ArthroCare Bid Signals Ortho Consolidation

Pricing pressures on hip and knee implants in the US and Europe continue to drive manufacturers to find ways of diversifying their sales streams or distinguishing themselves from their competitors. Smith & Nephew PLC made the latest move with a $1.7 billion offer to acquire ArthroCare Corp.[See Deal]If completed, the purchase would expand Smith & Nephew’s sports medicine business while helping it diversify into the ear, nose, and throat market. The deal may not get done as analysts speculate that competitors Stryker Corp. and Johnson & Johnson could step in with counteroffers. But the interest surrounding Austin, TX-based ArthroCare emphasizes the pressures being put on large joint makers to find new ways of making money in orthopedics.

Hip and knee makers are struggling against the downward price pressure brought on by the Affordable Care Act in the US and similar pressures in Europe. The response in recent...