and ankle surgery.In reconstruction of the lower extremities,our leading brands include Newdeal,the Uni-CPTMCompressionPlate,the BOLDCannulated CompressionScrew,the Uni-Clip,theAdvansysMidandHindFootPlating Systems,the
72、 Hallu-FixSystem,the PANTA Nail,and Qwix and Large Qwix stabilization screws,the HINTEGRA total ankle prosthesis(sold outside the United States),and the Subtalar MBA Implant System(Maxwell-Brancheau Arthroereisis System).Customers include orthopedic and podiatric surgeons specializing inlowerextremi
73、tyinjuries,ofwhichthereare2,300and6,200,respectively,intheUnitedStates.In2009,welaunchedseveral new products,including the Hallu-Lock MTPArthrodesis System,multiple product line extensions to thehighly successful Uni-CPTMCompression System,and the Panta XL Arthrodesis Nail.For upper extremity recons
74、truction,we offer the Universal2TMTotal Wrist Implant System,which is recog-nized asthe premier implant for wristarthroplasty,a procedure that restores the function ofthe arthritic wrist.Otherleading products offered include the KatalystTMBipolar Radial Head System for elbow reconstruction,the Spide
75、rTMLimited Wrist Fusion System for intercarpal arthrodesis,the Viper Distal Radius Plate for fracture fixation,theKompressorTMCompression Screw System for small bone fixation,the SafeGuard Mini Carpal Tunnel ReleaseSystem for treatment of carpal tunnel syndrome,and the EndoReleaseTMEndoscopic Cubita
76、l Tunnel System fortreatment of cubital tunnel syndrome.Bone Graft Substitutes for Extremity Reconstruction.Our comprehensive line of synthetic bone graftsubstitutes and demineralized bone matrix products includes three distinct product lines Integra OS Osteo-conductive Scaffold,a bone void filler m
77、anufactured from beta tri-calcium phosphate and type I bovine collagen;Trel-XTMdemineralized bone matrix;and Trel-XC,demineralized bone matrix premixed with cancellous bone.Bone graft substitutes are used in many of the more than 700,000 extremity fusion and osteotomy proceduresannually.The extremit
78、y reconstruction bone graft market is estimated at more than$50 million annually in theUnited States.Integra Spine and OrthoBiologics Product PortfolioIn 2008,the United States spinal implant market,consisting of thoracolumbar fusion devices,cervical fusiondevices,interbody fusion devices,and motion
79、 preservation technologies,was valued at approximately$4.2 billion,represents one of the most dynamic and growing segments of the orthopedic industry.Integra Spine providescomprehensive spinal solutions from the occiput to the sacrum,and has 15 spinal fusion systems,a full line ofsynthetic orthobiol
80、ogics,minimally invasive spine solutions and motion preservation devices in development.SpinalFusionDevices.Manypeople sufferfromchronic backpain,whichmaybealleviated surgicallywitha spinal fusion,the process of removing the disc material and fusing twovertebrae together.However,thevertebraecannot f
81、use unless bone touches bone.To create this union,surgeons utilize two types of fusion devices-supplemental fixation systems and interbody/vertebral body replacements.Supplemental fixationdevicesareplateandrodsystemsusedtokeepthevertebrainplace,securingthebonetobone union.Interbody/vertebral body re
82、placements are shaped like a cage and used to hold the bone graft in place.They are placed in the disc space and filled with bone graft or bone type material.Successful spinal fusion requiresthe combination of supplemental fixation and interbody/vertebral body replacement devices.Integra Spine offer
83、seach type of device for the different areas of the spine and specific types of diseases.Supplemental Fixation Systems.According to industry sources,in 2008 the cervical market was valued atmore than$700 million.The market consists of posterior and anterior fixation devices,which include plating and
84、rod systems.Integra Spine offers several supplemental fixation systems for cervical procedures.We offer theTetherTManterior cervical plating system for the anterior side,the AtollTMOccipital-Cervical-Thoracic(“OCT”)system for the posterior side,and the Manta RayTMSystem in the United States,an anter
85、ior cervical plate that3provides a unique locking ring on the screw,which eliminates the need for a secondary locking mechanism.Withthe addition of the AtollTMOCT System in May 2009,Integra Spine now offers spinal fusion solutions throughoutthe entire spine,from occiput to sacrum.The degenerative di
86、sc market is the largest market segment within the spinal implant market.The majority ofthe procedures are for patients with degenerative disc disease requiring fusion in the lower lumbar region of thespine.Lower back pain affects approximately 80%of Americans at some point in their lives.When back
87、pain issevere,apedicle screwsystemmaybeusedtoalleviatethechronicbackpainandlimited mobilitycausedbyvariousspinal disorders,including spinal tumors.We address this market with the CoralTMSpinal System used for thecorrection andstabilization ofthe lumbar orlowerregionofthe spine,andtocorrect spinal de
88、formities.In2009,weintroduced the CoralTMExtended Tab Spinal Screw Series for the correction of spinal deformities,such asspondylolisthesis and scoliosis,and 5.5m CoralTMcobalt chrome rods for use in spinal correction and fusionprocedures.For 2010,the United States deformity market is estimated to b
89、e approximately$539 million.Interbody/vertebral body replacements.Integra Spine offers a number of interbody/vertebral body replace-ment devices(“IBD”).These include Vu e-PODTM,Vu L-PODTM,L-PODTM,Vu c-PODTMand Vu MeshTMdevices.Each of these devices is a small cage with a unique shape.They are used t
90、o hold the graft in place to ensure asuccessful fusion.In 2009,the Vu e-PODTMand VuL-PODTMdevices receivedclearance from the FDAto be marketed as a spinalIBD.Prior to receiving the IBD status,the devices were cleared by the FDA as spinal vertebral body replacementdevices(VBR).The dual classification
91、 gives the surgeon a broader range of usages:as an adjunct to fusion inpatients with degenerative disc,as well as to replace a collapsed,damaged or otherwise unstablevertebral bodydueto tumor or trauma.The IBD market for 2008 was estimated at$1.05 billion.OrthoBiologics.Integraoffersa comprehensivef
92、amily oforthobiologic products anddeploysanestablishednetwork of distributors focusing on orthopedic surgeons.We market and sell a range of innovative bone graftsubstitutes and other related medical devices that are used to enhance the repair and regeneration of bone in spinaland trauma surgery,tota
93、l joint replacements and dental applications.Integra is one of the largest companies in theworld focused on advanced technology in orthobiologics.We believe that our product portfolio consists of some ofthe most well-established orthobiologic brands,such as Integra MozaikTMOsteoconductive Scaffold,t
94、he Accellfamily of demineralized bone matrix products,which includes Accell Evo3,launched in 2009,and DynaGraft IIand OrthoBlast II.Our synthetic bone product line consists of beta-tricalcium phosphate(“TCP”)grafts and puttyand is manufactured with the patented TheriForm technology,which controls th
95、e porosity and structure of theproduct,makes the product unique,and enhances its performance.The United States market size for bone graft substitutes in orthopedic spinal procedures is estimated at$1.4 billion.Additional opportunities exist in orthopedic reconstructive applications.Minimally Invasiv
96、e Solutions.In September 2009,we acquired certain assets and liabilities of InnovativeSpinal Technologies,Inc.(“IST”).IST designed,developed,manufactured and sold spinal implant productsfocused on minimally invasive surgery and motion preservation techniques.Minimally invasive fixation systemsoffer
97、surgeons an opportunity to deliver pedicle screws with a small incision,potentially reducing blood loss andrecovery time.This acquisition provided us with innovative products that were available soon after acquisition,aswell as intellectual property that will support a pipeline of new products,parti
98、cularly in the rapidly growing field ofminimally invasive spine surgery.The product lines acquired in the acquisition of ISTs assets include the Paramount MIS/Open system forpercutaneous lumbar fusion procedures,the Paramount interbody fusion system,and the CordantTManteriorcervical plating system,a
99、s well as the product development assets related to ISTs AxientTMproduct line forposterior dynamic stabilization.In addition,to the Paramount system,we offer a posterior lumbar mini-openretractor system,the iPASSAGE.This unique retractor offers a number of blade options as well as a light source.NEU
100、ROSCIENCES PRODUCT PORTFOLIOOur Integra NeuroSciences sales organization sells a full line of products for neurosurgery.We have productsfor each step of a cranial procedure and the care of the patient after the operation.We sell equipment used in the4neurosurgery operating room and neurosurgery inte
101、nsive care unit(“ICU”).We also offer a wide array of implantsfor neurosurgery and spine surgery,including a complete set of duraplasty products and biomaterials for spinesurgery.Duraplasty Products.In the United States,over 225,000 craniotomy procedures are performed each year.Most ofthese surgeries
102、 breach the dura mater,which is the tough,fibrousmembrane that surroundsand protects thetissue of the brain and spinal cord.The breach must be repaired,either by suturing or applying a dural graft toprevent cerebrospinal fluid leaks and facilitate wound healing.Since the introduction of the DuraGen
103、Dural GraftMatrix in 1999,the first onlay collagen graft for dural repair,we have become the market leader in suturelessclosure of dural defects in the United States.We subsequently launched DuraGen Plus Dural Regeneration Matrixin 2003,Suturable DuraGenTMDural Regeneration Matrix in 2005,and DuraGe
