Leading medical devices maker Smith & Nephew (SNN) strengthened its Arthroscopy franchise with the launch of Dyonics Platinum Series Shaver Blades.The Dyonics Incisor Plus Platinum 4.5 mm Blade and Dyonics Bonecutter Platinum 5.5 mm blades are the first in the 18-blade family to incorporate the company’s Platinum technology.
The Dyonics Incisor Plus Platinum 4.5 mm Blade is designed to deal with knee procedures including anterior cruciate ligament (ACL) reconstruction and complex meniscectomies. The Bonecutter Platinum blade is designed to be used for subacromial decompression procedures in the shoulder and ACL reconstruction in the knee due to its ultra-aggressive resection of thick tissue and hard bone.
The removal of tissue, cartilage and bone is significant during any arthroscopic repair procedure. With improved precision and efficiency surgeons have higher probability of preserving the maximum amount of healthy tissue. Smith & Nephew is confident that the recently launched blades will deliver superior arthroscopic resection, debris evacuation and sharpness.
Smith & Nephew derives revenues from three business units – Orthopedics (consisting of Reconstruction, Trauma and Clinical Therapies), Endoscopy and Advanced Wound Management, the first segment contributing maximum (55%) revenues. During the most recent quarter, these units recorded revenues of $588 million (underlying growth of 4%), $231 million (up 5%) and $258 million (up 8%), respectively.
Within 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. A 6% growth was recorded at Arthroscopy with the Repair franchise showing good results, consistent with the last few quarters. Having sensed the immense potential at the Arthroscopy business, in June 2011, the company acquired Tenet Medical, the seller of patient positioning systems.
In fiscal 2011, the company expects the Repair Product sub-segment to drive the Arthroscopy unit. However, Smith & Nephew faces challenges in the form of intense competition, price and volume pressure. Despite several headwinds, Smith & Nephew aims to improve its performance going forward on the back of a strong product pipeline and steeped-up investments.
Smith & Nephew retains a Zacks #3 Rank (Hold) short term that corresponds with our Neutral long-term recommendation on the stock. The company faces stiff competition at the Arthroscopy business from Zimmer Holdings (ZMH) and Johnson & Johnson (JNJ), among others. Both Zimmer and Johnson & Johnson carry Zacks #3 ranks (Hold) along with Neutral recommendations.
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