Acquisition Rumors Swirl Around Smith & Nephew Leadership Change

After spending four years at the helm of Smith & Nephew plc, Illingworth is stepping down to retire and return to the United States. The 57-year-old broke the news to business reporters and financial analysts during a recent conference call announcing the company’s 2010 full-year earnings, saying he came to a “very difficult and personal decision” to leave his job. He did not get more specific, though he told Britain’s best-selling broadsheet newspaper The Telegraph that he had “done a lot of commuting” during his tenure with the London, England-based firm.

Illingworth has been with Smith & Nephew for nearly nine years. He joined the company in May 2002 as president of Orthopaedics and was appointed a board director and chief operating officer four years later. He was named CEO in July 2007; last year, he made a total of $2.7 million in his position, earning a $1.4 million salary, receiving $1.2 million as a bonus and amassing $28,000 in other compensation, according to his profile on Forbes.com.

Smith & Nephew executives were strangely silent about Illingworth’s imminent departure, raising speculation that Europe’s largest manufacturer of shoulder and knee implants is ripe for takeover. When asked directly, Illingworth dismissed the rumors, telling reporters there is “nothing to comment on there” and referred them to a statement the company released in mid-January insisting it was “not engaged in any discussions which could lead to a merger or takeover.” As if to prove its point, Smith & Nephew bigwigs announced Illingworth’s successor almost immediately after the CEO went public with hisretirement decision.

The transfer of power will take place at the end of the company’s annual general meeting on April 14. Olivier Bohuon will step into Illingworth’s shoes at that point, though the former CEO has agreed to remain a Smith & Nephew employee through August to help Bohuon, 52, with the transition. Executives said they have been searching for a new chief executive “for some time” even though Illingworth did not go public with his retirement plans until mid-February. While Smith & Nephew executives did not give a reason for choosing Bohuon, his management background may have been a deciding factor—he has been CEO of French drugmaker Pierre Fabre SA since Sept. 1 and he previously ran the pharmaceutical business of Abbott Laboratories.

Financial analysts called Illingworth’s retirement surprising but said the company’s decision to name a successor should dampen the rumors fueling rumors of an acquisition. One analyst also noted that the management change overshadows the company’s strong fourth-quarter (2010) results. “The earnings show the impact of the work of the CEO and his team of the last four years in a positive light,” Chris Donnellan, an analyst at Evolution Securities Ltd. inLondon, told Bloomberg.

Smith & Nephew’s fourth-quarter trading profit rose to $278 million from $254 million during the same period in 2009, according to the company’s latest earnings report. Revenue at the company’s Advanced Wound Management division, headquartered in St. Petersburg, Fla., climbed 7 percent to $912 million; a significant part of that growth came from the sale of negative pressure wound therapy products, a filing with the U.S. Securities and Exchange Commission stated.

Earnings per share climbed to 20.5 cents, up from 14.5 cents in the fourth quarter of 2009. Overall sales held steady at $1 billion and operating profit swelled to $267 million from $189 million, but revenue from orthopedic products slipped 1 percent to $584 million. The decrease illustrates the industry’s continued struggle to overcome the effects of the worldwide financial crisis, which has caused patients to choose older, lower-cost artificial hips and knees or postpone elective surgery altogether. Exacerbating market pressures is the prospect of tougher regulatory standards in both the United States and Europe, which has added to the costs of bringing a product to market.

Cayenne Medical AppointsNew CEO

Cayenne Medical Inc. now has a new leader at its helm.

The Scottsdale, Ariz.-based company named David B. Springer as president and CEO to succeed James Hart, who has become executive chairman of the firm due to health reasons.

Springer, 46, has more than 20 years of executive-level leadership experience with Fortune 500 healthcare firms and emerging medical device companies. He most recently was president and CEO of CHF Solutions Inc., a privately held manufacturer of cardiac care devices headquartered in Brooklyn Park, Minn. He spent four years at the company drafting strategies to market and commercialize products, and orchestrated its sale last year to Denver, Colo.-based medical technology firm Gambro. Before he joined CHF, Springer was senior vice president of St. Jude Medical Inc.’s U.S. division, where he helped drive the company’s domestic strategic and operational plans. Prior to his stint at St. Jude Medical, Springer served as chief operating officer at AnyDevice Inc., an Atlanta, Ga.-based provider of software development services that merged with wireless software provider Hiddenmind Technology Inc.

