Three surgeons on Thursday recommended against implanting a certain Zimmer Holdings Inc. (ZMH) replacement knee product because of "unacceptably high" rates of loosening and corrective surgery.

Their report, issued at the American Academy of Orthopaedic Surgeons' conference in New Orleans, weighed on Zimmer's shares, sending them down 3.1% on the day to $57.03. The news also follows talk at the conference of problems with all-metal replacement hips, although Zimmer--the biggest player in the $11 billion replacement-joint market--has less exposure there.

Zimmer didn't have immediate comment on the knee issue late Thursday.

On that front, the surgeons cited issues with Zimmer "NexGen" knees, including a component that attaches to the bottom of the thighbone without any cement to glue it in place.

Among 108 knees operated on and analyzed after two years, 9% had to have revision surgery, and many more had loosening that likely needs surgery, said Richard Berger, a study author and surgeon at Rush University Medical Center in Chicago, in an interview.

He called the revision rate "horrific" said he's now looking into problems with Zimmer knees that do use cement. The components in question are known as "high flex" knee parts, Berger said.

According to Berger, he and other surgeons have raised this issue with the company, and he doesn't feel Zimmer has been responsive. "We told them they should pull it from the market," Berger said.

All the surgeries in the study were conducted in 2005 by either Berger or Craig Della Valle, also at Rush. The hospital is a major Zimmer customer, and both Berger and Della Valle are high-volume surgeons there. They wrote the paper with Hany Bedair, a surgeon who formerly worked with them and now practices at Newton Wellesley Hospital outside Boston.

Berger stressed that these aren't errors in technique and that the issue "was related to the implant design itself."

Deutsche Bank analyst Tao Levy said this could be a "potentially significant issue" for Zimmer and also a positive for rivals Stryker Corp. (SYK) and Johnson & Johnson (JNJ).

The orthopedics conference has also featured scrutiny of so-called "metal-on-metal" hip implants, which use metal surfaces on both the ball and socket portions, amid some safety concerns. These aren't new concerns to surgeons, but they have been aired out in recent news reports, and analysts indicated Thursday that doctors will ramp back on using these parts.

The metal hips are popular for perceived durability, but doctors also have hips with ceramic and plastic surfaces at their disposal. Because of this, the impact may be muted for companies that make alternatives and can retain the business, although product price differences could come into play.

Small Wright Medical Group Inc. (WMGI) relies the most on metal-on-metal hips, analysts said. The company's stock slipped 4% to $16.06 Thursday.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com
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