Competition heats up in wound therapy market

Sunday, October 14, 2007

LONDON - Pump manufacturer Smith & Nephew inked a deal with Universal Hospital Services last week in a move that could challenge industry giant KCI's dominance in the $1.2 billion negative pressure wound therapy (NPWT) market.

Under the deal, UHS will manage and distribute Smith & Nephew's Blue Sky NPWT products in the U.S. acute market. UHS's customer base includes 3,800 acute care hospitals and 80 offices nationally, giving Smith & Nephew a boost into the market. The market is dominated by KCI, which is estimated to own 89% of the market (See HME News, October 2007).

"This is a great combination of two companies providing leadership in their respective business areas," stated Robin Carlstein, senior vice president of NPWT Strategic Business Unit. "Smith & Nephew in wound management, and UHS in medical equipment management and logistics expertise."

Similar to KCI's model, Smith & Nephew's products will be rented, not sold.
Analysts at Wachovia Capital Markets view the deal as a threat to KCI, which they say has experienced complaints from customers regarding paperwork requirements, difficulty transitioning patients from the hospital to the home with an NPWT pump, slow turnaround in refurbishing pumps and high prices.

Medicare NPWT spending soared 444% from 2001-2005 to $163 million, which many industry leaders believe may have led to CMS including NPWT in the first round of national competitive bidding.