07.28.10
$3.8 Billion
KEY EXECUTIVES:
David J. Illingworth, CEO
Adrian Hennah, Chief Financial Officer
Naseem Amin, Chief Scientific Officer
John W. Campo, Chief Legal Officer
Mark Augusti, President, Biologics & Spine
Joseph DeVivo, President, Orthopaedics
Michael Frazzette, President, Endoscopy
Roger Teasdale, President, Advanced Wound Management
R. Gordon Howe, Sr. VP, Global Planning and Development
NO. OF EMPLOYEES: 9,764
GLOBAL HEADQUARTERS: London, United Kingdom.
Each year, the executive team at Smith & Nephew plc charts the company’s business growth based on four longstanding strategic pillars: Customer led; Efficiency; Investing for Growth; and Alignment. The Investing for Growth pillar calls for the firm to drive sales from new opportunities such as biologics, emerging markets and adjacent technologies.
In 2009, the Investing for Growth pillar seemed to dominate the other three strategies as the company launched a bevy of new products and re-invested in its facilities in such emerging markets as China to ensure future growth. Smith & Nephew also strengthened its research and development efforts, making several key moves during the year that reinforced its reputation among the industry’s major orthopedic manufacturers for fostering innovative new product development.
In addition to devoting $155 million, or 4.1 percent of its total sales last year to R&D, company executives appointed a chief science officer. The new role, which went to veteran researcher Naseem Amin, was created to give Smith & Nephew an avenue for finding “new products that yield the greatest return for patients, healthcare professionals, shareholders and other stakeholders.” Amin is expected to play a critical role in building the company’s innovation and research and development capability in the years ahead, executives said.
Amin joined Smith & Nephew in August 2009. Previously, he was senior vice president of business development at Biogen Idec, a biotechnology firm in Weston, Mass. Before that, he worked for Genzyme Corporation, BaxterHealthcare and Eli Lilly and Company.
The company’s renewed focus on R&D also resulted in the opening of a new facility in Durham, N.C., that develops advanced biological therapies to promote healing and relieve pain. Corporate managers said they wanted the company to locate a facility in the Research Triangle area in order to access leading research universities.
Smith & Nephew expanded beyond North Carolina to leave its mark on three continents last year. The company opened or commissioned surgeon training centers in Shanghai, China; Lucerne, Switzerland;York, United Kingdom; and Memphis, Tenn. China became a hotbed of activity as executives mapped out a strategy to capture a leading share of that country’s medical device market, which is expected to swell to $6 billion by 2013. To reinforce its commitment there, the company created a “China Board” to guide strategy and located a head office in Shanghai. In addition, the firm broke ground on an orthopedic manufacturing site outside Beijing, and celebrated the opening of an Advanced Wound Management manufacturing plant in Suzhou.
The $60 million facility in Suzhou, which replaces the company’s manufacturing plant in Largo, Fla., is the first to be built and operated by Smith & Nephew since entering the Chinese market in 1994. The facility manufactures Allevyn adhesive dressings and other products for the company’s Advanced Wound Management franchise. Executives said the new manufacturing plant produced 9.6 million Allevyn dressings last year.
New additions to the Allevyn product line helped propel Advanced Wound Management sales by 6 percent last year to $846 million and operating profit by 41 percent to $144 million. The new products (released in both the United States and Europe) included Allevyn Ag Gentle, Allevyn Ag Gentle Border, Acticoat Flex 3 and Acticoat Flex 7. The Allevyn Gentle Ag dressings combine the antimicrobial protection of silver with silicone and soft gel adhesives to minimize pain and trauma to the wound when removing the dressing, according to a Smith & Nephew news release. The Acticoat products are made specifically for treating wounds that are highly susceptible to infection in “awkward anatomical” areas such as the face and hands.
The Acticoat products are the second-largest brand in Smith & Nephew’s wound management portfolio.
As such, Smith & Nephew decided it was best to assume full control of the intellectual property, manufacturing and assets related to the product’s nanocrystalline silver technology. In December, the company purchased the manufacturing assets and intellectual property from Nucryst Pharmaceuticals Corp. (based in Fort Saskatchewan, Canada) for $21 million.
