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Smith & Nephew Extends Portfolio

Zacks Equity Research

Smith & Nephew plc (SNN) continues to focus on portfolio expansion as it rolled out its new Modular Rail System (:MRS) for external fixation and deformity correction. The concept of MRS was developed by Dror Paley, MD, of the Paley Advanced Limb Lengthening Institute at St. Mary’s Medical Center in West Palm Beach, FL.

Based on the body’s ability to generate new bone tissue, MRS is specifically designed to correct bone deformities, malunions, non-unions and limb length discrepancies. The company’s latest system deploys a segmented, external rail and a series of half-pins to hold together the several bone components until new bone tissue grows and matures.

MRS is different from most of the other rail systems available in the market as it can span a patient’s joint. This enables the patient to function normally while the device is in place.

The length of MRS can be adjusted according to patient’s anatomy because of its modular rail system. Moreover, the system can be joined with other components from the company’s TAYLOR SPATIAL FRAME and ILIZAROV circular fixation device. Considering the modular, multiplanar rail which enables length adjustments, the system can be used for the hip, knee, ankle or elbow joints.

Recently, Smith & Nephew shifted its focus to its Advanced Wound Management franchise, away from a clouded orthopedic space. The introduction of MRS reflects a strategic measure to increase investment in its extremities and limb restoration portfolio. We believe that the company’s innovative products should leverage sales in a fast growing extremities market.

Despite pressure due to the looming macroeconomic concerns, Smith & Nephew’s investment in its extremity platform is likely to result in sales expansion with increasing procedural uptake. We expect the company to witness higher growth with the gradual recovery of the economy.

The stock carries a Zacks Rank #3 (Hold). While we remain on the sidelines for Smith & Nephew, other stocks in the medical devices space such as Conceptus (CPTS), Hanger (HGR) and CareFusion (CFN) warrant a look. These stocks carry a Zacks Rank #2 (Buy).

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