Smith & Nephew (SNN), an international medical device major operating in the orthopedic reconstruction and trauma, endoscopy and advanced wound management market, recently announced its intention of acquiring privately-held Tenet Medical Engineering, Inc. However, the financial terms of the agreement are yet to be disclosed.
Alberta-based Tenet provides advanced technology in the arthroscopic surgery space with intuitive patient positioning controls, increased versatility, adjustability and stability, global compatibility and fully integrated systems. Smith & Nephew seeks to integrate Tenet’s arthroscopy portfolio with its existing products in this segment and will be sold through the company’s global sales team of Endoscopy.
Prior to the acquisition, Smith & Nephew had a long-standing distribution agreement with Tenet for its patient positioning products.
The Endoscopy business of Smith & Nephew develops and commercializes endoscopic (minimally invasive surgery) techniques, for surgery of the joints and ligament repair. The portfolio includes specialized devices and fixation systems to repair damaged tissue; fluid management equipment for surgical access, digital cameras, digital image capture, scopes, light sources and monitors to assist with visualization, radiofrequency wands, electromechanical and mechanical blades and hand instruments for the treatment of damaged tissue.
At the end of the fourth quarter of fiscal 2010, the company’s Endoscopy revenue stood at $232 million (contributing 21% to its total revenues), flat year over year. Geographically, sales dropped in both the U.S. and Europe (down 4% and 3% year over year, respectively). However, the company witnessed strong year over year upside of 14% in the rest of the world segment aided by strong contribution from the emerging markets.
The competitive scenario remains intense in the orthopedic space with Smith & Nephew facing stiff competition from larger players like Stryker (SYK), Johnson & Johnson’s (JNJ) DePuy and Zimmer (ZMH).
Despite several headwinds, Smith & Nephew aims to improve its performance going forward on the back of a strong product pipeline and higher acquisition related investments. The company expects to achieve above market growth in Endoscopy in the upcoming quarters.
