Smith & Nephew Eyes Acquisitions in Emerging Markets

Smith & Nephew has $1.5 billion earmarked for acquisitions, according to CEO Olivier Bohuon. The company is looking to make purchases that will beef up its sports medicine, trauma, and wound care businesses, and it's especially eyeing acquisition targets in emerging markets.

Brazil, Russia, India, and China—collectively known as the BRIC countries—are especially attractive locations for the company. Smith & Nephew acquired India-based manufacturers Adler Mediquip and Sushrut-Adler, earlier this year, and it's in the process of buying an orthopedics distributor in Brazil. 

Besides the BRICs, Smith & Nephew is also looking to grow its presence in Turkey, Mexico, Saudi Arabia and South Africa. The company is already in the process of acquiring an orthopedics distributor in Turkey and has been adding sales representatives in Mexico since 2012.  

In addition to making acquisitions in the developing world, Smith & Nephew is also tailoring its products to customers in emerging markets. It plans to launch a line of mid-tier wound-care products later this year.

Smith & Nephew's sales from emerging and international markets have climbed from 8% in 2010 to 13% in Q2 of this year, Bohuon said, adding that he expects these locations to account for even more business going forward.

"In summary, the emerging and international markets offer huge potential," Bohuon said in an earnings call. "Our approach will deliver an increasingly strong financial return on our investment there. I'm also convinced that over 25% of Smith & Nephew revenue will come from these regions in the next 5 years." 

Smith & Nephew's sales were up 4.4% year over year in Q2, but profits fell more than 50%.

—by Jamie Hartford, managing editor, MD+DI
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