UK-based medical products manufacturer Smith & Nephew unveiled an ambitious new strategy on Monday, targeting accelerated sales growth and over $1 billion in free cash flow by 2028. This move aims to solidify the achievements of its recently completed three-year transformation plan.
Previously pressured by high inflation and supply chain challenges, the company launched a restructuring initiative focused on streamlining its largest orthopedics division, cutting costs, and boosting growth in wound management and sports medicine. The plan has now been successfully executed.
The company, specializing in orthopedic implants, wound dressings, and surgical support devices, plans to further refine its product portfolio under the new strategy. It will increase investments in high-growth areas like sports medicine while reducing inventory by approximately $500 million.
"This is a balanced plan—both ambitious and achievable—that will help us meaningfully accelerate growth and deliver stronger financial performance," CEO Deepak Nath told Reuters.
As of 12:48 GMT, the company's shares rose 1.9%.
**Ambitious Growth Targets for the Next Three Years** Smith & Nephew aims for a 6%-7% compound annual growth rate (CAGR) in underlying revenue by 2028. It maintained its 2025 revenue growth forecast of around 5%, expecting an acceleration to roughly 6% in 2026.
RBC Capital Markets analyst Jack Reynolds-Clarke noted, "Achieving this would require a significant leap from historical performance. We remain cautious until the company can reliably demonstrate such growth capability."
Innovation is central to Smith & Nephew's strategy, with nearly half of this year's growth driven by products launched in the past five years. The company plans to allocate about 5% of revenue to R&D.
Like many businesses, Smith & Nephew faces rising costs and higher U.S. import tariffs. The group, which operates production sites in the UK, Switzerland, Costa Rica, Malaysia, and China, is adjusting output and material flows to mitigate tariff impacts.
CEO Nath welcomed the U.S.-UK trade agreement on medical products but noted that UK operations account for only a minor portion of tariff exposure. The primary pressure stems from imports into the U.S. from Costa Rica, Malaysia, and China.
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