104、n XSTMDural Regeneration Matrixin 2007,demonstrating our sustained commitment to providing the neurosurgical community with innovativetechnology and materials for the management of dural defects.These products are alternatives to autologous tissuegrafts taken from elsewhere in the patients body.Tiss
105、ue Ablation Equipment.Ultrasonic surgery uses high frequency acoustic pulses to selectively dissectsoft tissues according to their density,leaving fibrous tissues,such as nerves and blood vessels,relativelyunaffected.As a result,it facilitates the ablation of unwanted tissue adjacent or attached to
106、vital structures.Integras CUSA tissue ablation system has been a leading ultrasonic surgical aspirator for over 25 years.Ourproduct offerings include the CUSA EXcel,CUSA Selector and CUSA DissectronTM(sold internationally).In2009,weintroduced theCUSAExcel UltrasonicSurgical AblationSystemandtheCUSAN
107、XTTMUltrasonicTissueAblation System.Accessories for and features of these systems include the TissueSelectTM,the CUSA Electro-surgery Module(CEMTM)and the newly introduced CUSA ShearTipTM.Our market-leading CUSA tissue ablation systems are used in over 100,000 procedures annually,at over2,000 center
108、s around the world for the removal of brain tumors,epilepsy foci,as well as gynecological and livertumors.According to industry sources,the total United States market for ultrasonic tissue ablation products is over$60 million.Applications for ultrasonic tissue ablation technology continue to expand,
109、both within neurosurgeryand in other surgical specialties,and we are developing accessories,such as new tips and handpieces,to meet thesenew clinical applications.We expect the market to continue to grow.Cerebral Spinal Fluid(“CSF”)Management Devices.CSF drainage is an important component ofmanaging
110、 the intracranial pressure of a neuro-compromised patient or a patient undergoing abdominal aorticaneurysm surgery.In 2007,over 300,000 procedures in the United States were performed using lumbar orventricular drainage systems,representing an estimated$100 million market.Hydrocephalus is a condition
111、 in which the primary characteristic is excessive accumulation of CSF in thebrain.Itismostcommonly treated byinsertingashuntintotheventricularsystemofthebrain.Theshuntisdesignedto divert the flow of CSF out of the brain to an appropriate drainage site,such as the peritoneal cavity or the heartsright
112、 atrium,and through a pressure valve to maintain a normal level of CSF within the ventricles.Each year thereare approximately 50,000 new implants and revision cases to treat hydrocephalus.Integra currently offers a diverseline of hydrocephalus management products,including a wide variety of valves a
113、nd ventricular,lumbar,peritonealand cardiac catheters.Cranial Stabilization Equipment.Most neurosurgery procedures require that the head is held rigidly duringthe operation.The MAYFIELD line of cranial stabilization equipment fixes the head in an orientation determinedby the surgeon;the device conta
114、cts the head via skull pins that are held in a frame that is anchored to the operatingtable and can be adjusted in multiple planes of movement.The MAYFIELD system is used worldwide in over 200,000 brain procedures annually.Treatments usingMAYFIELD include head trauma injuries,pediatric disorders suc
115、h as hydrocephalus,biopsies,cancer removal,and treatments for cerebrovascular disorders such as aneurysms,and neurodegenerative disorders such asParkinsons disease or epilepsy.In 2009,we launched the MAYFIELD Infinity XR2 Radiolucent CranialStabilization System.Intracranial Monitoring Equipment.The
116、neurosurgical intensive care unit monitors a patients post-operative condition,following most neurosurgical procedures involving craniotomy.We offer the leading products5for monitoring intracranial pressure(the Camino ICP monitor)and metabolic activity(LICOX brain tissuemonitoring system)and equipme
117、nt for the drainage of excess CSF(the AccuDrain Extermal Ventricular DrainageSystems).Our Camino and LICOX monitoring systems are also used in the treatment of Traumatic Brain Injury(“TBI”).TBIisamajor publichealth problemandcoststheUnitedStatesanestimated$56billionayear.Morethanfive million America
118、ns alive today have had a TBI,resulting in a permanent need for help in performing dailyactivities,and TBI survivors are often left with significant cognitive,behavioral,and communicative disabilities.Research has shown that not all brain damage occurs at the moment of impact,but frequently evolves
119、over theensuing hours and days after the initial injury.The secondary damage may be controlled,in part,by monitoring andmanaging intracranial pressure and brain tissue oxygen.MEDICAL INSTRUMENTS PRODUCT PORTFOLIOWe are one of the leading surgical instrument companies in the United States,providing m
120、ore than 60,000instrument patterns and surgical products to hospitals,surgery centers,and dental,podiatry,veterinary andphysician offices.Integra SurgicalIntegra Surgical is a leading supplier of innovative,high-quality operating room instrumentation and surgicallighting.TheJaritinstrument line offe
121、rsacomprehensiveselection ofreusablesurgicalinstrumentsthatprovidesacomplete solution for laparoscopic,general,cardiovascular,neuro,gynecological,and orthopedic surgical spe-cialties.Luxtec products lead the surgical illumination market.These products include market leading Xenonillumination systems
122、,digital video recording systems,fiber optic cables and surgical loupes.Innovative market-leading Omni-Tract Surgical table retractor systems offer surgeons and operating rooms the benefits of lightweight,fewer parts,and fast,easy set up.MiltexMiltex,Inc.hasestablished itselfasoneofthelargestandmost
123、respected suppliersofhand-held instruments inthealternate sitemarket,whichincludessurgical,dental,podiatryandanimal healthmarkets.Ourextensiveproductportfolio of over 30,000 line items,in combination with our strong distributor partnerships,allows us to reach abroad spectrum of providers,both domest
124、ically as well as internationally.Miltexs extensive product portfolio of hand-held surgical instrumentation encompasses all of the clinicalspecialties that are significant within the non-acute setting including female patient care,the aesthetics market-place,ENT,ophthalmology and all other venues th
125、at provide surgical care outside of the hospital.We also are amajor player inveterinary specialties,suchasdentistry andorthopedics,aswellinthe emerging life sciences sector.Miltex is recognized as a premium manufacturer of dental instruments related to hygiene,oral surgery,periodontal and endodontic
126、 instrumentation.The Miltex dental portfolio contains the well recognized premiumbrand names,Miltex,Thompson,Moyco and Union Broach.We offer the dental market the largest array of choicesin extraction forceps,market leadership in sterilization cassettes and unique intra-oral lighting technologies.Mi
127、ltexhas successfully incorporated one of Integras regenerative collagen materials into its oral surgery and periodontalofferings and continues to work in consort to bring additional opportunities to the industry.RESEARCH AND DEVELOPMENT STRATEGYWe spent$44.3 million,$60.5 million and$30.7 million in
128、 2009,2008and 2007,respectively,on research anddevelopment activities.The 2009 amount includes$0.3 million of in-process research and development chargesrecorded inconnection withtheISTacquisition.The2008amountincludes$25.2million ofin-processresearch anddevelopment charges recorded in connection wi
129、th the acquisition of Theken Spine,LLC,Theken Disc,LLC andTherics,LLC(collectively“Integra Spine”).The 2007 amount includes$4.6 million in-process research anddevelopment charges recorded in connection with the IsoTis acquisition.Increases in research and development6expenditures will accelerate the
130、 development of new devices for neurosurgery,extremity reconstruction andorthobiologics.Our research and development activities focus on identifying and evaluating unmet surgical needs and productimprovement opportunities to drive the development of innovative solutions and products.We apply our tec
131、hno-logical and developmental core competencies to develop regenerative products for neurosurgical,orthopedic andspinal applications,neuro-monitoring and CSF management,cranial stabilization and closure,tissue ablation,surgical instruments and spine,soft tissue,extremity small bone,and joint fixatio
132、n.Our activities include bothinternal product development initiatives and the acquisition of proprietary rights to strategic technologicalplatforms.Regenerative Products.Because implants represent a fast-growing,high-margin market segment for us,alarge portion of our research and development expendi
133、ture is allocated to the development of these products.Ourregenerativeproductdevelopmentportfolio focusesonapplying ourexpertise inbiomaterials andcollagen matricesto support the development of innovative products targeted at neurosurgical,orthopedic and spinal surgeryapplications,as well as dermal
134、regeneration,nerve repair,and wound dressing applications.Our focus ontechnological advancement,product segmentation and differentiation activities will continue to drive our activitiesin each of these areas.Neurosurgery.We haveprioritized ourportfolio to align with the largest,fastest growingand mo
135、st profitablesegmentsofthe neurosurgical markets we serve.Our2010research andproduct development effortsare focused onextendingourleadership positionsindural repair,anddevelopingthenexttissueablation system,anewcritical careneuromonitoring system and an advanced shunt for the management of hydroceph
136、alus.We serve many segments ofthe neurosurgical market place and have other projects in place to enhance our existing brain mapping,tissueablation and stereotactic devices.Extremity Reconstruction.We continue to build and expand the capabilities of our product developmentteam,focusingonthe developme
