We had the opportunity to join Smith & Nephew (LON:SN) recent institutional investor roadshow and hear about the introspection that has emerged following the appointment of its new CEO. While endorsing its strategy as a portfolio medical device company, two strategic reviews have identified areas which, when the detail is announced at the Q3 and FY18 results, will enable investors to track S&N’s target of returning to market growth rates.
The situation
S&N is Europe’s largest medical device company with three divisions that can be further divided into nine franchises and many more product areas. Such a complex organisation operating in c 100 countries has evolved into an unwieldly structure, which had constrained underlying growth to c 2% in Q2 – below the market rate of c 4%. Strategic reviews have benchmarked S&N against its higher-performing peers, which are organised along franchise rather than geographic lines, and examined the organisation from the bottom up. Two areas of focus have been highlighted (in addition to M&A) that should return S&N to higher growth.
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