Won’t Follow M&A Trend – Says Smith & Nephew CEO

Olivier Bohuon says he is not a fan of the concept of big is beautiful, and adds that there’s not much innovation occurring in hip implants.

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, as per a Reuters news story.

Last last year, Stryker Corp was rumored to be bidding for Smith & Nephew, Europe’s largest maker of artificial joints. According to Bohuon, Smith & Nephew will not be joining in the wave of mergers, which has swept the reconstructive joint market.

Not much innovation

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. Patients are generally satisfied with their joint replacements, especially those who receive hip implants, he noted, adding that there is not much innovation occurring in the industry.

The company is focusing on rebalancing its product portfolio to focus on higher-growth areas such as sports medicine and wound care, according to the CEO, who would rather bring market-disruptive products, than ‘be big.’

Source: Reuters/ JPMorgan.metameetings.com

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