On June 6, 2012, Symmetry Medical Inc. announced the completion of its distribution agreement between its subsidiary Symmetry Surgical and Japan Surgical Specialty (JSS) Corporation. As per the agreement, JSS will distribute all the leading medical device brands of Symmetry Surgical in Japan.
The procurement of a distributor in the Japanese market is aligned with Symmetry Surgical’s focus on worldwide expansion of its business inclusive of all brands under the erstwhile Codman Surgical Instruments and SSi. The acquisition of the surgical instruments business of Codman and Shurtleff Inc. (Codman), a Johnson and Johnson (JNJ - Analyst Report) enterprise in December 2011 shaped Symmetry Surgical into a business worth $100 million. The Specialty Surgical Instruments (SSi) was acquired in 2007.
Symmetry Surgical is currently serving a market size of $1 billion with potentially 40% sales contribution from the international market. With the acquisition of Codman Surgical Instruments, Symmetry Surgical has extended its global footprint to over 60 countries. Symmetry Surgical had earlier completed a distribution agreement to directly distribute its offerings in Australia and New Zealand. The company focus towards expanding its international presence is yielding results. Currently, Symmetry plans to gain clients in emerging markets of Asia, the Middle East and South America.
Management at Symmetry Surgical believes that the product portfolio launch in Japan is a breakthrough, given the fact that the country is the world’s second largest medical device maker. It also asserts that the distribution agreement in a key market like Japan would catalyze growth of the existing business. The move should hasten the company’s global expansion. The integration of the recent acquisition will also enhance the product portfolio to serve a larger Japanese market.
Founded in 1991, Japan Surgical Specialty Corporation is part of the Intermed Japan Group (IMJ). As per the company, JSS is driven to meet the demands of the surgical market in Japan via clinical and service support. JSS operates a full service business model along with logistics and related distribution network in Japan. In this context, JSS is well poised to drive sales of the product portfolio of Symmetry Surgical.
Symmetry is the largest original equipment manufacturer (OEM) and provider of implants and related surgical instruments and cases to orthopedic devices manufacturers. Its major customers include Johnson & Johnson’s DePuy, Stryker (SYK - Analyst Report) and Zimmer Holdings .
Symmetry currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. However, we maintain our long-term ‘Neutral’ recommendation on the stock.