Contents:

LIST OF EXHIBITS III EXECUTIVE SUMMARY ES-1 METHODOLOGY M-1 1.0 INTRODUCTION 1 1.1 Anatomy of the Human Spine 1 1.1.1 Degenerative Spinal Disorders 3 1.1.2 Deformity Spinal Disorders 5 1.1.3 Trauma/Tumor Spinal Disorders 7 1.1.4 Treatment Options 7 1.1.5 Spinal Fusion 9 1.2 Cervical Fusion Devices 11 1.3 Thoracolumbar Fusion Devices 13 1.4 Interbody Fusion Devices 15 1.4.1 Implant Material 15 1.4.2 Surgical Approach 17 1.5 Nonfusion Devices 19 1.5.1 Artificial Disc Overview 19 1.5.2 Dynamic Stabilization Overview 20 1.5.3 Nuclear Disc Prosthesis Overview 20 2.0 CANADIAN SPINAL IMPLANT MARKET 22 2.1 Market Overview 22 2.2 Canadian Health Care System 23 2.2.1 Health Care Provision 24 2.2.2 Health Care Funding 24 2.2.3 Health Care Expenditure 25 2.3 Medical Devices in Canada 26 2.3.1 Market Forecast 27 2.3.2 Market Drivers and Limiters 31 2.3.2.1 Market Drivers 31 2.3.2.2 Market Limiters 35 2.4 Competitive Analysis 38 3.0 TRADITIONAL THORACOLUMBAR IMPLANT MARKET 43 3.1 Market Overview 43 3.2 Market Analysis 44 3.2.1 Procedures 44 3.2.2 Market Forecast 47 3.3 Competitive Analysis 51 4.0 TRADITIONAL CERVICAL IMPLANT MARKET 52 4.1 Market Overview 52 4.2 Market Analysis 53 4.2.1 Procedures 53 4.2.2 Market Forecast 56 4.3 Competitive Analysis 60 5.0 INTERBODY DEVICE MARKET 61 5.1 Market Overview 61 5.2 Market Analysis 62 5.2.1 Procedures 62 5.2.2 Market Forecast 66 5.3 Competitive Analysis 70 6.0 NONFUSION IMPLANT MARKET 71 6.1 Market Overview 71 6.2 Market Analysis 72 6.2.1 Procedures 72 6.2.1.1 Artificial Disc Procedures 72 6.2.1.2 Dynamic Stabilization Procedures 72 6.2.2 Market Forecast 75 6.2.2.1 Artificial Disc Market Forecast 75 6.2.2.2 Dynamic Stabilization Market Forecast 75 6.3 Competitive Analysis 79 MRG ACRONYMS AND INITIALISMS 80 MRG List of Exhibits EXECUTIVE SUMMARY Exhibit ES-1: Spinal Implant Market, by Segment, Canada, 2005 and 2010 ES-1 Exhibit ES-2: Drivers and Limiters of the Canadian Spinal Implant Market ES-2 Exhibit ES-3: Traditional Thoracolumbar Market, by Segment (US$), 2004– ES-3 Exhibit ES-4: Interbody Device Market, Segmented by Device, 2004–2010 ES-4 Exhibit ES-5: Leading Competitors in the Spinal Implant Market, Canada, ES-5 METHODOLOGY Exhibit M-1: Currency Exchange Rates, 2005 M-3 CHAPTER 1: INTRODUCTION 1 Exhibit 1-2: The Vertebral Bodies and Vertebral Discs of the Spine 2 3 6 Exhibit 1-5: Instrumented Spinal Fusion Procedure Classification 10 Exhibit 1-6: Cervical Fusion Device Classification 12 18 Exhibit 1-8: Primary Objectives of Artificial Disc Replacement 19 Exhibit 1-9: General Contraindications of Artificial Disc Replacement 20 CHAPTER 2: CANADIAN SPINAL IMPLANT MARKET Exhibit 2-1: Spinal Implant Market, by Segment (US$), Canada, 2004–2010 22 Exhibit 2-2: Source of Funding for the Canadian Health Care System, 2005 24 Exhibit 2-3: Canadian Health Care Expenditures, by Area, 2005 25 Exhibit 2-4: Instrumented Spinal Procedures, by Segment, Canada, 2004– 29 Exhibit 2-5: Spinal Implant Market, by Segment, Canada (US$) and (CAD$), 30 Exhibit 2-6: Drivers and Limiters of the Canadian Spinal Implant Market 31 Exhibit 2-7: Over-65 As a Portion of the Total Population, Canada, 2006– 32 Exhibit 2-8: Over-65 as a Portion of the Total Population, Canada, 2006– 32 Exhibit 2-9: Selected Spinal Implant Material Developments 34 Exhibit 2-10: Comparison of Total Annual Costs for a Model Medical Device 39 Exhibit 2-11: Proportion of the Population with a Post-Secondary Degree 39 Exhibit 2-12: Leading Competitors in the Spinal Implant Market, by Device 40 CHAPTER 3: TRADITIONAL THORACOLUMBAR IMPLANT MARKET Exhibit 3-1: Spinal Implant Market, by Segment, Canada (US$), 2004–2010 43 Exhibit 3-2: Instrumented Thoracolumbar Fusion Procedures, by 45 Exhibit 3-3: Traditional Instrumented Thoracolumbar Fusion Procedures, by 46 Exhibit 3-4: Traditional Instrumented Thoracolumbar Fusion Market, by 48 Exhibit 3-5: Traditional Instrumented Thoracolumbar Fusion Market, by 49 Exhibit 3-6: Traditional Instrumented Thoracolumbar Fusion Market 50 Exhibit 3-7: Leading Competitors in the Traditional Thoracolumbar Implant 51 CHAPTER 4: TRADITIONAL CERVICAL IMPLANT MARKET Exhibit 4-1: Traditional Cervical Implant Market, Canada, (US$), 2004–2010 52 Exhibit 4-2: Instrumented Cervical Fusion Procedures, by Instrumentation, 54 Exhibit 4-3: Instrumented Cervical Fusion Procedures, by Approach, 55 Exhibit 4-4: Traditional Instrumented Cervical Fusion Market, by Approach, 57 Exhibit 4-5: Traditional Instrumented Cervical Fusion Market, by Approach, 58 Exhibit 4-6: Traditional Instrumented Cervical Fusion Market Growth, by 59 Exhibit 4-7: Leading Competitors of the Traditional Cervical Implant Market, 60 CHAPTER 5: INTERBODY DEVICE MARKET Exhibit 5-1: IBD Market, by Segment, Canada (US$), 2004–2010 61 Exhibit 5-2: IBD Procedures, by Region of the Spine, Canada, 2004–2010 64 Exhibit 5-3: Lumbar IBD Procedures, by Device, Canada, 2004–2010 65 Exhibit 5-4: IBD Market, by Device, Canada (US$), 2004–2010 67 Exhibit 5-5: IBD Market, by Device, Canada (CAD$), 2004–2010 68 Exhibit 5-6: IBD Market Growth, by Device, Canada, 2005–2010 69 Exhibit 5-7: Leading Competitors of the IBD Market, Canada, 2005 70 CHAPTER 6: NONFUSION IMPLANT MARKET Exhibit 6-1: Nonfusion Implant Market, as a % of Total, by Segment, Canada 71 Exhibit 6-2: Nonfusion Procedures, by Device, Canada, 2004–2010 74 Exhibit 6-3: Nonfusion Market, by Device, Canada (US$), 2004–2010 76 Exhibit 6-4: Nonfusion Market, by Device, Canada (CAD$), 2004–2010 77 Exhibit 6-5: Nonfusion Market Growth, by Device, Canada, 2004–2010 78 Exhibit 6-6: Leading Competitors in the Nonfusion Market, by Segment, 79 Exhibit 6-7: Nonfusion Devices, by Company, Canada, 2006 79

