Symmetry Closes Deal for Codman Business

It’s official. Symmetry Medical Inc. has formally ingested the surgical instruments business of Codman & Shurtleff Inc., a division of Johnson & Johnson.

The integration of Codman’s surgical instruments with Symmetry’s hospital direct business—Specialty Surgical Instrumentation (SSi)—occurred fairly quickly, only weeks after the deal was first announced in mid-December. The combined hospital direct general surgical instruments business, now known simply as Symmetry Surgical (and based in Nashville, Tenn.), is expected to generate more than $100 million in annual sales.

Analysts have lauded the acquisition, noting that Symmetry is gaining several outstanding brand names for its $165 million investment, including Bookwalter table-mounted retractors (considered the strongest of Codman’s offerings; the Bookwalter retractors generally are regarded as the standard of care for abdominal surgery), Opti-Length extended length instruments, Greenberg retractors and handrests, Rapidclean detachable cervical and lumbar Kerrison rongeurs, the Quad-Lock sterilization container system, the Classic and Classic Plus line of tempered steel instruments, the Karlin Crank frame spinal retractor set and the Magnafree (non-magnetic) line of products.

In addition to the various brands of instruments, Symmetry gains Codman’s sales and distribution network, which encompasses more than 60 countries. Symmetry President and CEO Thomas J. Sullivan said emerging markets in Asia, South America, Africa and the Middle East will help his company to grow and become “part of advancing patient care” in those new locales. He told Orthopedics This Week that the deal gives Symmetry Surgical “…stronger direct and distributor sales channels, a larger international presence, particularly in Asia and Latin America, and a broader product portfolio. We expect to continue to deliver faster than market growth in Symmetry Surgical over the long run.”

Symmetry executives insisted the acquisition is a bottom-line move for the company, saying it diversifies its revenue base with higher-margin, hospital-direct products that make up about 25 percent of total revenue. Pro-formal 2011 revenue for the acquired surgical instrument business was about $60 million. The deal also adds strategic logistics and procurement capabilities in Tuttlingen, Germany, to serve Symmetry’s OEM and hospital customers.

“We believe the additional presence in demanding surgical specialty procedures and relationships with key surgeon developers will enhance Symmetry’s ability to bring innovative, value-add new products to the market for the benefit of both our OEM and hospital customers,” Sullivan said in a news release. “Symmetry Surgical provides several strategic benefits for our overall business, including increased revenue diversification, enhanced gross margin, a strategic instruments procurement capability in Tuttlingen, Germany, a strengthened intellectual property portfolio, and innovation driven by access to broader hospital market intelligence in additional surgical specialties. Our resulting offering will be one of the broadest and most respected product portfolios in the $1 billion market for general surgical instruments. This positions us well to continue growing our U.S. market share in the hospital direct business, as well as building on the strong international presence established abroad by the brands acquired from Codman.”

Sullivan will serve as president of both Symmetry Surgical and Symmetry Medical. Chris Huntington, Symmetry Medical’s chief operating officer, Asia, will become chief operating officer of Symmetry Surgical. Huntington will lead integration efforts and report directly to Sullivan. The executive team of Symmetry Surgical will include a mix of senior leaders from the surgical instruments business of Codman and SSi, as well as newly recruited senior industry executives.

Symmetry Medical is based in Warsaw, Ind. Codman is headquartered in Raynham, Mass.; the main markets for its instruments are spine surgery, general and OBGYN surgery, microsurgery and neurosurgery, and cardiovascular and thoracic surgery. Symmetry sells instruments, implants and other products to such orthopedic behemoths as Stryker Corp., Smith & Nephew plc, Zimmer Holdings Inc., Biomet Inc., DePuy and Medtronic Inc. Its three largest customers in 2010, according to Orthopedics This Week, were DePuy, Stryker and Zimmer. Symmetry’s non-orthopedic customers include Cardinal Health Inc., Edward Lifesciences LLC and St. Jude Medical Inc.

The deal for Codman’s surgical instruments business represents Symmetry’s second major purchase from Johnson & Johnson. In 2008, the company paid $45 million for DePuy’s instrument manufacturing facility in New Bedford, Mass. A key element of that deal was the provision that DePuy buy at least $106 million in incremental products from Symmetry between then and 2012.