Is Smith & Nephew Really Going all EasyJet in U.S?

A Reuters piece today suggests that device company Smith & Nephew is to offer a sort of “no frills” airline approach to provision of its replacement hips and knees in the United States.

Background

Called Syncera, the new service is apparently targeted at what S&N has identified as 5-10 percent of U.S. hospitals that cannot afford the usual package of support.

So what’s the plan? Well it seems that for a start the company will cut down on accompanied procedures, a move that “could cut costs by 40-50 percent.”

Beyond that, it’s not immediately obvious what else could easily be trimmed, so it’s probably safe to assume that’s where it stops. Splitting your strategy might not be a totally crazy idea, but is unlikely to be popular with well-reimbursed sales staff who will find themselves effectively competing with their own company.

What the company claims is that profit margins would remain broadly similar since operating costs under the Syncera programme would be sharply lower.

The news coincides with an August 1 release of quarterly financials to the end of June, which show a 3 percent rise in underlying sales coupled with a 6 percent rise in underlying trading profit. With the group’s Wound Management division showing zero growth, the sales ramp is attributable exclusively to the Advanced Surgical Devices group, which includes the aforementioned total joints.

Conspiracy theorists are naturally already speculating that this move might presage a sell-off of a chunk of the S&N implant line due to the untenability of running a sales team for some and not for others, all of which comes in the wake of takeover rumours that have fuelled the pages of industry watchers over the past few months

Company comments

Chief Executive Olivier Bohuon said; “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.”

Source: Smith & Nephew, plc., Reuters

 

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