Cold snap good, and bad, for orthopaedic firms

* More broken bones boost demand for trauma products

* But some elective procedures delayed by bad weather

* Synthes shares up 1.7 pct, Smith & Nephew gains 1.3 pct

By Ben Hirschler

LONDON, Jan 11 (Reuters) – The prolonged cold snap across Europe and North America has led to a surge in fractures caused by slips and road accidents, boosting demand for orthopaedic trauma products used to fix broken bones.

The weather should provide a near-term sales boost for companies like Switzerland’s Synthes (SYST.VX) and British-based Smith & Nephew (SN.L), according to analyst Chris Donnellan of Evolution Securities, who upgraded both stocks on Monday.

But a spokesman for Smith & Nephew said the picture was complex and several offsetting factors meant the overall impact of the weather could be broadly neutral.

In particular, while trauma units have seen a surge in incidents, the Arctic weather meant other patients scheduled for elective procedures — such as hip and knee replacements — had not been able to attend surgery as planned, he said.

And while a good winter skiing season is likely to see more ski-related fractures, the increase may not be material as the recession has hit demand for winter holidays.

Shares in Smith & Nephew were 1.3 percent higher by 1240 GMT, while Synthes gained 1.7 percent, as both stocks outperformed a 1 percent rise in the healthcare sector .SXDP.

The orthopaedics sector has proved vulnerable to the economic downturn in the past year, with many patients deferring elective operations that required out-of-pocket payments.

In the case of Smith & Nephew, that will translate into the loss of around $25 million of hip sales and $38 million of knee sales in 2009 compared to what might have been expected in a normal year, according to Evolution’s Donnellan.

The big question now is to what extent procedures deferred in 2009 will be completed in 2010.

Results last week from Biomet give some encouragement, with the U.S. orthopaedics company reporting signs of elective procedures starting to bottom out in the three months to Nov. 30.


Josh Sandberg

Josh Sandberg is the President of Ortho Spine Partners and Partner for The De Angelis Group. He also serves as Co-Founder and Editor of OrthoSpineNews.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button