S&N's 5-Year Plan: Platform Development, Emerging Markets, R&D
By Jof Enriquez,
Follow me on Twitter @jofenriq
Smith & Nephew (S&N) CEO Olivier Bohuon says he envisions in the next three to five years for the company to continue building upon successful restructuring efforts in order to fully realize benefits and opportunities in a competitive global market.
During S&N's third-quarter conference call, Bohuon reminded analysts that he has successfully steered the company in reorganizing management units; prioritizing high-growth businesses, such as sports medicine and emerging markets; and guiding key acquisitions, such as ArthroCare, to set up the base for future growth. Still, Bouhon thinks some “fine-tuning” is needed.
"But now what I want to do in the next two or three years is to focus on three things: A, the execution. B, the platforms, with this JOURNEY platform and the complements of the JOURNEY platform that we're going to launch in 2017 and further. In PICO and the lifecycle management of PICO, because this is really a good growth driver for us," said Bohuon, according to Seeking Alpha.
S&N's JOURNEY portfolio includes partial and total knee replacements featuring kinematic motion between the femur and tibia and tibia bones inside the joint (besides knee flexion alone). The company says strong order uptake of the JOURNEY II implant drove their global knee business to four percent growth during the third quarter. PICO, a disposable negative pressure wound therapy device, powered S&N's advanced wound devices unit to five percent growth for the period. S&N says they have sold over 1 million PICO devices since launch five years ago.
Bouhon identified emerging markets as his third priority area, stating that they “remain an important place to be, and with the share we have in the emerging markets, I think we can win very well in these geographies." The company said performance across emerging market countries, with the exception of the Gulf States, has remained very strong, and will remain so in the medium to long-terms.
Emerging markets revenue for the third quarter was up six percent, led by China. However, established markets were relatively flat at one percent, with the United States market up at a modest two percent. That put a damper on underlying sales, which rose two percent to $1.119 billion (£902.13 million), toward the lower end of estimates, S&N reported. Revenue was up eight percent in Sports Medicine Joint Repair and four percent in Knee Implants, continuing strong first-half performance.
Bohuon said he recently hired a new chief for R&D and globalized the company's R&D program. Related, S&N opened a $10-million (£8-million) state-of-the-art R&D center in Hull in the United Kingdom, which will conduct research across all of Smith & Nephew's divisions, with a focus on wound dressings in particular, reports The Telegraph.
"M&A remains high in the priority also, and we are looking for good opportunities, either bolt-on, as usual; but also bigger opportunities, if they make sense for us and for the business, and if it makes sense strategically and financially, as usual," said Bohuon, who touted the continued synergy and growth benefits from S&N's purchase of ArthroCare over two years ago, and the more recent acquisition of the NAVIO robotics platform.
Bohuon also told analysts that pricing and sales job effectiveness also are priorities going forward, and newly-installed CCO Mike Frazzette will be tasked with driving them.