07.01.06
$2.4 Billion ($41.3B Total)
Key Executives:
Dudley Eustace, Chairman
Chris O’Donnell, CEO
Peter Hooley, Finance Director
Peter Arnold, Group Director of Technology
Peter Huntley, Group Director, Indirect Market
Joe Woody, President, Wound Management
Jim Taylor, President, Endoscopy
David Illingworth, President, Orthopedics
No. of Employees: 8,618
World Headquarters: London, United Kingdom
From its humble beginnings as a small pharmaceutical chemist shop in Hull, England, Smith & Nephew has grown into one of the largest orthopedic device manufacturers in the world with 2005 revenues of $2.4 billion, a 12% increase over 2004. Not surprisingly, the largest growth in 2005 stemmed from the orthopedic segment, with revenues growing 18% to $1.28 billion.
Along with the rest of the orthopedic industry facing healthcare budget restraints in the United States and abroad, Smith & Nephew has been showing some signs of a slowdown this year, though. Gains for the first quarter of 2006 were only single-digit percentages—in fact, overall sales were flat with only a 2% increase over the first quarter of 2005. In early 2006, the company segmented its orthopedic business into two separate global units—orthopedic reconstruction and orthopedic trauma—to further enhance orthopedic segment growth. In addition to generalized industry trends, the company attributed the sales lag to the orthopedic sales force restructuring. However, Smith & Nephew expects numbers to turn around by the second half of 2006 with numerous product launches on tap.
In 2005, the double-digit growth was bolstered by numerous product launches. In November, the orthopedic segment launched the Legion Revision Knee System, which employs the company’s exclusive Oxinium technology (a substance with the strength of metal and wear resistance of ceramic) and is expected to produce increased revenues in 2006.
Additionally, the PERI-LOC Periarticular Locked Plating System and Mobilab mobile surgical training facility for orthopedic surgeons were introduced.
Last year also saw two important approvals for Smith & Nephew, the most prominent of which later caused a relatively unknown man from Belleville, IL to go down in the annals of orthopedic history. On June 5, 2006, Rick Jones, 52, became the first recipient of Smith & Nephew’s Birmingham Hip Resurfacing technology. Since then, 20 more patients have had the procedure, and now that the technology has been approved by the FDA for use in the United States, the company expects the number of procedures here to increase by as much as 80% in the next 25 years. This expectation is in line with a Goldman Sachs Global Investment market estimate of $400 million in the United States by 2010.
In other regions, the Stride Porous Hip Stern and Genesis II minimally invasive tibial base plates received approval in Japan, the second largest orthopedic market in the world. Additionally, the acquisition of Leading Kabushiki Kaisah (“Leading Medical”), an orthopedic distributor in Japan, is expected to enable Smith & Nephew to double its sales force in that market.
The Endoscopy segment also contributed gains to the company’s bottom line. Posting revenues of $6 million, a 9% increase from 2004, this segment launched numerous products during 2005, most notably the 400 Series Camera system, the Dyonics 25 Fluid Management System and the Accu-pass Suture Shuttle. After a patent dispute with ArthroCare, Inc. was resolved, Smith & Nephew was able to resume selling its Dyonics Electroblade Resector and the Saphyre Bipolar Ablation Probe products.
Regulatory approvals for the Endoscopy segment included the Calaxo absorbable osteoconductive interference screw, the Glider Articular Cartilage radio frequency probe and the Condor Controller, which centralizes control of medical and audio-visual equipment in the operating room.
The Advanced Wound Management segment, while not as productive as other units, still produced a 5% increase with $690 million. New product launches included an improved version of Allevyn hydrocellular dressings called the Allevyn Plus, Acticoat Moisture Control antimicrobial barrier dressings and Acticoat Absorbent in the European market.
After completing an acquisition in 2004 for Versajet, a fluid jet debridement system, the company was able to incorporate sales of the system into its 2005 accounting. With a new handpiece to allow faster debridement, Versajet is currently in 13 markets worldwide.
In step with Smith & Nephew’s expansion in areas of products and acquisitions, the company has contracted in other areas to remain a lean and trim operation. In August 2005, the Advanced Wound Management group announced its intention to exit tissue-engineering operations due to delays in achieving “economic viability.” Unable to find a purchaser for the operation, the operation was ceased during the first quarter of 2006 and a rationalization of $461 million was recorded in 2005.
Additionally, in August 2005, Smith & Nephew—in a joint venture with Beiersdorf AG—divested BSN Medical to Montagu Private Equity for the sum of $1.7 billion. The transaction was completed this February.
While the moves are not expected to affect revenues this year, it is noteworthy that James Taylor, president of the Endoscopy division, resigned in February and Advanced Wound Management President James Dick will retire this summer.
