Smith & Nephew Slashes Costs Of Orthopedic Offerings

By Jof Enriquez,
Follow me on Twitter @jofenriq

European orthopedic device-maker Smith & Nephew will offer U.S. hospitals discounted prices on its artificial hips and joints as part of a new “no frills” strategy designed to build up its position in an increasingly competitive market.

S&N’s chief executive Olivier Bohuon said that the new Syncera service is relevant for the five to 10 percent of hospitals in the U.S. that cannot afford to purchase its traditional bundled services, according to a Business Insider report. Bohuon said that those hospitals will save 40 to 50 percent by using the streamlined offering. In the report, he said that the sales strategy will not have much of an impact on the company’s profit margins, since operating costs associated with the traditional service — such as sending over a technician to the client site — will likewise be cut.

According to The Telegraph, S&N had traditionally offered its clients a premium, start-to-finish service that included supply chain management, medical device delivery, and on-site technical support. The “no-frills,” “light touch” alternative to the premium sales package will provide the device but without the extras, the report said. Bohuon told The Telegraph that his company has been preparing the approach over the last 18 months. The company launched its pilot a few weeks ago, and plans to offer the service to European hospitals if the program becomes a success in the U.S., the report said.

The company announced the new strategy in conjunction with strong second-quarter numbers that the company shared with reporters in a conference call. As reported by Reuters, S&N posted a “10 percent rise in second-quarter trading profit as it regained momentum after a weak start to the year, despite problems in wound management.”

According to the report, S&N remains a potential acquisition target. Stryker had considered buying S&N for months, but eventually backed out from a potential deal. Bohuon said he is optimistic that S&N can remain independent, although inversion deals could remain the norm in the industry.

“Are we going to remain independent? It is not up to me to tell you that — I don't have the answer. But I believe we have a good future, we have great growth in front of us, we have a number of new programs and I believe success is here,” Bohuon told reporters, according to the Reuters report.