137、nt offixationdevices forupperandlowerextremity reconstruction,skin,nerveandsoft tissue products,and have structured a robust product development program that will advance our productofferings.This program includes the development of devices for both the upper and lower extremities.In 2009,welaunched
138、 five significant extremities products:three for use in lower extremity procedures,one for soft tissuereinforcement,and one new skin product offering.Spine.Our 2008 acquisition of Integra Spine expanded our product development engine with a strongengineering team,prototyping and mechanical testing c
139、apabilities and a portfolio of active spine implant productdevelopments.We continued our growth strategy in 2009 with the acquisition of most of the assets of IST,whichgave us an entre into the rapidly growing,minimally invasive spine market.In 2009,Integra Spine introduced fiveproducts,including th
140、e Paramount minimally invasive spine system,a series of interbody spinal implants made ofPEEK-Optima polymers from Invibio Limited,two additions to the CoralTMSpinal System and the AtollTMOccipital-Cervical-Thoracic(OCT)System,a posterior cervical spinal fixation system.With the addition of theAtoll
141、TMOCT System,we now offer spinal fusion solutions throughout the entire spine,from occiput to sacrum.OrthoBiologics.We have built a strong orthobiologic product development capability that leverages ourAccell family of demineralized bone matrix product lines and our Integra MozaikTMOsteoconductive S
142、caffold,resorbable bone void filler product line.We continue to develop line extensions based on these foundationtechnologies that further complete our offerings.In 2009,we expanded our Accell Evo3 product line,offering asmaller sizeoptionforsurgeons,whichisparticularly usefulinprocedureswheresmalle
143、r amountsofdemineralizedbone matrix are required.We integrated the Therics research anddevelopment program,which wasacquired aspartof the 2008 Integra Spine acquisition,into the overall orthobiologics research and development program.We willlook to further develop products based on this technology t
144、o create synthetic materials with unique architecture andchemistry.7COMPETITIONCompetitors inthe spineandorthobiologics markets include Alphatec Spine,Inc.,Johnson&Johnson,GlobusMedical Inc.,Medtronic,Inc.,NuVasive,Inc.,Orthofix,Stryker Corporation,Synthes,Inc.,and Zimmer,Inc.,andalso include severa
145、l smaller,biologic-focused companies,such as Orthovita and Osteotech.Our competitors in the neurosurgery markets are the Aesculap division of B.Braun,Johnson&Johnson,Medtronic,Inc.and Stryker Corporation.In addition,many of our neurosurgery product lines compete with smallerspecialized companies and
146、 larger companies that do not otherwise focus on neurosurgery.Our competition in extremity reconstruction includes Johnson&Johnson,Small Bone Innovations,Inc.,Synthes,Inc.,Stryker Corporation,Tornier,Inc.,Wright Medical Group,Inc.and Zimmer,Inc.,as well as othermajor orthopedic companies that carry
147、a full line of small bone and joint fixation and soft tissue products.We believe that we are the second largest reusable surgical instrument company in the United States.Wecompete with the Aesculap division of B.Braun,as well as the largest reusable instrument business,V.Mueller,adivision of CareFus
148、ion.In addition,we compete with Johnson&Johnson and many smaller instrument companiesin the reusable and disposable specialty instruments markets.We rely on the depth and breadth of our sales andmarketing organization andourprocurement operationtomaintain ourcompetitivepositioninsurgicalinstruments.
149、Finally,incertain casesourproductscompete primarily againstmedical practices thattreat aconditionwithoutusing a medical device or any particular product,such as medical practices that use autograft tissue instead of ourdermal regeneration products,duraplasty products and nerve repair products.Depend
150、ing on the product line,wecompete on the basis of our products features,strength of our sales force or distributor,sophistication of ourtechnology and cost effectiveness of our solution to the customers medical requirements.GOVERNMENT REGULATIONAsa manufacturer and marketer of medical devices,we are
151、 subject to extensive regulation by the FDA and theCenterforMedicareServicesoftheU.S.DepartmentofHealthandHumanServicesandotherfederal governmentalagencies and,in some jurisdictions,by state and foreign governmental authorities.These regulations govern theintroduction of new medical devices,the obse
152、rvance of certain standards with respect to the design,manufacture,testing,labeling,promotion andsales ofthe devices,the maintenance ofcertain records,the ability to track devices,the reporting of potential product defects,the import and export of devices,and other matters.We believe that weare in s
153、ubstantial compliance with these governmental regulations.The regulatory process of obtaining product approvals and clearances can be onerous and costly.The FDArequires,as a condition to marketing a medical device in the United States,that we secure a Premarket Notificationclearance pursuant to Sect
154、ion 510(k)of the Federal Food,Drug and Cosmetic Act(the“FFDCA”),an approvedPremarket Approval application(or supplemental PMA application)or an approved Product DevelopmentProtocol.Obtaining these approvals and clearances can take up to several years and involves preclinical studiesand clinical test
155、ing.The FDA has announced that it is reviewing the 510(k)Premarket Notification process whichmay result in more extensive testing and clinical trial requirements.To perform clinical trials for significant riskdevices in the United States on an unapproved product,we are required to obtain an Investig
156、ational DeviceExemption(“IDE”)fromthe FDA.TheFDAmayalsorequire afilingforFDAapprovalpriortomarketing productsthat are modifications of existing products or new indications for existing products.Moreover,after clearance/approval is given,if the product is shown to be hazardous or defective,the FDA an
157、d foreign regulatory agencieshave the power to withdraw the clearance or require us to change the device,its manufacturing process or itslabeling,tosupplyadditional proofofitssafetyandeffectivenessortorecall,repair,replace orrefundthecostofthemedical device.Because we currently export medical device
158、s manufactured in the United States that have not beenapproved by the FDA for distribution in the United States,we are required to obtain approval/registration in thecountry weare exportingtoandmaintain certain recordsrelating toexportsandmake these available tothe FDAforinspection,if required.The F
159、DA Medical Device User Fee and Modernization Act of 2002 and the FDA Amendments Act of 2007established regulations governing user fees for certain regulatory submissions to the FDA.Currently user fees arerequired for 510(k)PMAs,certain PMA supplements,PMA annual reports,FDA establishment registratio
160、ns and8other regulatory submissions.There may be increases in user fees on an annual basis as well as additional user feesestablished by the FDA.Human Cells,Tissues and Cellular and Tissue-Based ProductsIntegra manufactures medical devices derived from human tissue(demineralized bone tissue).The FDA
161、 has specific regulations governing human cells,tissues and cellular and tissue-based products,orHCT/Ps.An HCT/P is a product containing,or consisting of,human cells or tissue intended for transplantation intoa human patient.Examples include bone,ligament,skin and cornea.Some HCT/Ps also meet the de
162、finition of a biological product,medical device or drug regulated under theFFDCA.These biologic,device or drug HCT/Ps must comply both with the requirements exclusively applicable toHCT/Psand,inaddition,withrequirementsapplicable tobiologics,devicesordrugs,includingpremarketclearanceor approval from
163、 FDA.Section 361 of the Public Health Service Act(“PHSA”),authorizes the FDA to issue regulations to prevent theintroduction,transmission or spread of communicable disease.HCT/Ps regulated as“361”HCT/Ps are subject torequirements relating to registering facilities and listing products with FDA,scree
164、ning and testing for tissue donoreligibility,Good Tissue Practice when processing,storing,labeling,and distributing HCT/Ps,including requiredlabeling information,stringent record keeping,and adverse event reporting.Some states have their own tissue banking regulation.We are licensed or have permits
165、for tissue banking inCalifornia,Florida,New York and Maryland.In addition,tissue banks may undergo voluntary accreditation by theAmerican Association of Tissue Banks(“AATB”).The AATB has issued operating standards for tissue banking.Compliance with these standards is a requirement in order to become
166、 an AATB-accredited tissue establishment.National Organ Transplant Act.Procurement of certain human organs and tissue for transplantation issubject to the restrictions of the National Organ Transplant Act(“NOTA”),which prohibits the transfer of certainhuman organs,including skin and related tissue f
167、or valuable consideration,but permits the reasonable paymentassociated with the removal,transportation,implantation,processing,preservation,quality control and storage ofhuman tissue and skin.We reimburse tissue banks for their expenses associated with the recovery,storage andtransportation of donat
168、ed human tissue that they provide to us for processing.We include in our pricing structureamountspaidtotissuebankstoreimbursethemfortheirexpensesassociated withtherecoveryandtransportation ofthe tissue,in addition to certain costs associated with processing,preservation,quality control and storage o
169、f thetissue,marketing and medical education expenses,and costs associated with development of tissue processingtechnologies.NOTA payment allowances may be interpreted to limit the amount of costs and expenses that we mayrecover in our pricing for ourproducts,thereby reducing our future revenue andpr
