Following the announcement that Smith & Nephew has acquired the Extremity Orthopaedics business of Integra LifeSciences for $240m;

Kamilla Kan, Medical Devices Analyst at GlobalData, a leading data and analytics company, offers her view on this deal:

“According to GlobalData, over 71% of Integra LifeSciences’ net sales are across business segments from North America. By acquiring Integra’s orthopedics assets, Smith & Nephew will strengthen its presence in the orthopedic market – particularly in the US, which previously accounted for around 50% of its total revenue.

“However, global orthopedic procedures are set to decline by over 20% over the course of 2020 due to the COVID-19 pandemic. Moreover, in the US alone, the hip and knee reconstruction market has decreased by approximately 70% in Q2 2020, as most of the elective surgical procedures were either canceled or delayed.

“As a result, Integra LifeSciences and many other companies in the orthopedic business are experiencing a sharp decline in revenue. Integra LifeSciences derived over 90% of revenue in orthopedic markets in the US and Europe – two regions that are currently COVID-19 hotspots.

“Although acquiring a business that has been badly impacted by the pandemic could be considered a risky move, with hospitals in North America slowly increasing the purchasing of medical device equipment and gradually resuming the elective procedures, Smith & Nephew’s US sales should see an upward movement in the future – providing a positive impact on the company’s revenue by the end of 2020.

“Furthermore, the geographic broadening of its business will also provide some resilience against the effects of the COVID-19 pandemic, since countries in the Asia-Pacific region are successfully controlling the spread of the disease, which provides a chance for companies to improve their sales even further.”