Medical device maker Smith & Nephew CEO: Big not always beautiful

By Susan Kelly

Jan 12 (Reuters) – The chief executive of Smith & Nephew , the medical device maker that has been the subject of persistent takeover rumors, on Monday said mergers designed to gain size do not change market share dynamics in the hip and knee replacement business.

“I am not a fan of the concept ‘big is beautiful,'” said Olivier Bohuon, speaking at an annual JPMorgan conference on healthcare.

Rumors that competitor Stryker Corp was planning an imminent bid for Smith & Nephew, Europe’s largest maker of artificial joints, resurfaced late last year.

A wave of mergers has swept the reconstructive joint market, but Smith & Nephew is not joining in, Bohuon said.

“We have not decided to follow this path,” he said.

While declining to comment directly on the Stryker rumors, the Smith & Nephew CEO said market share in the hip and knee industry has remained stable for the past decade. At the same time, prices are eroding 3 percent to 4 percent a year, because artificial joints have become a low-growth, commoditized business, he said.

Patients are generally satisfied with their joint replacements, especially those who receive hip implants, he noted. So there isn’t much innovation occurring in the industry.

“Rather than reinventing the hip,” Smith & Nephew is looking to rebalance its product portfolio to focus on higher-growth areas such as sports medicine and wound care, the CEO said.

“For me, what matters is the ability of a company to bring to the market disruptive products. You don’t have to be big to do that,” Bohuon said.

Smith & Nephew remains interested in doing “bolt-on” acquisitions, particularly deals that would help the company grow in emerging markets, he said.

(Reporting by Susan Kelly in Chicago; editing by Andrew Hay)

Josh Sandberg

Josh Sandberg is the President and CEO of Ortho Spine Partners and sits on several company and industry related Boards. He also is the Creator and Editor of OrthoSpineNews.

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