54 • ODT odtmag.com July/August 2014
4. Smith & Nephew
Olivier Bohuon, CEO
Mike Frazzette, President, Advanced Surgical Devices
Glenn Warner, President, Advanced Wound Management
Gordon Howe, President, Global Operations
Cyrille Petit, Chief Corporate Development Officer
Arjun Rajaratnam, Chief Compliance Officer
Brad Cannon, President, Endoscopy, Trauma & Extremities
Gaurav Agarwal, President, Orthopedic Reconstruction
David Kelman, VP, Hip Development
Laura Whitsitt, Sr. VP, Research & Emerging Technologies
David Hoffman, Sr. VP, Emerging Business Group
NO. OF EMPLOYEES: 12,024
HEADQUARTERS: London, the United Kingdom
Many companies, first time out of the proverbial gate with a new product may find success, but divine provi- dence won’t sustain growth for long. It takes a plan, a
formula, a roadmap—call it what you like. In the long-term, success doesn’t just happen. It’s planned for.
The“plan” (both in the short term—i.e., the most recent full
fiscal year—and farther down the road) for orthopedic heavyweight Smith & Nephew plc for FY13 (ended Dec. 31) was a
healthy mix of new product introductions (stoked by a robust
R&D pipeline) plus the promise of emerging-growth areas such
as the BRIC countries (Brazil, Russia, India and China).
According to the report from consulting company Deloitte
called its“2014 global healthcare outlook,” as the U.S. and European markets level out—especially in the large-joint markets—
over the next five years, the Asia-Pacific market is expected to be
the fastest-growing region in the world for orthopedic devices.
The Deloitte report highlighted healthcare spending in emerging
Middle East and Asian marketplaces. Middle Eastern countries
are expected to see a 10 percent increase in healthcare spending while China and India are expected to see a 14 percent and
17 percent growth, respectively, due to fast-growing populations
and expanded access to healthcare.
During the fiscal year, Smith & Nephew’s emerging and international market sales grew 18 percent to $563 million, comprising
13 percent of the company’s revenue (up from 8 percent in 2010).
By contrast, established markets grew 2 percent to $3.8 billion.
China, for example, is now Smith & Nephew’s sixth-largest
global market, and delivered revenue growth of more than 30
percent in 2013. To meet growing demand in that market, the
company opened an extension of its Advanced Wound Manage-
ment unit’s manufacturing facility in Suzhou, China, more than
doubling the size of the facility (totaling 291,000 square feet) and
doubling output capacity.
The company made key purchases in growth markets—
distributors and manufacturers.
Smith & Nephew acquired the Brazilian distribution of its
wound care products from Politec Saúde for an undisclosed
amount. Politec Saúde, was the exclusive distributor of Smith &
Nephew’s Advanced Wound Management (AWM) products in
Brazil, and derived about one-quarter of its overall revenues from
advanced wound management sales. Smith & Nephew also purchased Brazilian distribution partner Pró Cirurgia Especializada.
“Being closer to the customer is at the heart of our emerging
markets strategy. Brazil is a long-term opportunity and this is an
important investment which creates a significant platform from
which we can grow,” said CEO Olivier Bohuon.
Bouhon’s international shopping spree also included targets in
India—Adler Mediequip Pvt Ltd. and with it, the brands and assets of Sushrut Surgicals Pvt Ltd., which makes orthopedic trauma
products in India for the Indian market. The financial terms of the
deal were not disclosed. The move was Smith & Nephew’s entry
point into India, which has a growing trauma segment.
“Through this important acquisition we are continuing to deliver on our strategic priorities to build leadership positions in the
emerging markets, to supplement our organic growth through
acquisitions, and to bring forward a mid-tier offering for these regions,” said Bohuon.“Sushrut-Adler has a long and distinguished
history, a reputation for quality products and a loyal customer
base. Its trauma portfolio strongly complements our established
positions in orthopedic reconstruction and sports medicine in India, giving us an enhanced platform from which to continue to
build a sustainable business.”
Products include primarily trauma implants and instrumentation, but the companies also have spine and limb salvage portfolios.
In addition, the company bought the distribution arm of its
orthopedic reconstruction, trauma and sports medicine products
in Turkey from Plato Group for an undisclosed amount.
For FY13, research and development represented 5. 3 percent of
Smith & Nephew’s revenue—a healthy increase of 35 percent to
$231 million from $171 million in 2012.
The company’s big-ticket product launch was the Journey II
Bi-Cruciate Stabilized (BCS) total knee system from the company’s Advanced Surgical Devices (ASD) sector. It is the second
generation of the Journey knee product.
“The Journey II BCS knee takes knee performance beyond the
current standards for fit and alignment and gives patients the complex motion, strength and stability of a human knee,” said Gaurav
Agarwal, president of Smith & Nephew’s joint reconstruction
business. “You don’t have to ask patients if it feels like a normal
knee—you can see it in their gait and in their post-op[eration] X-rays. We redefined knee implant function when we launched the