Synthes Sells Subsidiary to Settle Plea Bargain

West Chester, Pa.-based Synthes Inc. sold assets of its Norian subsidiary to Exton, Pa.-based Kensey Nash Corporation for $22 million to satisfy terms of a plea bargain agreement with the federal government.

Last year, Synthes was charged with running an illegal test market for a Norian bone cement which resulted in three patients’ deaths. The company pleaded guilty to unauthorized testing, paid $23 million in fines for failing to report the incident to the U.S. Food and Drug Administration, and agreed to divest its Norian assets.

Synthes faced a divesture deadline of May 24. Missing the deadline would subject the company to fines and possible exclusion from Medicare and Medicaid. It is expected that Synthes will dissolve Norian as a stand-alone company due to exclusion.

“As part of a long-term supply agreement, Kensey Nash will manufacture Norian products, and Synthes will exclusively distribute the products worldwide,” said a company statement from Kensey Nash.
Kensey Nash paid Synthes $11 million upfront, and will pay another $11 million when manufacturing is transferred from Norian’s facility to Kensey’s. Manufacturing will shift over the next 18 to 24 months.