Key Executives:
Dudley Eustace, Chairman
Chris O’Donnell, CEO
Peter Hooley, Finance Director
Peter Arnold, Group Director of Technology
Peter Huntley, Group Director, Indirect Market
Joe Woody, President, Wound Management
Jim Taylor, President, Endoscopy
David Illingworth, President, Orthopedics
No. of Employees: 8,618
World Headquarters: London, United Kingdom
From its humble beginnings as a small pharmaceutical chemist shop in Hull, England, Smith & Nephew has grown into one of the largest orthopedic device manufacturers in the world with 2005 revenues of $2.4 billion, a 12% increase over 2004. Not surprisingly, the largest growth in 2005 stemmed from the orthopedic segment, with revenues growing 18% to $1.28 billion.
Along with the rest of the orthopedic industry facing healthcare budget restraints in the United States and abroad, Smith & Nephew has been showing some signs of a slowdown this year, though. Gains for the first quarter of 2006 were only single-digit percentages—in fact, overall sales were flat with only a 2% increase over the first quarter of 2005. In early 2006, the company segmented its orthopedic business into two separate global units—orthopedic reconstruction and orthopedic trauma—to further enhance orthopedic segment growth. In addition to generalized industry trends, the company attributed the sales lag to the orthopedic sales force restructuring. However, Smith & Nephew expects numbers to turn around by the second half of 2006 with numerous product launches on tap.
In 2005, the double-digit growth was bolstered by numerous product launches. In November, the orthopedic segment launched the Legion Revision Knee System, which employs the company’s exclusive Oxinium technology (a substance with the strength of metal and wear resistance of ceramic) and is expected to produce increased revenues in 2006.
Additionally, the PERI-LOC Periarticular Locked Plating System and Mobilab mobile surgical training facility for orthopedic surgeons were introduced.
Last year also saw two important approvals for Smith & Nephew, the most prominent of which later caused a relatively unknown man from Belleville, IL to go down in the annals of orthopedic history. On June 5, 2006, Rick Jones, 52, became the first recipient of Smith & Nephew’s Birmingham Hip Resurfacing technology. Since then, 20 more patients have had the procedure, and now that the technology has been approved by the FDA for use in the United States, the company expects the number of procedures here to increase by as much as 80% in the next 25 years. This expectation is in line with a Goldman Sachs Global Investment market estimate of $400 million in the United States by 2010.
In other regions, the Stride Porous Hip Stern and Genesis II minimally invasive tibial base plates received approval in Japan, the second largest orthopedic market in the world. Additionally, the acquisition of Leading Kabushiki Kaisah (“Leading Medical”), an orthopedic distributor in Japan, is expected to enable Smith & Nephew to double its sales force in that market.
The Endoscopy segment also contributed gains to the company’s bottom line. Posting revenues of $6 million, a 9% increase from 2004, this segment launched numerous products during 2005, most notably the 400 Series Camera system, the Dyonics 25 Fluid Management System and the Accu-pass Suture Shuttle. After a patent dispute with ArthroCare, Inc. was resolved, Smith & Nephew was able to resume selling its Dyonics Electroblade Resector and the Saphyre Bipolar Ablation Probe products.
Regulatory approvals for the Endoscopy segment included the Calaxo absorbable osteoconductive interference screw, the Glider Articular Cartilage radio frequency probe and the Condor Controller, which centralizes control of medical and audio-visual equipment in the operating room.
The Advanced Wound Management segment, while not as productive as other units, still produced a 5% increase with $690 million. New product launches included an improved version of Allevyn hydrocellular dressings called the Allevyn Plus, Acticoat Moisture Control antimicrobial barrier dressings and Acticoat Absorbent in the European market.
After completing an acquisition in 2004 for Versajet, a fluid jet debridement system, the company was able to incorporate sales of the system into its 2005 accounting. With a new handpiece to allow faster debridement, Versajet is currently in 13 markets worldwide.
In step with Smith & Nephew’s expansion in areas of products and acquisitions, the company has contracted in other areas to remain a lean and trim operation. In August 2005, the Advanced Wound Management group announced its intention to exit tissue-engineering operations due to delays in achieving “economic viability.” Unable to find a purchaser for the operation, the operation was ceased during the first quarter of 2006 and a rationalization of $461 million was recorded in 2005.
Additionally, in August 2005, Smith & Nephew—in a joint venture with Beiersdorf AG—divested BSN Medical to Montagu Private Equity for the sum of $1.7 billion. The transaction was completed this February.
While the moves are not expected to affect revenues this year, it is noteworthy that James Taylor, president of the Endoscopy division, resigned in February and Advanced Wound Management President James Dick will retire this summer.