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Symmetry Gains Ground in Italy

Zacks Equity Research

Symmetry Surgical, a subsidiary of orthopedic implants and instruments maker Symmetry Medical Inc. (SMA) recently inked an exclusive agreement in Italy with Biocommerciale Srl. Per the agreement, Biocomerciale will distribute Symmetry’s surgical instruments portfolio inclusive of all brands under erstwhile Codman Surgical Instruments, Olsen Medical and SSi.

Biocommerciale is driven to meet the demands of hospitals and healthcare professionals in Italy. With experience of more than 30 years and distribution network linked with more than 1,000 hospitals, clinics and medical facilities in the Italian marketplace, Biocommerciale is poised to drive sales of Symmetry Surgical product portfolio.

Since Symmetry Medical’s core Original Equipment Manufacturing (:OEM) Solutions business is facing declining capital spending and procedural and pricing pressure from the weak global orthopedic market, the company is focused on expanding its smaller Symmetry Surgical business.

Earlier this month, Symmetry signed a distribution agreement with a leading medical device distributor, MTG Medical Technologies (MTG). Per the terms of the deal, MTG will distribute Symmetry Surgical’s surgical instruments product portfolio in Europe.

Earlier, in October, Symmetry Surgical had entered into a distribution agreement with Canada-based AMT Electrosurgery Inc. to distribute its entire portfolio of medical devices in Canada. In June, Symmetry Surgical had completed a distribution agreement with Japan Surgical Specialty (:JSS) Corporation to sell its products in the Japanese market. The company had also completed a distribution agreement to directly distribute its offerings in Australia and New Zealand.

With a clouded orthopedic space in the domestic market, the distribution agreements might be an attempt to diversify the company’s geographical base by exploring offshore opportunities. It should also enable Symmetry to gain a competitive edge against larger players in the market who continue to improve supply continuum.

In the third quarter 2012, Symmetry Surgical revenues jumped 136.1% on a year-over-year basis to gross $24.8 million. Growth was primarily led by contributions from Codman and Olsen Medical buyout (in 2011). The company’s distribution efforts should further boost revenues in the future.

Symmetry is the largest original equipment manufacturer (:OEM) and provider of implants and related surgical instruments and cases to orthopedic devices manufacturers. Its major customers include Johnson & Johnson’s (JNJ) DePuy, Stryker (SYK) and Zimmer Holdings (ZMH).

Symmetry currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. However, we maintain our long-term ‘Neutral’ recommendation on the stock.

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Read the Full Research Report on SMA

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