In Orthopedics, Consolidation's Aftershocks

Even after the tremendous consolidation of 1998, many orthopedic industry executives are betting on more. The big deals will likely involve Bristol-Myers Squibb Co. subsidiary Zimmer Inc., widely rumored to be on the block, and either Smith & Nephew PLC or Sulzer Medica Ltd. , two companies in the middle of the market-share pack who have made clear their intentions to grow their orthopedic businesses, particularly in total joints. Another possible consolidation player: spinal company Surgical Dynamics Inc. , now a Tyco International Ltd. business after that company's acquisition last year of United States Surgical Corp.[See Deal]. Tyco officials have hinted that they will either have to significantly increase their presence in orthopedics or get out altogether, because holding on with a single orthopedic business isn't viable.

Until those bigger deals take place, however, what deal-making occurs in orthopedics is likely to be small, such as Encore...