After dropping markedly for two consecutive years, both the number of acquisitions in medical devices and the total dollar volume of those deals jumped significantly in 2003, according to information from Windhover Information's Strategic Transactions Database of industry transactions.

J&J's aggressive moves in orthopedics has industry executives nervous, most recently about its purchases of artificial disk maker Waldemar Link and biomaterials expert Orquest. The Link valuation (J&J is paying $325 million upfront, plus earn-outs) isn't quite as high as some earlier orthopedics deals, but it is still comparatively substantial. With Link and Orquest under its roof, J&J is poised to assume market leadership in the traditional orthopedics markets and also in spine.

A conservative industry, orthopedics rarely sees a lot of acquisition activity. But a number of deals among spine companies recently underscores how hot the spine market is right now and the importance of acquisition as a strategy for realizing its potential.

The spinal orthopedics business, long focused on traditional fixation tools such as screws, dowels, cements, and more recently, interbody fusion cages, has been undergoing a slow evolution that also incorporates a biological approach to bone healing. Orthovita believes its glass/resin-based bioactive materials mimic the biology of bone healing better than previous synthetics, and that these materials can more easily incorporate biologic agents for an added bone-healing boost. Now the company faces the challenge of generating the data that will differentiate it from a host of competitors making similar claims and enable it to penetrate a market inherently slow to adopt new technology.