International medical technology major
Smith & Nephew plc
) recently revealed clinical data from two independent studies.
The objective was to evaluate the efficacy of PICO Negative
Pressure Wound Therapy System (PICO) in preventing surgical site
infections (SSI) after a Caesarean section.
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One of the studies presented by Tacoma, Washington-based
MultiCare Health System demonstrated favorable outcomes from new
post-operative strategy introduced this month to manage
C-sections. The use of PICO in high-risk patients also showed
impressive results. The outcomes implied an 83% reduction in SSI,
underlying a probability of 0.5 or six in 1,200 to record SSI in
Another study, which enrolled 50 high-risk patients, also
presented encouraging data. These patients, prone to contracting
an infection post C-section on account of clinical obesity,
reported no infections and zero readmission.
According to a study by Jeanette Harris - an Infection
Preventionist, post-operative SSI in patients might lead to
re-admission for seven patient days at a cost of approximately
$50,000. Thus, the clinical studies demonstrate a significant
reduction in post-operative SSI, resulting in improved standards
of care and lower healthcare cost.
The data presented by Smith & Nephew is encouraging and
demonstrates further favorable safety and efficacious clinical
superiority of PICO. We are especially encouraged by the clinical
benefits of PICO in high-risk patients.
Neutral on Smith & Nephew
Notably, the company is increasing focus on the Advanced Wound
Management franchise, away from a congested orthopedic space.
However, the international market for advanced wound management
remains highly fragmented with Smith & Nephew enjoying 18%
market share in 2011 on a worldwide basis.
We believe that the company's market share is likely to increase
on the back of the recent acquisition of Healthpoint
Biotherapeutics. Further, Smith & Nephew expects to achieve
above-market growth in Advanced Wound Management in the upcoming
However, challenging conditions in established markets and
lukewarm demand in the orthopedic market remain. This is on
account of deferred elective procedures and is expected to weigh
on the company's performance. We currently have a long-term
Neutral recommendation on the stock which carries a Zacks Rank #3
(Hold). One of its peers in the orthopedic market,
Zimmer Holdings Inc.
), carries a Zacks Rank #2 (Buy).