Smith & Nephew in therapy joint venture

SMITH & Nephew, a titan of the artificial hip and knee world, today set out plans to spin off its biologics business, which supplies products promoting healing and pain relief, in a deal worth $258 million (£165 million).

The replacement joint-maker is rolling the biologics business, which has developed ultrasound and injection products for bone healing, into a new US-based joint venture. Healthcare private equity group Essex Woodlands will own 51% - for which it will pay S&N $98 million cash, plus a $160 million five-year note - with S&N holding 49%.

The new venture is to be called Bioventus.

Smith & Nephew has been hampered by lower demand for replacement joints, thanks to the shaky jobs market. Potential patients are putting off operations, which require weeks of sick leave, and S&N missed City forecasts at a trading update in November.

Olivier Bohuon, who became chief executive of Smith & Nephew in April last year, said today's biologics deal would help the firm to invest elsewhere.

He said: "In a single act we have given our existing biologics business the resources to address longer-term development projects ... and freed up management to focus on driving efficiencies in established markets."

S&N's biologics and clinical therapies business had sales of $223 million in 2010.