Smith & Nephew Wary of 'Mega-Merger'

Nancy Crotti

July 30, 2014

2 Min Read
Smith & Nephew Wary of 'Mega-Merger'

London-based Smith & Nephew plc, frequently brought up as an acquisition target, is going its own way, according to a report in the Telegraph.

Since his arrival at the company in 2011, CEO Olivier Bohuon has been redirecting the company's emphasis on hip and knee replacements toward innovations in one of its oldest businesses--wound care. It's not sexy, but it should be big business as Baby Boomers age, particularly those with diabetes.

Smith & Nephew's dressings have chips that alert the physician when the patient should have them changed, according to the Telegraph article. It also produces a line of gauzes that can cut in half the time it takes a serious wound to heal by applying suction to the surface of the dressing to encourage blood vessel growth beneath the wound. It branched into using living cells to accelerate healing following the 2012 acquisition of Texas-based Healthpoint Biotherapeutics.

To increase market share, Bohuon began targeting emerging markets for the company's products, centralizing R&D and manufacturing facilities and eliminating hands-on company technicians who come with its high-end products. Smith & Nephew recently began targeting existing markets--including U.S. hospitals--for such no-frills service, the Telegraph story said.

This latter strategy contrasts with Medtronic's (Minneapolis, MN) emphasis on providing complementary services as it transitions from being merely a medical device maker to what it calls a chronic disease management company. In August 2013, Medtronic purchased Cardiocom for $200 million in cash to expand into chronic disease management. Last year, Medtronic also announced that it had a formed a business unit to help hospital cardiology departments more efficiently.

Medtronic, along with Stryker, was rumored to be interested in acquiring Smith & Newphew. Despite initial reports, Stryker downplayed its interest, saying in May it had decided against making a bid. Medtronic, on the other hand, will likely shy aware from new M&A activity as it is busy working to see that its proposed acquisition of Covidien actually goes through as the United States cracks down on U.S. companies relocating their headquarters abroad to save on taxes.

That's probably just fine with Bohuon, who also told the Telegraph he's not interested in a mega-merger. Bohuon criticized such tax-driven deals as "defensive."

Nancy Crotti a contributor to MPMN and Qmed.

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About the Author(s)

Nancy Crotti

Nancy Crotti is a frequent contributor to MD+DI. Reach her at [email protected].

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