170、ofitability.If wewereto be foundto have violated NOTAs prohibition on the sale or transfer of human tissue for valuable consideration,we wouldpotentially be subject to criminal enforcement sanctions,which could materially and adversely affect our results ofoperations.Postmarket Requirements.After a
171、device is cleared or approved for commercial distribution,numerousregulatory requirements apply.These include the FDAQuality System Regulations which cover the procedures anddocumentation of the design,testing,production,control,quality assurance,labeling,packaging,sterilization,storage and shipping
172、 of medical devices;the FDAs general prohibition against promoting products for unapprovedoroff-label uses;the Medical Device Reporting regulation,whichrequires that manufacturers reporttothe FDAiftheir device may have caused or contributed to a death or serious injury or malfunctioned in a way that
173、 would likelycause or contribute to a death or serious injury if it were to recur;and the Reports of Corrections and Removalsregulation,which require manufacturers to report recalls and field corrective actions to the FDA if initiated toreduce a risk to health posed by the device or to remedy a viol
174、ation of the FFDCA.We are also required to register with the FDA as a medical device manufacturer.As such,our manufacturingsites are subject to periodic inspection by the FDA for compliance with the FDAs Quality System Regulations.These regulations require that we manufacture our products and mainta
175、in our documents in a prescribed mannerwithrespecttodesign,manufacturing,testingandcontrolactivities.Further,wearerequiredtocomplywithvariousFDA requirements and other legal requirements for labeling and promotion.If the FDA believes that a company is9not in compliance with applicable regulations,it
176、 may issue a warning letter,institute proceedings to detain or seizeproducts,issue a recall order,impose operating restrictions,enjoin future violations and assess civil penaltiesagainst that company,its officers or its employees and may recommend criminal prosecution to the Department ofJustice.Med
177、ical device regulations also are in effect in many of the countries outside the United States in which we dobusiness.These laws range from comprehensive medical device approval and Quality System requirements forsome or all of our medical device products to simpler requests for product data or certi
178、fications.The number andscope of these requirements are increasing.Under the European Union Medical Device Directive,medical devicesmust meet the Medical Device Directive standards and receive CE Mark Certification prior to marketing in theEuropean Union(the“EU”).CE Mark Certification requires a com
179、prehensive Quality System program,compre-hensive technical documentation and data on the product,which are then reviewed by a Notified Body.A NotifiedBody is an organization designated by the national governments of the European Union member states to makeindependent judgments about whether a produc
180、t complies with the protection requirements established by each CEmarking directive.The Medical Device Directive,ISO 9000 series and ISO 13485 are recognized internationalquality standards that are designed to ensure that we develop and manufacture quality medical devices.The EU hasrevised the Medic
181、al Device Directive(93/42/EC as amended by 2007/47/EC)and these revised regulations areeffective March 21,2010.Compliance with these regulations requires extensive documentation and clinical reportsfor all of our products sold in the EU,as well as revisions to labeling and other requirements to comp
182、ly with therevisions.A recognized Notified Body audits our facilities annually to verify our compliance with these standards.Australia,China,Japan and other countries have issued new regulations and requirements for obtaining approval ofmedical devices,including requirements governing the conduct of
183、clinical trials,the manufacturing of products andthe distribution of products for medical devices with which we must comply with in order to sell our products inthose countries.In the EU,our products that contain human derived tissue,including those containing demineralized bonematerial,are not medi
184、cal devices as defined in the Medical Device Directive(93/42/EC).They are also notmedicinal products asdefined in Directive 2001/83/EC.Today,regulations,if applicable,are different from one EUmember state tothe next.Duetothe absence ofaharmonized regulatory frameworkand the proposed regulation forad
185、vanced therapy medicinal products in the EU,the approval process for human-derived cell or tissue-basedmedical products may be extensive,lengthy,expensive,and unpredictable.Certain countries,as well as the EU,have issued regulations that govern products that contain materialsderived from animal sour
186、ces.Regulatory authorities are particularly concerned with materials infected with theagent that causes bovine spongiform encephalopathy(“BSE”),otherwise known as mad cow disease.Theseregulations affect our dermal regeneration products,duraplasty products,biomaterial products for the spine,nerveand
187、tendon repair products and certain other products,all of which contain material derived from bovine tissue.Although we take great care to provide that our products are safe and free of agents that can cause disease,productsthat contain materials derived from animals,including our products,may become
188、 subject to additional regulation,orevenbebanned incertain countries,because ofconcern overthe potential forpriontransmission.Significantnewregulations,or a ban of our products,could have a material adverse effect on our current business or our ability toexpand our business.See“Item 1A.Risk Factors
189、Certain Of Our Products Contain Materials Derived FromAnimal Sources And May Become Subject To Additional Regulation.”We are subject to laws and regulations pertaining to healthcare fraud and abuse,including anti-kickback lawsand physician self-referral laws that regulate the means by which companie
190、s in the health care industry may markettheir products to hospitals and health care professionals and may compete by discounting the prices of theirproducts.Thedeliveryofourproductsissubjecttoregulation regardingreimbursement,andfederal healthcare lawsapply when a customer submits a claim for a prod
191、uct that is reimbursed under a federally funded healthcareprogram.These rules require that we exercise care in structuring our sales and marketing practices and customerdiscount arrangements.See“Item 1A.Risk Factors Oversight Of The Medical Device Industry Might AffectThe Manner In Which We May Sell
192、 Medical Devices.”Our international operations subject us to laws regarding sanctioned countries,entities and persons,customs,import-export,lawsregarding transactions inforeign countries andthe U.S.ForeignCorruptPractices Actandlocal10laws regarding interactions with healthcare professionals.Among o
193、ther things,these laws restrict,and in somecases prohibit,United States companies from directly or indirectly selling goods,technology or services to peopleor entities in certain countries.In addition,these laws require that we exercise care in structuring our sales andmarketing practices in foreign
194、 countries.Our research,development and manufacturing processes involve the controlled use of certain hazardousmaterials.We are subject to federal,state and local laws and regulations governing the use,manufacture,storage,handling and disposalofthese materials andcertain waste products.Although webe
195、lieve that oursafety proceduresfor handling and disposing of these materials comply with the standards prescribed by the controlling laws andregulations,the risk ofaccidental contamination or injury from these materials cannot be eliminated.In the eventofthis type of accident,we could be held liable
196、 for any damages that may result and any liability could exceed ourresources.Although we believe that we are in compliance in all material respects with applicable environmentallaws and regulations,we could incur significant costs to comply with environmental laws and regulations in thefuture,and ou
197、r operations,business or assets could be materially adversely affected by current or futureenvironmental laws or regulations.In addition to the above regulations,we are and may be subject to regulation under federal and state laws,including,but not limited to,requirements regarding occupational heal
198、th and safety,laboratory practices and themaintenance ofpersonalinformation,includingpersonalhealthinformation.Asapubliccompany,wearesubjecttothe securities laws and regulations,including the Sarbanes-Oxley Act of 2002.We also are subject to other present,and could be subject to possible future,loca
199、l,state,federal and foreign regulations.Third-Party Reimbursement.Healthcare providers that purchase medical devices generally rely on third-party payers,including the Medicare and Medicaid programs and private payers,such as indemnity insurers,employer group health insurance programs and managed ca
200、re plans,to reimburse all or part of the cost of theproducts.As a result,demand for our products is and will continue to be dependent in part on the coverage andreimbursement policies of these payers.The manner in which reimbursement is sought and obtained varies basedupon the type of payer involved
201、 and the setting in which the product is furnished and utilized.Reimbursement fromMedicare,Medicaid and other third-party payers may be subject to periodic adjustments as a result of legislative,regulatoryandpolicychanges aswellasbudgetary pressures.Possiblereductions in,oreliminations of,coverageor
202、reimbursement by third-party payers as a result of these changes may affect our customers revenue and ability topurchase our products.Anychanges in the healthcare regulatory,payment or enforcement landscape relative to ourcustomers healthcare services has the potential to significantly affect our op
