Smith & Nephew: The Conservative Revolution
In the late 1980s, medical supply companies sought to leverage their relationships with new customers by creating a broad portfolio of diverse products. Smith & Nephew is pursuing a different tack--having spent a decade making one acquisition after another, it spent the last several years selling off most of those businesses. What remains is a company focused on products that repair tissue, in areas such as orthopedics, wound care, and endoscopy.
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Guess who was the fastest growing orthopedic implant company last year. Smith & Nephew. The boom that has characterized the orthopedics market for the past several years has been a rising tide that lifts all boats--all, that is, except Smith & Nephew. But in the last couple of years, Smith & Nephew has actually been growing faster than their larger competitors. And in an industry that will increasingly see winners and losers, Smith & Nephew believes it is positioned to be one of the winners.
While the deal between Smith & Nephew and Centerpulse may feel like the product of recent events, most notably Centerpulse's troubles, a closer look reveals the complementary nature of the two companies, showing the merger would have made sense in any case.
At an otherwise quiet American Academy of Orthopedic Surgeons meeting, the biggest news was Smith & Nephew's acquisition of pain specialist Oratec Interventions. Times have never been better in orthopedics, and the Smith & Nephew deal raises the question whether the industry is about to see a period of robust deal-making.