Japanese regulatory officials approved a host of wound therapy products last year as well, including the Allevyn Ag Gentle Border and Cadex dressing. Allevyn products are sold there under the Hydrosite trade name.
Other new products introduced to the market in fiscal 2009 (ended Dec. 31) included a range of wound dressings for orthopedic procedures and the Renasys enhanced negative pressure Though new endoscopic devices helped drive a 15.7 percent increase in operating profit last year, the Endoscopy segment could not overcome the sharp decline in demand (mostly from hospitals) for visualization equipment such as digital cameras, scopes, light sources and monitors. As a result, 2009 revenue fell 1 percent to $791 million, dragged down by a 20 percent decrease in visualization products ($121 million). Arthroscopy device sales, which grew 7 percent to $647 million last year, comprised the bulk of the revenue in this segment.
Despite the decline in demand for visualization systems, the segment achieved some financial success with the debut of devices that stand a good chance of producing significant revenue for the company in the next several years. One of those devices is the Biceptor Tenodesis System, an updated approach to bicep tendon repair that enables surgeons to reattach the tendon to the humerus, or upper arm bone, using an all-arthroscopic procedure. Doctors claim the device simplifies biceps tenodesis procedures by eliminating steps and shortening the length of surgery.
Another promising new product launch last year was the Dyonics 5.5mm Bonecutter Electroblade Resector, an all-in-one device for treating one of the most common sources of shoulder pain—subacromial impingement. The resector performs the work of three separate devices: a mechanical shaver for soft tissue removal, a burr to smooth bone, and a radiofrequency probe to seal blood vessels at the surgery site. Use of the resector, Smith & Nephew executives said, often results in shorter procedures.
In addition to the new device launches, the Endoscopy segment secured regulatory clearances for various products in most major markets (except Japan, where the approval process is more lengthy). Approval was granted for the PEEK Interference Screw, BioSure PK Interference Screw, TwinFix Ultra PK FT Suture Anchor and Knotless Instability Anchor. The products, all made of polyetheretherketone, are designed to reattach ligaments, tendons or soft tissues to bone in knees, shoulders or other articulating joints.
The Orthopaedics segment—the largest of the company’s three business units—shouldered most of the new product launches and regulatory approvals in 2009. At least 20 approvals and clearances were granted worldwide, including those for the Journey Select knee system and Legion Porous Plus HA primary femoral components as well as upgrades to Birmingham Hip Replacement instruments, additions to the R3 Acitabular system, and accessories for the VLP Foot Plating Screw System. In addition, Japanese regulatory authorities approved the Trigen Meta-Nail system and Intertan Nail System, while European officials gave their okay to the company’s MIS hip stem and MDF revision hip stem. Smith & Nephew also received higher classification approvals for its total knee and total hip arthroplasty systems, and perfected the development of the Trigen Sureshot distal targeting system for intramedullary nailing. The Trigen device eliminates considerable amounts of radiation exposure to orthopedic trauma surgeons.
One of the more profitable new products for Smith & Nephew last year was its platform of patient-matched cutting blocks for total knee procedures. Dubbed Visionaire, the system uses a patient’s magnetic resonance imaging scans and X-rays to create custom cutting blocks that allow surgeons to achieve optimal mechanical axis alignment as well as save time in the operating room.
The Visionaire instruments, along with standbys such as the Legion Total Knee System, helped generate $2.1 billion in sales for the Orthopaedic segment last year, a 1 percent decrease from the $2.15 billion the unit earned in 2008. Operating profit climbed 7.3 percent to $410 million. Reconstruction products earned the most money for the segment ($1.4 billion), followed by orthopaedic trauma devices ($414 million) and clinical therapy systems ($235 million).
Overall company sales of $3.8 billion were flat last year, remaining on roughly the same level as 2008. Operating profit grew 15 percent to $723 million, and earnings per ordinary share climbed nearly 11 cents to 53.4 cents.