203、erations and revenue.PATENTS AND INTELLECTUAL PROPERTYWe seek patent protection for our key technology,products and product improvements,both in the UnitedStates and in selected foreign countries.When determined appropriate,we have enforced and plan to continue toenforce and defend our patent rights
204、.In general,however,we do not rely on our patent estate to provide us with anysignificant competitive advantages as it relates to our existing product lines.We rely upon trade secrets andcontinuing technological innovations to develop and maintain our competitive position.In an effort to protect our
205、trade secrets,we have a policy of requiring our employees,consultants and advisors to execute proprietaryinformation and invention assignment agreements uponcommencement ofemployment orconsulting relationshipswith us.These agreements alsoprovidethat all confidential information developed ormade know
206、nto the individualduring the course of their relationship with us must be kept confidential,except in specified circumstances.AccuDrain,Accell,Accell Evo3,AtollTM,AuragenTMBold,BuzzTM,Camino,CRW,CoralTM,CUSA,CUSA Excel,DenLite,DissectronTM,DuraGen,DuraGen Plus,DynaGraft II,Hallu-Fix,HINTEGRA,ICOSTM,
207、Inforce,Integra,Integra MozaikTM,Integra OS,Jarit,LICOX,LimiTorrTM,Luxtec,Manta RayTM,Miltex,NeuraGen,NeuraWrapTM,Newdeal,OmniSight,OmniTract,OrthoBlast II,OSV II,Qwix,Padgett,Panta,Paramount,Radionics,RedmondTM,RugglesTM,Safeguard,Selector,Subtalar MBA,TenoGlide,TetherTM,Trel-XTM,Trel-XC,Tibiaxys,U
208、ni-Clip,VentrixTM,XKnife and the Integra wave logoare some of the material trademarks of Integra LifeSciences Corporation and its subsidiaries.MAYFIELD is aregistered trademark of SM USA,Inc.,and is used by Integra under license.11EMPLOYEESAtDecember 31,2009,we hadapproximately 3,000employees engage
209、d in production andproduction support(including warehouse,engineering and facilities personnel),quality assurance/quality control,research anddevelopment,regulatory and clinical affairs,sales,marketing,administration and finance.Except for certainemployees at our facilities in France and Mexico,none
210、 of our employees is subject to a collective bargainingagreement.FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREASFinancial information about our geographical areas is set forth under“Item 7.Managements Discussion andAnalysis of Financial Condition and Results of Operations International Revenues and Ope
211、rations”and in ourfinancial statements Note 14,“Segment and Geographic Information,”to our Consolidated Financial Statements.SOURCES OF RAW MATERIALSIn general,rawmaterials essential to ourbusinessesare readily available from multiple sources.Forreasons ofquality assurance,availability,orcosteffecti
212、veness,certain components andrawmaterials are available onlyfromasole supplier.Our policy is to maintain sufficient inventory of components so that our production will not besignificantly disrupted even if a particular component or material is not available for a period of time.Certain ofourproducts
213、,including ourdermal regeneration products,duraplastyproducts,biomaterial productsfor the spine,nerve and tendon repair products and certain other products,contain material derived from bovinetissue.Wetakegreatcaretoprovidethatourproductsaresafeandfreeofagentsthatcancausedisease.Inparticular,the col
214、lagen used in the products that Integra manufactures isderivedonly from the deep flexortendon ofcattle lessthan 24monthsoldfromNewZealand,a countrythat hasneverhadacase ofbovinespongiformencephalopathy,orfrom the United States.We are also qualifying sources of collagen from another country that is c
215、onsidered BSE-free.The World Health Organization classifies different types of cattle tissue for relative risk of BSE transmission.Deep flexor tendon is in the lowest-risk category for BSE transmission(the same category as milk,for example),and is therefore considered to have a negligible risk of co
216、ntaining the agent that causes BSE.Certain of our demineralized bone matrix products contain human tissue in the form of ground cortical andcancellous bone.We source the bone tissue only from FDA and the American Association of Tissue Banks(“AATB”)registered and inspected tissue banks.The donors are
217、 rigorously screened,tested,and processed inaccordancewith the FDAandAATB requirements.Onlydonated tissuefromFDAandAATBregistered,inspected,non-profit tissue banks is qualified to source for our raw materials.Additionally,each donor must pass all of theFDA-specified bacterial and viral testing befor
218、e the raw material is distributed to Integra for further processing.Wereceive with each donor lot a certification of the safety of the raw material from the tissue banks medical director.Asan added assurance of safety,each lot ofbone is released into the manufacturing process only after our staffof
219、quality assurance microbiologists screens the incoming bone and serology test records.During our manufac-turing process,the bone particles are subjected to our proprietary process and terminally sterilized.We havedemonstrated through our testing that this type of rigorous processing further enhances
220、 the safety and effectivenessof our demineralized bone material products.SEASONALITYRevenues during our fourth quarter tend to be stronger than other quarters because many hospitals increasetheir purchases of our products during the fourth quarter to coincide with the end of their budget cycles.AVAI
221、LABLE INFORMATIONWe are subject to the informational requirements of the Securities Exchange Act of 1934,as amended,(the“Exchange Act”).In accordance with the Exchange Act,we file annual,quarterly and special reports,proxystatements and other information with the Securities and Exchange Commission.Y
222、ou may view our financialinformation,including the information contained in this report,and other reports we file with the Securities andExchange Commission,onthe Internet,without charge assoonasreasonably practicable after we file them with the12Securities and Exchange Commission,in the“SEC Filings
223、”page of the Investor Relations section of our website atwww.Integra-LS.com.You may also obtain a copy of any of these reports,without charge,from our investorrelations department,311 Enterprise Drive,Plainsboro,NJ 08536.Alternatively,you may view or obtain reportsfiled with the Securities and Excha
224、nge Commission at the SEC Public Reference Room at 100 F Street,N.E.inWashington,D.C.20549,or at the Securities and Exchange Commissions Internet site at www.sec.gov.Please callthe Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the publicreference fa
225、cilities.SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSWe have made statements in this report,including statements under“Business”and“Managements Dis-cussion and Analysis of Financial Condition and Results of Operations”that constitute forward-looking statementswithin the meaning of Section 27A o
226、f the Securities Act of 1933,as amended(the“Securities Act”),andSection 21E of the Exchange Act.These forward-looking statements are subject to a number of risks,uncertaintiesand assumptions about us including,among other things:general economic and business conditions,both nationally and in our int
227、ernational markets;our expectations and estimates concerning future financial performance,financing plans and the impact ofcompetition;anticipated trends in our business;anticipated demand for our products,particularly capital equipment products;our expectations concerning our ongoing restructuring,
228、integration and manufacturing transfer and expan-sion activities;existing and future regulations affecting our business;our ability to obtain additional debt and equity financing to fund capital expenditures and working capitalrequirements and acquisitions;physicianswillingnesstoadoptourrecently lau
229、nchedandplannedproducts,third-party payorswillingnessto provide or continue reimbursement for these products and our ability to secure regulatory approval forproducts in development;initiatives launched by our competitors;our ability to protect our intellectual property,including trade secrets;our a
230、bility to complete acquisitions,integrate operations post-acquisition and maintain relationships withcustomers of acquired entities;work stoppages at our facilities;and other risk factors described in the section entitled“Risk Factors”in this report.You can identify these forward-looking statements
231、by forward-looking words such as“believe,”“may,”“could,”“might,”“will,”“estimate,”“continue,”“anticipate,”“intend,”“seek,”“plan,”“expect,”“should,”“would”and similar expressions in this report.We undertake no obligation to publicly update or revise any forward-lookingstatements,whether as a result o
232、f new information,future events or otherwise.In light of these risks anduncertainties,the forward-looking events and circumstances discussed in this report may not occur and actualresults could differ materially from those anticipated or implied in the forward-looking statements.13ITEM 1A.RISK FACTO
233、RSRisks Related to Our BusinessOur operating results may fluctuate.Our operating results,including components of operating results such as gross margin and cost of productsales,mayfluctuate fromtime totime,andsuchfluctuations could affect ourstockprice.Ouroperating results havefluctuated in the past
234、 and can be expected to fluctuate from time to time in the future.Some of the factors that maycause these fluctuations include:current economic conditions,which could affect the ability of hospitals and other customers to purchase ourproducts and could result in a reduction in elective and non-reimb
235、ursed operative procedures;the impact of acquisitions;the impact of our restructuring activities;the timing of significant customer orders,which tend to increase in the fourth quarter to coincide with theend of budget cycles for many hospitals;market acceptance of our existing products,as well as pr
