11th May 2007 11:24
Smith & Nephew Plc11 May 2007 Smith & Nephew enters the negative pressure wound therapy market through theacquisition of BlueSky Medical Group, Inc 11 May 2007 Smith & Nephew plc (LSE: SN, NYSE: SNN), the global medical technology business,announces that its Advanced Wound Management business has agreed to purchaseBlueSky Medical Group, Inc ("BlueSky"), a privately-held company headquarteredin Carlsbad, California, from its founders for an initial payment of $15million. The company has developed products for treating chronic wounds usingnegative pressure wound therapy ("NPWT") and manufactures a range of negativepressure pumps and wound dressing kits to serve its global customer base. The market for NPWT is the fastest growing segment of the woundcare market. Ithas expanded rapidly in recent years and is now estimated to be a global marketworth $1.2 billion in 2006. The market is growing at an annual rate in excessof 12% in the United States and greater than 25% in non-US markets. NPWT is atechnology used to treat chronic wounds such as diabetic ulcers, pressure sores,and post-operative and hard-to-heal wounds. NPWT aids the more rapid healing ofwounds by the application of sub-atmospheric pressure to an open wound. Smith &Nephew does not currently operate in this market segment. The two founders ofBlueSky, Richard Weston and Tim Johnson will assist in integrating the businessinto Smith & Nephew's Advanced Wound Management business. Smith & Nephew has agreed to pay $15 million initially with further milestonepayments of up to $95 million related to revenues and other events. BlueSky hadrevenues of approximately $11 million from its distributors in 2006 (equivalentto $55 million in market sales) and net assets of under $1 million. Theacquisition of BlueSky is expected to dilute Smith & Nephew's 2007 earnings byaround 1%, to be broadly neutral in 2008 and to be accretive from 2009 onwards.The impact in 2007 will be to reduce the trading margin of the Advanced WoundManagement business by approximately 1% (approximately 2% in the second half). BlueSky has been engaged in litigation with KCI, another NPWT business, and wasrecently successful in its defence of a patent infringement suit. Although thisdecision is the subject of an appeal, Smith & Nephew believes that BlueSky'sproducts do not infringe KCI patents. David Illingworth, Chief Operating Officer of Smith & Nephew, said: "We are very pleased to acquire this business which gives us immediate entryinto the negative pressure wound therapy market, the fastest growing segment ofthe advanced wound care market. This significantly improves the long termgrowth prospects of the Advanced Wound Management business of Smith & Nephew." Joe Woody, President of Smith & Nephew's Advanced Wound Management Division,said: "We are very excited by this acquisition and the market position that this willgive us. We look forward to adding BlueSky's products to our customer solutionsfor hard-to-heal wounds and to working with these exciting products. With ourglobal scale, distribution channels and customer understanding we caneffectively leverage BlueSky's sales and profits into a substantial business." Enquiries InvestorsLiz Hewitt +44 (0) 20 7401 7646Group Director Corporate AffairsSmith & Nephew MediaDavid Yates +44 (0) 20 7831 3113Financial Dynamics - London Jonathan Birt +1 (212) 850 5634Financial Dynamics - New York About Smith & Nephew Smith & Nephew is a global medical technology business, specialising inOrthopaedic Reconstruction, Orthopaedic Trauma and Clinical Therapies, Endoscopyand Advanced Wound Management products. Smith & Nephew is a global leader inarthroscopy and advanced wound management and is one of the leading globalorthopaedics companies. Smith & Nephew is dedicated to helping improve people's lives. The Companyprides itself on the strength of its relationships with its surgeons andprofessional healthcare customers, with whom its name is synonymous with highstandards of performance, innovation and trust. The Company has 8,800 employeesand operates in 31 countries around the world generating annual salesapproaching $2.8 billion. About BlueSky Medical Group Inc. BlueSky Medical Group Inc. was formed in 2003 and is based in Carlsbad,California. The company had revenues of approximately $11m from itsdistributors in 2006, which is equivalent to $55m in market sales. The companyhad net assets of under $1m at the end of 2006. The company has approximately 4,000 pumps in the market, which is about a 5%market share. For further information, see the company's website at http://www.blueskymedical.com. Forward-Looking Statements This press release contains certain "forward-looking statements" within themeaning of the US Private Securities Litigation Reform Act of 1995. Inparticular, statements regarding expected revenue growth and trading marginsdiscussed under "Outlook" are forward-looking statements as are discussions ofour product pipeline. These statements, as well as the phrases "aim", "plan","intend", "anticipate", "well-placed", "believe", "estimate", "expect","target", "consider" and similar expressions, are generally intended to identifyforward-looking statements. Such forward-looking statements involve known andunknown risks, uncertainties and other important factors (including, but notlimited to, the outcome of litigation, claims and regulatory approvals) thatcould cause the actual results, performance or achievements of Smith & Nephew,or industry results, to differ materially from any future results, performanceor achievements expressed or implied by such forward-looking statements. Pleaserefer to the documents that Smith & Nephew has filed with the U.S. Securitiesand Exchange Commission under the U.S. Securities Exchange Act of 1934, asamended, including Smith & Nephew's most recent annual report on Form 20F, for adiscussion of certain of these factors. All forward-looking statements in this press release are based on informationavailable to Smith & Nephew as of the date hereof. All written or oralforward-looking statements attributable to Smith & Nephew or any person actingon behalf of Smith & Nephew are expressly qualified in their entirety by theforegoing. Smith & Nephew does not undertake any obligation to update or reviseany forward-looking statement contained herein to reflect any change in Smith &Nephew's expectation with regard thereto or any change in events, conditions orcircumstances on which any such statement is based. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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