Smith & Nephew (FTSE:SN, NYSE:SNN) CEO Olivier Bohuon said today that the medical device company’s new "no-frills" program for its orthopedics business aims to cut implant prices in half.
The program, called Syncera, is a bare-bones offering that doesn’t include extras such as logistical support or an on-site technician.
Bohuon, who revealed the program earlier this week, said today that the Syncera program could reduce hip and knee replacement device prices by 40% to 50%, estimating the target market at 5% to 10% of U.S. hospitals during a conference call with analysts to discuss Smith & Nephew’s 2nd-quarter results.
Syncera " fulfils the unmet needs of customers searching for a different value proposition," namely by offering 2 hip implants and 2 knee implants "combined with cutting-edge technology that streamlines the supply chain and logistics and enables technical support in the operating room," according to a press release.
"This new model has the potential to generate significant savings for the customer. Following very positive feedback, we expect to start shipping the 1st product shortly," Smith & Nephew said.
Q2 results top expectations
Smith & Nephew reported profits of $89 million, or 10¢ per share, on sales of $1.15 billion for the 3 months ended June 30, for a top-line slide of -31.0% on sales growth of 6.8%. Adjusted to exclude 1-time items, earnings per SNN share were $1.02, 6¢ ahead of expectations on Wall Street. Earnings per SN share were 20.4¢, a penny ahead of expectations in The City.
"We have delivered a good increase in revenues and trading profit, resulting in a 13% uplift in EPSA. We believe this strong performance reflects the execution of our strategy to rebalance the business towards higher growth markets. In particular, we drove good growth in sports medicine, joint repair and our investment in emerging & international markets has delivered a 17% increase in revenues. In orthopaedic reconstruction we saw an improved performance led by both U.S. knees and hips," Bohuon said in prepared remarks. "We also completed the ArthroCare acquisition in the period. I am very excited by the prospects for our expanded sports medicine business."
