- Full 2007 Annual Report
- Annual Report
Review from our Chairman and Chief Executive
- John Buchanan
- Chairman
- David J. Illingworth
- Chief Executive
Market conditions in Smith & Nephew’s chosen areas of expertise continue to be favourable with strong demand for innovative products illustrating that advances in technology in the field of medical devices are valued by clinicians and healthcare providers around the world.
The Company had a successful year in Reconstruction with the BIRMINGHAM HIP° Resurfacing System (“BHR°”) in the US, following its launch there in 2006, and saw Smith & Nephew’s US knee business improve in the fourth quarter. Reconstruction continues to deliver above market growth as it has done for 5 consecutive years. Advanced Wound Management returned to growth after several difficult years and did so while the business was being restructured. Endoscopy earned double digit revenue growth for the first time in five years benefiting from investment in its business outside the US. In Trauma the Company now has a good product range and the sales force to deliver continued growth.
Two significant acquisitions were made during the year. In May Plus Orthopedics Holding AG (“Plus”) a private Swiss orthopaedic company, was acquired for CHF 1,091 million ($889 million) in cash, including assumed debt. After this acquisition Smith & Nephew ranks fourth in the global orthopaedic reconstruction market. During the second quarter the acquisition of BlueSky was announced, a negative pressure wound therapy business. BlueSky provides a valuable entry into this $1.4 billion fast growing segment of the woundcare market. The worldwide launch of the product range began in the first quarter of 2008.
The Earnings Improvement Programme (“EIP”) was launched in the first quarter of 2007 and by the end of the year had improved the trading margin, before the two acquisitions made in the year, by over one per cent. Good progress was made in the operational management of the company. Functions are being centralised within and across the four businesses in areas such as IT and procurement and substantial changes are being made in manufacturing and sales force management.
Smith & Nephew’s long term strategy is to concentrate on high growth segments in the four businesses, with emphasis on meeting the needs of customers and acquiring businesses which fit within this strategy. The Company’s innovative products which enable good outcomes for patients, medical professionals and healthcare providers alike are expected to generate continued growth in 2008 and beyond.