Smith & Nephew's Race to the Top
Guess who was the fastest growing orthopedic implant company last year. Smith & Nephew. The boom that has characterized the orthopedics market for the past several years has been a rising tide that lifts all boats--all, that is, except Smith & Nephew. But in the last couple of years, Smith & Nephew has actually been growing faster than their larger competitors. And in an industry that will increasingly see winners and losers, Smith & Nephew believes it is positioned to be one of the winners.
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One of the most innovative and creative orthopedic implant designers, the UK's Finsbury's Orthopedics never quite built the sales and distribution capability to enable it to capture the full value of its designs. The company's recent sale to DePuy underscores how much the orthopedics industry has changed since its earliest days.
Even by the standards of today's medical device world, the acquisition last year of Plus Orthopedics Holdings by Smith & Nephew was impressive. Perhaps it was the deal's value: by any measure, one billion Swiss francs (or just under $900 million) simply has a nice ring to it. Perhaps it was the deal's European provenance: rarely in Europe do small start-ups grow to a size to justify such a valuation. But if the deal was anything but typical, the story behind Plus seems almost textbook.
Once the very model of stability among orthopedics companies, Biomet went through a rocky period a while ago as its stock price tanked and its long time CEO left the company. To the rescue has come a group of private equity investors who will take the company private when the transaction closes later this year. Biomet officials insist the company's turnaround will be based on the same success factors that made the company successful in the past: product innovation, strong distributor relationships, and close customer ties. But the question is: what changes, if any, will Biomet's new owners bring?