|Smith & Nephew CEO Olivier Bohuon|
Smith & Nephew ($SNN), like most orthopedic device outfits, will need to diversify if it wants to grow, and CEO Olivier Bohuon has a green light and a heap of cash to make that a reality, hunting for buyouts around the globe.
In an interview with Bloomberg, Bohuon said the U.K. giant has $1.5 billion set aside for M&A, and he's looking out for deals in emerging markets and lower-cost products that would help wean S&N off its reliance on orthopedic implants.
Last quarter, the company's revenue climbed about 4.4% to $1.1 billion, as gains in wound care made up for roughly 1% declines in sales of hip and knee replacements. Pricing pressures and slumping demand have made it harder and harder to count on orthopedic implants to drive revenue, and the company will need to reach into new markets to survive, Bohuon said.
"We need to bring them products which are appropriate, which means low-cost and a different business model," the CEO told Bloomberg.
So far, that's meant a deeper stake in the global wound care market and a focus on trauma devices. S&N spent $782 million to acquire Healthpoint in late December, bringing in a business that grossed $190 million in 2012. In May, it bought India's Adler Mediequip for an undisclosed sum, bagging that company's line of orthopedic trauma products and share of a fast-growing local market.
Those deals are already starting to pay off; S&N's wound management business grew about 30.5% last quarter to $333 million, and trauma ticked up about 2% amid otherwise disappointing sales for the company's surgical devices.
And while rumors come and go that the U.K. device giant could well be an M&A target itself, Bohuon said the company has no plans to go on the auction block.
"We want to stay independent," he told Bloomberg. "Everything we do is to stay independent. The board is very clear on that, and I am their steward."
- read the interview
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