Smith & Nephew Unveils New Discounted, Hospital-focused Sales Model (HealthPointCapital)
Smith & Nephew unveiled a new hospital-focused sales model that will offer two of the company’s primary hip and knee implants through multiyear contracts at an approximate discounted rate of one-third.
The new system is called Syncera, and Smith & Nephew anticipates the two products offered under it, Genesis II Knee, and the combination of the Synergy hip stem and reflection cap, are suitable for roughly 80% of all hip and knee procedures undertaken in the United States.
Along with reconstructive implants, the delivery program will also provide basic technical support in the operating room and supplemental technology to help streamline customer’s supply chain and logistics. Management believes this type of model can lead to more attractive economics for patients, payers and providers as it offers automatic ordering and product replenishment, point-of-care automated tools, comprehensive pre-launch training and support, and access to technical and live account support when needed. Syncera is projected to generate overall cost savings of 40-50% for participating customers.
Orthopedic sales and accounts historically have been focused at the surgeon level, but with this new delivery model, Smith & Nephew is aiming to fulfil the needs of customers searching for a different value proposition, the 5-10% of U.S. hospitals that cannot afford the company’s full-service offering.
Management expects Syncera to initially result in dilution, but ultimately the idea is to maintain its present-day margins by reducing product prices concurrently with lower Selling, General & Administrative (SG&A) operating expenses resulting from less intensive marketing and individualized training efforts as this type of program strips away some of the traditional costs, such as sending a company technician to attend procedures.
So far Smith & Nephew has received positive feedback from customers on Syncera and expects to start shipping the first product under the new system shortly.