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Smith & Nephew acquires Osteobiologics, Inc


11 July 2006

Provides the only off-the-shelf bioabsorbable implant for articular cartilage repair on the market in Europe

Smith & Nephew plc (LSE: SN, NYSE: SNN) announced today its acquisition of privately-held, Texas-based, OsteoBiologics, Inc. (OBI).

OBI markets innovative bioabsorbable bone graft substitutes (BGS) in Europe to repair cartilage defects in the knee and offers the TruFitTM BGS Plugs in the U.S. as a bone void filler. OBI's products are an exciting addition to Smith & Nephew's existing comprehensive arthroscopy portfolio and will be sold through Smith & Nephew Endoscopy's global sales force.

Smith & Nephew has agreed to pay a net consideration of $72.3m in cash for OBI, whose 2005 sales revenues were $3.3m. The acquisition is expected to reduce earnings by $7m in the second half of 2006 and be broadly neutral in 2007.

OBI's primary product marketed in Europe, TruFitTM CB, is a one-step arthroscopic procedure for repairing bone and articular cartilage defects. Cartilage is a protective covering of the articular surfaces of bones that reduces friction and provides flexibility within the joint. Cartilage defects are often a result of traumatic injury or degenerative conditions and are often found in conjunction with meniscal tears or ACL injuries. There is strong evidence that articular cartilage defects can lead to osteoarthritis.

Currently, less than 20 percent of cartilage defects in the knee are treated due to the lack of an efficacious and patient-friendly solution.

"We view the opportunity to effectively treat articular cartilage defects as a major opportunity for our Endoscopy business and have been looking at this area for some time," said Sir Christopher O'Donnell, Chief Executive of Smith & Nephew plc. "This unique technology from OBI strengthens our market leading range of arthroscopy products for the benefit of surgeons and their patients. We welcome the OBI team to Smith & Nephew."


About us

Smith & Nephew is a global medical technology business, specialising in Orthopaedic Reconstruction, Orthopaedic Trauma and Clinical Therapies, Endoscopy and Advanced Wound Management products. Smith & Nephew is a global leader in arthroscopy and advanced wound management and is one of the leading global orthopaedic companies.

Smith & Nephew is dedicated to helping improve people's lives. The company prides itself on the strength of its relationships with its surgeons and professional healthcare customers, with whom its name is synonymous with high standards of performance, innovation and trust. The company has over 8,500 employees and operates in 33 countries around the world generating annual sales of $2.6 billion.


Forward-Looking Statements

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All forward-looking statements in this press release are based on information available to Smith & Nephew as of the date hereof. All written or oral forward-looking statements attributable to Smith & Nephew or any person acting on behalf of Smith & Nephew are expressly qualified in their entirety by the foregoing. Smith & Nephew does not undertake any obligation to update or revise any forward-looking statement contained herein to reflect any change in Smith & Nephew's expectation with regard thereto or any change in events, conditions or circumstances on which any such statement is based.


Enquiries

Debbie Scott
Financial Dynamics - London
Tel: +44 (0) 20 7831 3113
Jonathan Birt
Financial Dynamics - New York
Tel: +1 212 850 5634
Joe Metzger
Smith & Nephew - Endoscopy
Tel: +1 978 749 1330