In 1997, Springer was part of the founding management team of WebMD (formerly QDCS Inc.), serving as executive vice president of business development and senior vice president of sales. Earlier in his career, he worked in the sales, corporate accounts and marketing departments at Inter Medics, Kimberly-Clark Healthcare and The Procter & Gamble Company.

Springer graduated in 1986 from Purdue University in West Lafayette, Ind., with a Bachelor of Science degree in industrial management and a minor in industrial engineering.

Founded in 2005, Cayenne Medical is a privately held company that develops soft tissue reconstruction technology and devices for the sports medicine market.

Changing of the Presidential Guard at DePuy Orthopaedics

A new president has been inaugurated at Johnson & Johnson’s orthopedicsbusiness unit.

The company recently named Namal Nawana as worldwide president of DePuy Spine Inc., a Raynham, Mass.-based designer, manufacturer and supplier of orthopedic and neurosurgical devices and supplies. Nawana has worked within the DePuy business unit for 13 years, performing various jobs in engineering, marketing, sales and general management in Asia Pacific, Australia, Canada and Europe, according to acompany news release.

Nawana succeeds Gary Fischetti, who was promoted in January to company group chairman for the DePuy Family of Companies. In his new role, Fischetti oversees operations at all DePuy companies, including DePuy Orthopaedics, DePuy Spine and DePuy Mitek. Fischetti has worked for J&J for 27 years, assuming roles in product and business development, general management and sales and marketing positions.

Nawana’s appointment was announced less than two weeks after DePuy Orthopaedics disclosed the resignation of its worldwide president, David Floyd. President of the unit since 2007, Floyd submitted his resignation in late February and left the company at the end of March. A company spokeswoman told Bloomberg that Floyd left to “pursueinterests outside the company.” Shedeclined to be more specific.

Though it generated $5.59 billion in revenue last year for New Brunswick, N.J.-based J&J, the DePuy business unit has struggled in recent years with product recalls, lawsuits over faulty implants and a slowdown in medical procedures due to the worldwide financial crisis. The company took a $922 million charge related to last summer’s recall of its ASR XL Acetabular hip system, according to a fourth quarter earnings release. In late August last year, DePuy Orthopaedics announced the recall of the ASR XL Acetabular System, a hip socket used in traditional replacement surgery, and the ASR Hip Resurfacing System, a partial hip replacement that involves placing a metal cap on the ball of the femur in order to preserve more bone. The company said it was recalling both products due to the number of patients who needed a second hip replacement. About 93,000 ASR devices have been implanted in patients worldwide, according to DePuy. Over the last two years, the U.S. Food and Drug Administration has received about 400 complaints from American patients who received the implants.

AdvaMeDx Strengthens its Management Team

AdvaMeDx has added a veteran policyanalyst to its ranks.

Tharini Sathiamoorthy is the group’s new associate vice president, according to a news release from the organization. Sathiamoorthy brings a decade of experience in public and government affairs and health policy analysis to the position, having served most recently as senior associate in the health policy practice at global public affairs firm APCO Worldwide Inc.
During her tenure at APCO, Sathiamoorthyperformed federalpolicy outreach and analysis and crafted stakeholder and ally development programs for various clients, including medical device and diagnostics manufacturing companies.

Before she joined APCO, Sathiamoorthy managed Medicare and Medicaid projects for two healthcare advisory firms—The Lewin Group, a 15-year-old company based in Falls Church, Va., and The Marwood Group, headquartered in New York, N.Y. Earlier in her career, Sathiamoorthy coordinated government affairs and healthpolicy activities for the American Collegeof Physicians, a Philadelphia, Pa.-based national group of internists whose 130,000 members include internal medicine subspecialists, internists, medical students, residents and fellows. She also was a legislative analyst for Dean Blakey & Moskowitz, a management consulting services firm based in Washington, D.C.

“Tharini’s extensive expertise working with federal policy makers, providing health policy analysis and developing strategic alliances will be instrumental in advancing the advocacy efforts important to AdvaMeDx,” Andrew Fish, AdvaMeDx executive director, said in a prepared statement. “Tharini will be a valuable asset in our mission to provide timely patient access to safe and effective diagnostic tests by establishing risk-based regulation and modernizing the antiquated Medicarepayment system.”

AdvaMeDx is a division of the Advanced Medical Technology Association (AdvaMed) that focuses solely on in-vitro diagnostic technologies. While the group draws its support from AdvaMed’s vast resources, it maintains its own strategic policy and advocacy priorities, including: developing industry standards and statistics; advocating for domestic and international payment and regulatory policies for the diagnostics sector; and facilitating the adoption of diagnostic devices.