Officials at Smith & Nephew (NYSE:SNN) weren’t acting brides left at the altar, but they weren’t exactly tossing bouquets to the hot new couple in the orthopedic market during a conference call with investors today.
In January, Johnson & Johnson (NYSE:JNJ) was supposedly kicking the tires on an $11.3 billion buyout of Smith & Nephew. The rumored deal, first reported in Britain’s The Telegraph newspaper, was promptly swatted down by SNN officials. But talk of a deal lingered until the New Brunswick, N.J.-based medical products conglomerate pulled the trigger on a $21.3 billion buyout of Synthes (SWX:SYST.VX) late last month instead.
During the call today, SNN CFO Adrian Hennah deferred most talk about its newly pumped-up competitor in the orthopedic trauma market. Hennah said the deal wouldn’t drive a wave of industry consolidation, claiming the union would likely have little or no impact on SNN.
“The first thing is, the deal isn’t done yet and we suspect it will attract a significant amount of anti-trust attention in the coming months,” Hennah said. “But in its current form, we do not expect it to have a fundamental impact. … We do not expect a dramatic change in industry structure or competition.”
SNN competes directly with Synthes with its orthopedic trauma unit, which pulled in about $116 million during the three months ended April 2.
Overall, Smith & Nephew reported a $231 million profit on $1.06 billion in sales, down slightly from the $240 million operating profit the company reported on $995 million in sales during the same period last year.
Officials said economic problems in southern Europe and the U.K. have hampered business in the EU, but U.S. sales came in stronger during the quarter.
“The main drivers are government deficits,” Hennah said. “The price decreases are pretty constant. It’s not markedly different than in the U.S.”
Hennah said SNN expects pricing pressure to continue for the near future. The company’s European sales came in essentially flat during the quarter, at $363 million, compared to $357 million for the same period last year. Orthopedics, the company’s bread-and-butter business, dropped 2 percent in the EU.
But the sluggish sales were more than offset by an uptick in Smith & nephew’s U.S.-based business where Smith&Nephew reported a 4 percent bump in revenues to $439 million, compared to $421 million. Those sales were paced by strong knee sales, which grew 10 percent during the quarter based on strong sales of the company’s Visionaire knee system, which boasts a 30-year wear claim.
Overall, the orthopedics division pulled in $590 million, compared to $566 million during the same period last year.