KEY EXECUTIVES:
David J. Illingworth, CEO
Adrian Hennah, Chief Financial Officer
Naseem Amin, Chief Scientific Officer
John W. Campo, Chief Legal Officer
Mark Augusti, President, Biologics & Spine
Joseph DeVivo, President, Orthopaedics
Michael Frazzette, President, Endoscopy
Roger Teasdale, President, Advanced Wound Management
R. Gordon Howe, Sr. VP, Global Planning and Development
NO. OF EMPLOYEES: 9,764
GLOBAL HEADQUARTERS: London, United Kingdom.
Each year, the executive team at Smith & Nephew plc charts the company’s business growth based on four longstanding strategic pillars: Customer led; Efficiency; Investing for Growth; and Alignment. The Investing for Growth pillar calls for the firm to drive sales from new opportunities such as biologics, emerging markets and adjacent technologies.
In 2009, the Investing for Growth pillar seemed to dominate the other three strategies as the company launched a bevy of new products and re-invested in its facilities in such emerging markets as China to ensure future growth. Smith & Nephew also strengthened its research and development efforts, making several key moves during the year that reinforced its reputation among the industry’s major orthopedic manufacturers for fostering innovative new product development.
In addition to devoting $155 million, or 4.1 percent of its total sales last year to R&D, company executives appointed a chief science officer. The new role, which went to veteran researcher Naseem Amin, was created to give Smith & Nephew an avenue for finding “new products that yield the greatest return for patients, healthcare professionals, shareholders and other stakeholders.” Amin is expected to play a critical role in building the company’s innovation and research and development capability in the years ahead, executives said.
Amin joined Smith & Nephew in August 2009. Previously, he was senior vice president of business development at Biogen Idec, a biotechnology firm in Weston, Mass. Before that, he worked for Genzyme Corporation, BaxterHealthcare and Eli Lilly and Company.
The company’s renewed focus on R&D also resulted in the opening of a new facility in Durham, N.C., that develops advanced biological therapies to promote healing and relieve pain. Corporate managers said they wanted the company to locate a facility in the Research Triangle area in order to access leading research universities.
Smith & Nephew expanded beyond North Carolina to leave its mark on three continents last year. The company opened or commissioned surgeon training centers in Shanghai, China; Lucerne, Switzerland;York, United Kingdom; and Memphis, Tenn. China became a hotbed of activity as executives mapped out a strategy to capture a leading share of that country’s medical device market, which is expected to swell to $6 billion by 2013. To reinforce its commitment there, the company created a “China Board” to guide strategy and located a head office in Shanghai. In addition, the firm broke ground on an orthopedic manufacturing site outside Beijing, and celebrated the opening of an Advanced Wound Management manufacturing plant in Suzhou.
The $60 million facility in Suzhou, which replaces the company’s manufacturing plant in Largo, Fla., is the first to be built and operated by Smith & Nephew since entering the Chinese market in 1994. The facility manufactures Allevyn adhesive dressings and other products for the company’s Advanced Wound Management franchise. Executives said the new manufacturing plant produced 9.6 million Allevyn dressings last year.
New additions to the Allevyn product line helped propel Advanced Wound Management sales by 6 percent last year to $846 million and operating profit by 41 percent to $144 million. The new products (released in both the United States and Europe) included Allevyn Ag Gentle, Allevyn Ag Gentle Border, Acticoat Flex 3 and Acticoat Flex 7. The Allevyn Gentle Ag dressings combine the antimicrobial protection of silver with silicone and soft gel adhesives to minimize pain and trauma to the wound when removing the dressing, according to a Smith & Nephew news release. The Acticoat products are made specifically for treating wounds that are highly susceptible to infection in “awkward anatomical” areas such as the face and hands.
The Acticoat products are the second-largest brand in Smith & Nephew’s wound management portfolio.
As such, Smith & Nephew decided it was best to assume full control of the intellectual property, manufacturing and assets related to the product’s nanocrystalline silver technology. In December, the company purchased the manufacturing assets and intellectual property from Nucryst Pharmaceuticals Corp. (based in Fort Saskatchewan, Canada) for $21 million.