236、oducts in development;the timing of regulatory approvals;changes in the rates of exchange between the U.S.dollar and other currencies of foreign countries in whichwe do business,such as the euro and the British pound;expenses incurred and business lost in connection with product field corrections or
237、 recalls;changes in the cost or decreases in the supply of raw materials,including energy and steel;our ability to manufacture our products efficiently;the timing of our research and development expenditures;reimbursement for our products by third-party payors such as Medicare,Medicaid and private h
238、ealthinsurers;and inspections of our manufacturing facilities for compliance with Quality System Regulations(Good Man-ufacturing Practices)which could result in Form 483 observations,warning letters,injunctions or otheradverse findings from the FDA or from equivalent regulatory bodies.The industry a
239、nd market segments in which we operate are highly competitive,and we may be unable tocompete effectively with other companies.In general,there is intense competition among medical device companies.We compete with establishedmedical technology companies in many of our product areas.Competition also c
240、omes from early-stage companiesthat have alternative technological solutions for our primary clinical targets,as well as universities,researchinstitutions and other non-profit entities.Many of our competitors have access to greater financial,technical,research and development,marketing,manufacturing
241、,sales,distribution,administrative,consulting and otherresources than we do.Our competitors may be more effective at developing commercial products.Our competitorsmay be able to gain market share by offering lower-cost products or by offering products that enjoy betterreimbursement methodologies fro
242、m third-party payors,such as Medicare,Medicaid and private healthcareinsurance.Our competitive position will depend on our ability to achieve market acceptance for our products,developnew products,implement production and marketing plans,secure regulatory approval for products under devel-opment,obt
243、ain and maintain reimbursement coverage under Medicare,Medicaid and private healthcare insuranceand obtain patent protection.We may need to develop new applications for our products to remain competitive.Technological advances by one or more of our current or future competitors or their achievement
244、of superiorreimbursement from Medicare,Medicaid and private healthcare insurance could render our present or future14products obsolete or uneconomical.Our future success will depend upon our ability to compete effectively againstcurrent technology as well as to respond effectively to technological a
245、dvances.Competitive pressures couldadversely affect our profitability.For example,competitors have launched and have been developing products tocompete with our duraplasty products,extremity reconstruction implants,neuro critical care monitors andultrasonic tissue ablation devices,among others.Our l
246、argest competitors in the neurosurgery markets are Medtronic,Inc.,Johnson&Johnson,StrykerCorporation and the Aesculap division of B.Braun Medical Inc.In addition,many of our neurosurgery productlines compete with smaller specialized companies or larger companies that do not otherwise focus on neuros
247、urgery.Our competitors in extremity reconstruction include Johnson&Johnson,Synthes,Inc.and Stryker Corporation,aswell as other major orthopedic companies that carry a full line of reconstructive products.We also compete withWright Medical Group,Inc.,Small Bone Innovations,Inc.,Tornier,Inc.and other
248、companies in the extremityreconstruction market category.Our competitors in the spinal implant market include Medtronic,Inc.,Johnson&Johnson,Synthes,Inc.,Stryker Corporation,Zimmer,Inc.,NuVasive,Inc.,Globus Medical,Inc.,Alphatec Spine,Inc.and Orthofix.In surgical instruments,we compete with V.Muelle
249、r,as well as Aesculap.In addition,wecompete with Johnson&Johnson and many smaller instrument companies in the reusable and disposable specialtyinstruments markets.The competitors in our orthobiologics market include such well-established companies asMedtronic,Inc.,SynthesInc.andJohnson&Johnsonandals
250、oinclude several smaller,biologic-focused companies,such as Osteotech and Orthovita.Our private-label products face diverse and broad competition,depending on themarket addressed by the product.Finally,in certain cases our products compete primarily against medical practicesthat treat a condition wi
251、thout using a device or any particular product,such as the medical practices that useautograft tissue instead of our dermal regeneration products,duraplasty products and nerve repair products.Our current strategy involves growth through acquisitions,which requires us to incur substantial costsand po
252、tential liabilities for which we may never realize the anticipated benefits.Inaddition to internally generated growth,ourcurrent strategy involvesgrowththroughacquisitions.Since thebeginning of 2007,we have acquired 10 businesses or product lines at a total cost of approximately$285.3 million.We may
253、 be unable to continue to implement our growth strategy,and our strategy ultimately may beunsuccessful.Asignificant portion ofourgrowthinrevenues hasresulted from,andisexpected tocontinue toresultfrom,the acquisition of businesses complementary to our own.We engage in evaluations of potential acquis
254、itionsand are in various stages of discussion regarding possible acquisitions,certain of which,if consummated,could besignificant to us.Any new acquisition could result in material transaction expenses,increased interest andamortization expense,increased depreciation expense and increased operating
255、expense,any of which could havea material adverse effect on our operating results.Certain businesses that we acquire may not have adequatefinancial,disclosure,regulatory,quality or other compliance controls at the time we acquire them.As we grow byacquisition,we must manage and integrate the new bus
256、inesses to bring them into our systems for financial,disclosure,compliance,regulatory and quality control,realize economies of scale,and control costs.In addition,acquisitions involve other risks,including diversion of management resources otherwise available for ongoingdevelopment of our business a
257、nd risks associated with entering markets in which our marketing and sales force haslimited experienceorwhereexperienced distributionalliances arenotavailable.Ourfutureprofitability willdependin part upon our ability to develop further our resources to adapt to these new products or business areas a
258、nd toidentify and enter into or maintain satisfactory distribution networks.We may not be able to identify suitableacquisition candidates in the future,obtain acceptable financing or consummate any future acquisitions.If wecannot integrate acquired operations,manage the costofprovidingourproductsorp
259、rice ourproductsappropriately,our profitability could suffer.In addition,as a result of our acquisitions of other healthcare businesses,we may besubject to the risk of unanticipated business uncertainties,regulatory and other compliance matters or legalliabilities relating to those acquired business
260、es for which the sellers of the acquired businesses may not indemnifyus,for which we may not be able to obtain insurance(or adequate insurance),or for which the indemnification maynot be sufficient to cover the ultimate liabilities.15Our future financial results could be adversely affected by impair
261、ments or other charges.Sincewe have grown through acquisitions,we had$261.9 million of goodwill and$50.0 million of indefinite-lived intangible assets as of December 31,2009.Under the authoritative guidance for determining the useful life ofintangible assets,we are required to test both goodwill and
262、 indefinite-lived intangible assets for impairment on anannual basis based upon a fair value approach,rather than amortizing them over time.We are also required to testgoodwill and indefinite-lived intangible assets for impairment between annual tests if an event occurs such as asignificant decline
263、in revenues or cash flows for certain products,or we experience a significant change in discountrates used in the calculations of discounted cash flow,or circumstances change that would more likely than notreduce our enterprise fair value below its book value.If such a decline,rate change or circums
264、tance were tomaterialize,we may record an impairment of these intangible assets that could be material to the financialstatements.See“Managements Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Estimates”of this report.The guidance on long-lived assets re
265、quires that we assess the impairment of our long-lived assets,includingdefinite-lived intangible assets,whenever events or changes in circumstances indicate that the carrying value maynot be recoverable as measured by the sum of the expected future undiscounted cash flows.As of December 31,2009,we h
266、ad$161.1 million of definite-lived intangible assets.Thevalue ofmedical device businessesisoftenvolatile,andthe assumptionsunderlying ourestimates made inconnection with ourassessments under theguidance may change asaresult ofthat volatility orother factors outsideour control and may result in impai
267、rment charges.The amount of any such impairment charges could be significantand could have a material adverse effect on our reported financial results for the period in which the charge is takenand could have an adverse effect on the market price of our securities,including the notes and the common
268、stockinto which they may be converted.Current economic conditions may adversely affect the ability of hospitals,other customers,suppliers anddistributors to access funds or otherwise have available liquidity,which could reduce orders for our prod-ucts or interrupt our production or distribution or r
