Wright buys A.M. Surgical products

Services will be used for foot, ankle treatments

The Commercial Appeal
June 11, 2008
By Daniel Connolly

Wright Medical Group is tightening its grip on the market for foot and ankle surgery devices with a $2.1 million acquisition of products from A.M. Surgical Inc., a firm with which it signed a distribution agreement last year.

Wright, an Arlington-based medical device maker, said it may pay as much as $700,000 above the initial purchase price if the products sell well.

The company is buying different surgical equipment systems that can be used to treat various problems of the connective tissue of the foot and ankle, said John T. Treace, vice president of marketing for the firm's biologics and extremities division.

The products are used with an endoscope, a fiber-optic device that provides a surgeon with a view into the patient's body through a tiny opening.

One of the products, the AM EGR system, is for a gastrocnemius release, an operation which reduces tension on the heel cord.

When the tension is too tight, the person's foot can point downward like a horse's hoof, Treace said.

Surgeons also use the gastrocnemius release procedure as part of operations to heal chronic foot wounds, he said. But the most important application is for correcting flat feet.

"I think our primary driver there is for the flat foot, completing the flat foot surgical continuum and giving the sales reps everything they need to be the one-stop shop for that surgeon during a flat foot case," he said.

He spoke by cell phone from Diessen, Germany, where he was visiting a facility for Darco International Inc., a company whose foot and ankle division Wright acquired last year for $17 million.

It was Wright's first acquisition in years, and the firm followed it with an $8 million purchase of foot and ankle products made by Pennsylvania-based R&R Medical Inc., a $2.5 million purchase of products from Houston-based Metasurg, and an acquisition of Berkeley, Calif-based INBONE Technologies Inc. that's worth at least $27.7 million.

Wright's managers say they believe these acquisitions have made the company the largest player worldwide for foot and ankle surgery products, a niche field that's historically been overlooked by bigger companies. With $387 million in revenue last year, Wright is the smallest of the three major medical device makers in Memphis.

It's difficult to gauge the extent of Wright's dominance in the foot and ankle market, though, since many of its competitors are private, analysts say.

But there's no question sales growth has been explosive.

Sales in the company's extremities division, which includes products for body parts from the shoulders to the toes, rose 38 percent in 2007 to $62.3 million.

"In the last 12 to 18 months they have basically moved to the forefront or nicely moved to the front of the pack," said Jeff Johnson, an analyst with R.W. Baird & Co. in Milwaukee.

He said the acquisition of the products from Smithtown, N.Y.-based A.M. Surgical means Wright will increase its profit on each of the units sold, since it will act as manufacturer, not distributor.

"We're right now in a very good place for the whole company," he said.

Contact Daniel Connolly at 529-5296.

Wright's acquisition

Wright is buying surgical products related to endoscopic surgery on the feet and ankles.

The devices allow a doctor to do the surgery through small openings that heal quickly.

Contact Daniel Connolly at 529-5296.