Smith & Nephew Opens Overseas Plant for International Customers

Smith & Nephew plc has opened a manufacturing facility in China—its second in as many years—to better serve international customers.

The 10,000-square-meter building in Beijing replaces a smaller structure that Smith & Nephew inherited when it purchased Plus Orthopedics Holding AG in 2007 for $889 million. At the time, the acquisition doubled Smith & Nephew’s share of the European orthopedic reconstruction market and increased its share of the global orthopedic market by 12 percent. Based in Rotkreuz, Switzerland, Plus Orthopedics was one of the largest suppliers of prosthetic hips in Germany, a country with the world’s third-largest orthopedic market. Founded in 1991, the firm made artificial knees, a shoulder product and small joints for the hands.

Smith & Nephew opened its new manufacturing plant in Beijing nearly a year after launching another facility in Suzhou, a city 645 miles to the southeast. That facility manufactures the company’s Allevyn adhesive dressings as well as other products for its Advanced Wound Management business. Products made at the Suzhou plant are exported to 65 countries worldwide, according to the company. Allevyn adhesive dressings are used to treat conditions such as geriatric and diabetic ulcers.

The Beijing manufacturing facility will produce surgical instruments and artificial hip and knee components. The opening of this plant, industry experts observed, reflects the importance Smith & Nephew’s leaders place on establishing a strong presence in China. Company executives have said they expect increasing demand both in China and internationally for orthopedic products and services.

Fears of counterfeit products are keeping Smith & Nephew from building high-tech instruments and artificial joint components at its Beijing manufacturing plant, according to ChinaBio Today. As Chinese demand grows for joint replacements, the company will begin developing parts designed specifically for China’s population.

If current trends continue, Smith & Nephew may design those patient population-specific parts sooner than executives expected. Recent estimates put the potential artificial joint market in China at 30 million patients and growth rates in the double digits. Experts attribute such a rapid market expansion to China’s aging society and its transformation from an agrarian culture to a machine-using civilization. The regular use of machines is expected to contribute to the rise in orthopedic procedures, as operators become more prone to serious injuries. According to Chinese Customs Data, between 70,000 and 80,000 joint replacements occurred in 2008, with two-thirds of those procedures being hip replacements (and one-third being knee replacements).

China imported $140 million worth of orthopedic products in 2008, accounting for an in-market value of $420 million, according to Chinese Customs Data.