269、esult in a reduction in elective and non-reimbursedoperative procedures.Current economic conditions may adversely affect the ability of hospitals and other customers to access fundsto enable them to fund their operating and capital budgets.As a result,hospitals and other customers may reducebudgetso
270、rputall orpart oftheir budgetsonholdorclose their operations,whichcould haveanegativeeffect onoursales,particularly the sales of more expensive capital equipment such as our ultrasonic surgical aspirators,neuromonitors and stereotactic products,or result in a reduction in elective and non-reimbursed
271、 procedures.The disruption in the global financial markets and the economic downturn may adversely impact theavailability and cost of credit.Ourabilitytorefinanceourindebtednessandtoobtainfinancingforacquisitionsorothergeneralcorporateandcommercial purposes will depend on our operating and financial
272、 performance and is also subject to prevailingeconomicconditionsandtofinancial,businessandotherfactorsbeyondourcontrol.Inthefallof2008,globalcreditmarkets and the financial services industry experienced a period of unprecedented turmoil characterized by thebankruptcy,failure or sale of various finan
273、cial institutions,a general tightening of credit,and an unprecedentedlevel of market intervention from the United States and other governments.To market our products under development we will first need to obtain regulatory approval.Further,if wefail to comply with the extensive governmental regulat
274、ions that affect our business,we could be subject topenalties and could be precluded from marketing our products.Asa manufacturer and marketer of medical devices,we are subject to extensive regulation by the FDA and theCenterforMedicareServicesoftheU.S.DepartmentofHealthandHumanServicesandotherfeder
275、al governmentalagencies and,in some jurisdictions,by state and foreign governmental authorities.These regulations govern theintroduction of new medical devices,the observance of certain standards with respect to the design,manufacture,testing,labeling,promotion andsales ofthe devices,the maintenance
276、 ofcertain records,the ability to track devices,16the reporting of potential product defects,the import and export of devices and other matters.We are facing anincreasing amount ofscrutinyandcompliance costsasmore states areimplementing regulations governing medicaldevices,pharmaceuticals and/or bio
277、logics which affect many of our products.As a result,we have beenimplementing additional procedures,controls and tracking and reporting processes,as well as paying additionalpermit and license fees,where required.Our products under development are subject to FDA approval or clearance prior to market
278、ing for commercialuse.The processofobtaining necessary FDAapprovals orclearances can take years andis expensive and uncertain.The FDA has announced that it is reviewing the 510(k)Premarket Notification process,and there may berequirements for more extensive testing and/or clinical trials required fo
279、r products cleared to market under the510(k)process.The FDA may also require the more extensive PMA process for certain products.Our inability toobtain required regulatory approval on a timely or acceptable basis could harm our business.Further,approval orclearance may place substantial restrictions
280、 onthe indications for which the product may be marketed ortowhomitmay be marketed,warnings that may be required to accompany the product or additional restrictions placed on thesale and/or use of the product.Further studies,including clinical trials and FDA approvals,may be required to gainapproval
281、 for the use of a product for clinical indications other than those for which the product was initiallyapproved or cleared or for significant changes to the product.These studies could take years to complete and couldbe expensive,and there is no guarantee that the results will convince the FDA to ap
282、prove or clear the additionalindication.Any negative outcome in our clinical trials,including as a result of any interim analysis which we maydo with respect to our clinical trials from time to time,could adversely affect our ability to launch new products,which could affect our sales and our abilit
283、y to achieve reimbursement for new or existing products.In addition,forproducts with an approved PMA,the FDA requires annual reports and may require post-approval surveillanceprograms and/or studies to monitor the products safety and effectiveness.Results of post-approval programs maylimit or expand
284、 the further marketing of the product.We are also seeing third-party intermediaries require clinicaltrial data for products cleared through the 510(k)process in order to continue reimbursement coverage.Theseclinical trials could take years to complete and be expensive and there is no guarantee that
285、the FDAwill approve theadditional indications for use.There is also no guarantee that the intermediaries will agree to continue reim-bursement or provide additional coverage based upon these clinical trials.If the FDA does not approve theadditional indications for use,our ability to obtain reimburse
286、ment for these products and our ability to competeagainst alternative products or technologies could suffer and,consequently,affect our sales.Another risk ofapplication to the FDArelates to the regulatory classification of new products or proposed newuses for existing products.In the filing of each
287、application,we make a judgment about the appropriate form andcontent of the application.If the FDA disagrees with our judgment in any particular case and,for example,requiresusto file a PMAapplication rather than allowingusto market for approved useswhilewe seek broader approvals orrequires extensiv
288、e additional clinical data,the time and expense required to obtain the required approval might besignificantly increased or approval might not be granted.Our manufacturing facilities must be in compliance with FDA Quality System Regulations(Good Manu-facturing Practices).In addition,approved product
289、s are subject to continuing FDA requirements relating to qualitycontrol and quality assurance,maintenance of records,reporting of adverse events and product recalls,documen-tation,and labeling and promotion of medical devices.For example,some of our orthobiologics products aresubject to FDA and cert
290、ain state regulations regarding human cells,tissues,and cellular or tissue-based products,which include requirements for establishment registration and listing,donor eligibility,current good tissuepractices,labeling,adverse-event reporting,and inspection and enforcement.Some states have their own ti
291、ssuebankingregulation.Wearelicensed orhavepermitsasatissuebankinCalifornia,Florida,NewYorkandMaryland.In addition,tissue banks may undergo voluntary accreditation by the AATB.The AATB has issued operatingstandards for tissue banking.Compliance with these standards is a requirement in order to become
292、 a licensedtissue bank.The FDA and foreign regulatory authorities require that our products be manufactured according to rigorousstandards.These andfuture regulatory requirements couldsignificantly increase ourproduction orpurchasing costsand could even prevent us from making or obtaining our produc
293、ts in amounts sufficient to meet market demand.Ifwe ora third-party manufacturer change ourapproved manufacturing process,the FDAmay require a newapprovalbefore that process may be used.Failure to develop our manufacturing capability could mean that,even if we were17to develop promising new products
294、,we might not be able to produce them profitably,as a result of delays andadditional capital investment costs.All of our manufacturing facilities,both international and domestic,are also subject to inspections by or underthe authority of the FDA and other regulatory agencies.Failure to comply with a
295、pplicable regulatory requirementscould subject us to issuance of Form 483 observations,warning letters or enforcement action by the FDA or otheragencies,including product seizures,recalls,withdrawal of clearances or approvals,restrictions on or injunctionsagainst marketing our product or products ba
296、sed on our technology,cessation of operations and civil and criminalpenalties,any of which could materially affect our business.Weare alsosubjecttotheregulatoryrequirements ofcountries outsidethe UnitedStateswherewedobusiness.For example,under the European Union Medical Device Directive,all medical
297、devices must meet the MedicalDevice Directive standards in order to obtain CE Mark Certification prior to marketing in the EU.CE MarkCertification requires a comprehensive Quality System program,comprehensive technical and clinical documen-tation anddata onthe product,whichaNotifiedBodyintheEUreview
298、s.Inaddition,wemustbecertifiedtothe ISO13485:2003 Quality System standards and maintain this certification in order to market our products in the EU,Canada,Japan,Latin America,countries in the Asia-Pacific region and most other countries outside the UnitedStates.Additionally,the EU has revised the M
299、edical Device Directive(93/42/EC as amended by 200747/EC)andthese revised regulations are effective March 21,2010.Compliance with these regulations requires extensivedocumentation,clinical reports for all of our products sold in the EU,as well as revisions to labeling and otherrequirements to comply
300、 with the revisions.Compliance with these regulations will be costly and are mandatory inorder to market ourproducts in the EU.Manyother countries have instituted newmedical device regulations and/orrevised current medical device regulations.These regulations often require extensive documentation,in
301、cludingclinical data and may require audits of our manufacturing facilities in order to gain approval to sell our products inthat country.There are also associated fees with these new regulations.These regulations are required for all newproducts and re-registration of our medical devices,and may in
