Leading medical devices maker Smith & Nephew (SNN) strengthened its portfolio with the launch of Truclear Sim Morcellation Simulator. The device, showcased at a conference in London, during September 21-24, is intended for training gynecologists who perform hysteroscopic morcellation, a procedure to remove intrauterine polyps and fibroids. It is estimated that more than 1 million women in 2011 will require treatment for abnormal uterine bleeding.
Management is confident that the introduction of the Truclear Sim Morcellation Simulator should serve as a valuable tool for increasing exposure of gynecologists to hysteroscopic morcellation. Traditional training for this procedure, using silicone uterine models, was performed in laboratories that failed to replicate conditions that might potentially arise during a procedure. Through the simulator, the gynecologist can assess performance on several parameters such as safety, pathology removal, procedure efficiency and visualization skills.
In April 2011, Smith & Nephew’s Endoscopy Division announced that its Truclear System has surpassed the milestone of 30,000 procedures. During the most recent quarter, Smith & Nephew’s three business units – Orthopedics (consisting of Reconstruction, Trauma and Clinical Therapies), Endoscopy and Advanced Wound Management – recorded revenues of $588 million (underlying growth of 4%), $231 million (up 5%) and $258 million (up 8%), respectively.
At the Endoscopy unit, revenues from the US and rest of the world increased (on an underlying basis) by 5% and 9%, respectively. However, Smith & Nephew witnessed flat growth in Europe due to the adoption of healthcare system austerity measures. The company plans to unite its Orthopedics and Endoscopy business under one unit – Advanced Surgical Devices – while Advanced Wound Management will be the second division.
Although Smith & Nephew expects to achieve above market growth in Endoscopy, the company faces challenges in the form of intense competition, price and volume pressure. Within Endoscopy business niche, the company faces competition from Hologic’s (HOLX) MyoSure tissue removal system, among others. Despite several headwinds, Smith & Nephew aims to improve its performance going forward on the back of a strong product pipeline and higher investments.
Smith & Nephew retains a Zacks #3 Rank (Hold) short term that corresponds with our Neutral long-term recommendation on the stock.
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