Japanese regulatory officials approved a host of wound therapy products last year as well, including the Allevyn Ag Gentle Border and Cadex dressing. Allevyn products are sold there under the Hydrosite trade name.
Other new products introduced to the market in fiscal 2009 (ended Dec. 31) included a range of wound dressings for orthopedic procedures and the Renasys enhanced negative pressure Though new endoscopic devices helped drive a 15.7 percent increase in operating profit last year, the Endoscopy segment could not overcome the sharp decline in demand (mostly from hospitals) for visualization equipment such as digital cameras, scopes, light sources and monitors. As a result, 2009 revenue fell 1 percent to $791 million, dragged down by a 20 percent decrease in visualization products ($121 million). Arthroscopy device sales, which grew 7 percent to $647 million last year, comprised the bulk of the revenue in this segment.
Despite the decline in demand for visualization systems, the segment achieved some financial success with the debut of devices that stand a good chance of producing significant revenue for the company in the next several years. One of those devices is the Biceptor Tenodesis System, an updated approach to bicep tendon repair that enables surgeons to reattach the tendon to the humerus, or upper arm bone, using an all-arthroscopic procedure. Doctors claim the device simplifies biceps tenodesis procedures by eliminating steps and shortening the length of surgery.
Another promising new product launch last year was the Dyonics 5.5mm Bonecutter Electroblade Resector, an all-in-one device for treating one of the most common sources of shoulder pain—subacromial impingement. The resector performs the work of three separate devices: a mechanical shaver for soft tissue removal, a burr to smooth bone, and a radiofrequency probe to seal blood vessels at the surgery site. Use of the resector, Smith & Nephew executives said, often results in shorter procedures.
In addition to the new device launches, the Endoscopy segment secured regulatory clearances for various products in most major markets (except Japan, where the approval process is more lengthy). Approval was granted for the PEEK Interference Screw, BioSure PK Interference Screw, TwinFix Ultra PK FT Suture Anchor and Knotless Instability Anchor. The products, all made of polyetheretherketone, are designed to reattach ligaments, tendons or soft tissues to bone in knees, shoulders or other articulating joints.
The Orthopaedics segment—the largest of the company’s three business units—shouldered most of the new product launches and regulatory approvals in 2009. At least 20 approvals and clearances were granted worldwide, including those for the Journey Select knee system and Legion Porous Plus HA primary femoral components as well as upgrades to Birmingham Hip Replacement instruments, additions to the R3 Acitabular system, and accessories for the VLP Foot Plating Screw System. In addition, Japanese regulatory authorities approved the Trigen Meta-Nail system and Intertan Nail System, while European officials gave their okay to the company’s MIS hip stem and MDF revision hip stem. Smith & Nephew also received higher classification approvals for its total knee and total hip arthroplasty systems, and perfected the development of the Trigen Sureshot distal targeting system for intramedullary nailing. The Trigen device eliminates considerable amounts of radiation exposure to orthopedic trauma surgeons.
One of the more profitable new products for Smith & Nephew last year was its platform of patient-matched cutting blocks for total knee procedures. Dubbed Visionaire, the system uses a patient’s magnetic resonance imaging scans and X-rays to create custom cutting blocks that allow surgeons to achieve optimal mechanical axis alignment as well as save time in the operating room.
The Visionaire instruments, along with standbys such as the Legion Total Knee System, helped generate $2.1 billion in sales for the Orthopaedic segment last year, a 1 percent decrease from the $2.15 billion the unit earned in 2008. Operating profit climbed 7.3 percent to $410 million. Reconstruction products earned the most money for the segment ($1.4 billion), followed by orthopaedic trauma devices ($414 million) and clinical therapy systems ($235 million).
Overall company sales of $3.8 billion were flat last year, remaining on roughly the same level as 2008. Operating profit grew 15 percent to $723 million, and earnings per ordinary share climbed nearly 11 cents to 53.4 cents.