302、volve lengthy and expensive reviews.Our products that contain human derived tissue,including those containing de-mineralized bone matrices,arenot medical devices in the EU as defined in the Medical Device Directive(93/42/EC).They are also not medicinalproducts as defined in Directive 2001/83/EC.Toda
303、y,regulations,if applicable,differ from one EU member state tothe next.Because of the absence of a harmonized regulatory framework and the proposed regulation for advancedtherapy medicinal products in the EU,as well as for other countries,the approval process for human-derived cell ortissue based me
304、dical products may be extensive,lengthy,expensive,and unpredictable.Among others,some of ourorthobiologics products are subject to European Union member states regulations that govern the donation,procurement,testing,coding,traceability,processing,preservation,storage,and distribution of human tissu
305、es andcells and cellular or tissue-based products.These European Union member statesregulations include requirementsforregistration,listing,labeling,adverse-event reporting,andinspection andenforcement.SomeEUmember stateshave their own tissue banking regulations.Certain of our products contain mater
306、ials derived from animal sources and may become subject to addi-tional regulation.Certain ofourproducts,including ourdermal regeneration products,duraplastyproducts,biomaterial productsfor the spine,nerve and tendon repair products and certain other products,contain material derived from bovinetissu
307、e.Products that contain materials derived from animal sources,including food,pharmaceuticals and medicaldevices,are increasingly subject to scrutiny in the media and by regulatory authorities.Regulatory authorities areconcerned about the potential for the transmission of disease from animals to huma
308、ns via those materials.Thispublic scrutiny has been particularly acute in Japan and Western Europe with respect to products derived fromanimal sources,because of concern that materials infected with the agent that causes bovine spongiformencephalopathy,otherwise known as BSE or mad cow disease,may,i
309、f ingested or implanted,cause a variantof the human Creutzfeldt-Jakob Disease,an ultimately fatal disease with no known cure.Cases of BSE in cattlediscovered in Canada and the United States have increased awareness of the issue in North America.We take care to provide that our products are safe and
310、free of agents that can cause disease.In particular,wehave qualified our source of collagen from a country outside the United States that is considered BSE-free.The18World Health Organization classifies different types of cattle tissue for relative risk of BSE transmission.Deepflexor tendon is in th
311、e lowest-risk categories for BSE transmission(the same category as milk,for example),and istherefore considered to have a negligible risk of containing the agent that causes BSE(an improperly folded proteinknown as a prion).Nevertheless,products that contain materials derived from animals,including
312、our products,maybecome subject to additional regulation,or even be banned in certain countries,because of concern over thepotential for the transmission of prions.Significant new regulation,or a ban of our products,could have a materialadverse effect on our current business or our ability to expand
313、our business.Certain countries,such as Japan,China,Taiwan and Argentina,have issued regulations that require ourcollagen products be processed from bovine tendon sourced from countries where no cases of BSE have occurred,and the European Union has requested that our dural replacement products and ot
314、her products that are used inneurological tissue be sourced from bovine tendon sourced from a country where no cases of BSE have occurred.Currently,wepurchaseourtendonfromtheUnitedStatesandNewZealand.WereceivedapprovalintheEU,Japan,Taiwan,China and Argentina for the use of New Zealand-sourced tendon
315、 in the manufacturing of our products.Ifwe cannot continue to use or qualify a source of tendon from New Zealand or another country that has never had acase of BSE,we will not be permitted to sell our collagen products in certain countries.Certain of our products are derived from human tissue and ar
316、e subject to additional regulations andrequirements.We manufacture medical devices derived from human tissue(demineralized bone tissue).The FDA hasspecific regulations governing human cells,tissuesand cellular and tissue-based products,orHCT/Ps.AnHCT/Pisa product containing or consisting of human ce
317、lls or tissue intended for transplantation into a human patient.Examples include bone,ligament,skin and cornea.Some HCT/Ps also meet the definition of a biological product,medical device or drug regulated under theFFDCA.Section 361 of the PHSAauthorizes the FDA to issue regulations to prevent the in
318、troduction,transmissionor spread of communicable disease.HCT/Ps regulated as“361”HCT/Ps are subject to requirements relating toregistering facilities and listing products with FDA,screening and testing for tissue donor eligibility,Good TissuePractice,or GTP,when processing,storing,labeling,and distr
319、ibution HCT/Ps,including required labelinginformation,stringent record keeping;and adverse event reporting.These biologic,device or drug HCT/Ps mustcomply both with the requirements exclusively applicable to 361 HCT/Ps and,in addition,with requirementsapplicable to biologics,devices or drugs,includi
320、ng premarket clearance or approval.Some states have their own tissue banking regulation.We are licensed or have permits as a tissue bank inCalifornia,Florida,New York and Maryland.In addition,tissue banks may undergo voluntary accreditation by theAmerican Association of Tissue Banks,or the AATB.The
321、AATB has issued operating standards for tissue banking.Compliance with these standards is a requirement in order to become a licensed tissue bank.In the EU,regulations,if applicable,differ from one EU member state to the next.Because of the absence of aharmonized regulatory framework and the propose
322、d regulation for advanced therapy medicinal products in the EU,as well as for other countries,the approval process for human derived cell or tissue based medical products may beextensive,lengthy,expensive,and unpredictable.Among others,some of our orthobiologics products are subject toEuropean Union
323、 member states regulations that govern the donation,procurement,testing,coding,traceability,processing,preservation,storage,and distribution of human tissues and cells and cellular or tissue-based products.These European Union member states regulations include requirements for registration,listing,l
324、abeling,adverse-event reporting,and inspection and enforcement.Some EU member states have their own tissue bankingregulations.Lack of market acceptance for our products or market preference for technologies that compete with ourproducts could reduce our revenues and profitability.We cannot be certai
325、n that our current products or any other products that we may develop or market willachieve or maintain market acceptance.Certain of the medical indications that can be treated by our devices canalso be treated by other medical devices or by medical practices that do not include a device.The medical
326、community widely accepts many alternative treatments,and certain of these other treatments have a long history of19use.Forexample,theuseofautograft tissueisawell-established meansforrepairingthedermis,anditcompetes foracceptance in the market with the Integra Dermal Regeneration Template.Wecannotbec
327、ertainthatourdevicesandprocedureswillbeabletoreplace thoseestablishedtreatmentsorthateither physicians or the medical community in general will accept and utilize our devices or any other medicalproducts that we may develop.For example,market acceptance of our bone graft substitutes will depend on o
328、urability to demonstrate that our bone graft substitutes and technologies are an attractive alternative to existingtreatment options.Additionally,ifthere are negativeeventsintheindustry,whetherreal orperceived,there couldbea negative impact on the industry as a whole.For example,we believe that some
329、 in the medical community havelingering concerns over the risk of disease transmission through the use of natural bone graft substitutes.In addition,our future success depends,in part,on our ability to develop additional products.Even if wedetermine that a product candidate has medical benefits,the
330、cost of commercializing that product candidate couldbe too high tojustify development.Competitors could develop productsthat are more effective,achieve ormaintainmore favorable reimbursement status from third-party payors,including Medicare,Medicaid and third-party healthinsurance,cost less or are r
331、eady for commercial introduction before our products.If we are unable to developadditional commercially viable products,our future prospects could be adversely affected.Market acceptance of our products depends on many factors,including our ability to convince prospectivecollaborators and customers
332、that our technology is an attractive alternative to other technologies,to manufactureproducts in sufficient quantities and at acceptable costs,and to supply and service sufficient quantities of ourproducts directly or through our distribution alliances.In addition,unfavorable reimbursement methodolo
333、gies,oradverse determinations of third-party payors,including Medicare,Medicaid and third-party health insurance,against our products or third-party determinations that favor a competitors product over ours,could harmacceptance or continued use of our products.The industry is subject to rapid and continuous change arisingfrom,among other things,consolidation,technological improvements,the pressure
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