Methodology

Research Methodology The following report uses a number of methodologies to gather and present data and analysis. At the outset, a large survey of secondary sources is conducted. These sources act as the basis for the primary-research stage, which builds and enhances the quantitative and qualitative attributes of the early research. Secondary sources include: Government Sources: - Securities and Exchange Commission filings - Food and Drug Administration and patent filings - National Center for Health Statistics data Spinal Implant Companies: - Annual reports, product brochures, corporate profiles, etc. Internal Databases and Reports: - Previous reports on similar/related sources General Internet Searches, Medical Literature and Newspaper/Magazine Searches: - Identifying various centers of specialization and articles that might provide leads for primary research. The secondary research stage builds the foundation for the primary research. The primary research methodology has four steps: Step 1: The first step involves an impartial scan of all the information gathered during the secondary research stage to determine its utility based on the specific requirements of this report. Each piece of information is, thus, either discarded or marked as high or low priority. It is then organized appropriately as determined by the structure and sectioning of the report. Step 2: At this stage, early assumptions are formed as to the implications of the information for the various spinal implant market segments. These assumptions are then used to determine hypotheses using both inductive and deductive approaches. On the quantitative front, these hypotheses result in full historical and projected market data sets (market sizes [units and US$] and market shares). Step 3: At this stage, the research is in position for its most important primary phase—expert interviews. Throughout the secondary research, industry and medical experts are identified. These experts are now contacted by telephone and asked to participate in interviews on recent trends and developments in the industry. Interviews are either conducted at the time of the initial call or scheduled at the convenience of the expert. Interview questions are tailored to the expertise of the particular interviewee, although in most cases, the most important questions are asked of all experts. The questions are largely based on the assumptions and hypotheses developed in Step 2, which are then either augmented, discarded, or adjusted based on the views and positions put forth. Attempts are made, whenever possible, to cross-check the views of various experts against each other and reach positions of consensus on issues and market numbers. Step 4: The final stage of the primary research stage involves individual and group analysis by Millennium Research Group. All research results are assessed and cross-checked thoroughly to determine their validity, relevance, and weight. From this process, qualitative conclusions are reached and data points finalized. Forecast Methodology In addition to Steps 1 through 4 (as outlined above), the following “bottom-up” methodology was followed in developing forecast assumptions for this report. A comprehensive breakdown of various spinal implant procedures was prepared using data from several sources including professional associations, government statistics, and private research/media sources. Industry experts and practitioners were consulted to ensure accuracy and verify observed trends. As a cross-check, total industry revenues available through 10Ks and other sources were compared against modeled industry revenues. Using the best estimates of industry experts, practitioners, private research/media sources and in-house experts, year-by-year growth rates, and average prices, were applied individually to each subcategory to derive forecasts. These estimates were cross-checked by industry experts (marketing managers, product managers, CEOs, etc.) and further refined. Overall findings were compared against market and procedure forecasts published by other sources to ensure reasonable estimates.