LAS VEGAS — Just across from Smith & Nephew's (S&N; London) 90X100 makeshift office on the exhibit floor at the American Academy of Orthopedic Surgeons (Rosemont, Illinois) annual meeting – lies Syncera (Mansfield, Massachusetts), a business unit set to change the model of how orthopedic products are sold.

The company which was launched in August of 2014, is an offshoot of S&N, and is aimed at slashing the prices of implants in half without sacrificing profit margins.

Syncera is a model that excludes logistical support or an on site technician and replaces them with an iPad app. The program was announced by S&N CEO Olivier Bohoun at the end of July 2014. The Syncera program could reduce hip and knee device prices by 40% to 50% for the target market of 5% to 10% of U.S. hospitals. The company spoke with Medical Device Daily early last week, to not only explain what it was, but how the model can be an alternative to the traditional sales model.

"We are a strategic business unit of Smith & Nephew, but we operate separately and we have our own sales team marketing team and support," Stuart Morris-Hipkins, senior VP and General Manager of Syncera, told Medical Device Daily. "I think it's important to understand the differences between the traditional model and the model enjoyed by Syncera."

Syncera offering will center on two prior generation lines: the Genesis II knee and the Synergy hip and Reflection cup. Hospitals signing up for Syncera will purchase instrument sets and inventory, as opposed to having them provided by the manufacturer.

"It's a consignment model," Morris-Hipkins said. "The traditional model has a manufacturers rep in the room. In the Syncera model, the instrument sets and implants are managed by the hospital. So they are able to acquire the instruments and implants as part of the agreements we have in place."

He added, we're focused on standard procedures done in the OR day in and day out. We're not focused on revisions."

The OR staff is trained by Syncera, and typically the hospitals are able to hire technicians through the savings generated in using the Syncera model.

"We also have very simplified pricing," he said. "So if you look at a traditional manufacturer, they have thousands of price lists. We have one price list – a price list for a knee, and one price for a hip – regardless if you're doing one procedure or 10,000 procedures."

Analysts tied to the orthopedic's space have been highly favorable of the model – which somewhat resembles a program Wright Medical (Arlington, Tennessee) boasted prior to selling its OrthoRecon assets to Microport Scientific (Shanghai). MicroPort Scientific confirmed the closing of the transaction to acquire the OrthoRecon business from Wright Medical Group, on Jan. 9, 2014.

"We also give S&N credit for trying a new sales model for its large joint implants, as it seeks to compete with much larger rivals, Debbie Wang, Senior Analyst with Morning Star, said. "The company's Syncera purchasing program is similar to the one Wright Medical unveiled shortly before it sold its large joint reconstruction business to Microport. By offering hospital clients lower-touch, less-intensive customer support in return for more attractive discounts, S&N could reduce the risk of being left off hospital shelves. We think this program will be most appealing to those hospitals that have a small number of surgeons using lots of S&N implants – in other words, customers who have less need for on-site support from sales reps can now accommodate surgeon preference for S&N at a lower cost."

Other analysts note there could be some cannibalization over time, but ultimately it will be a powerful program in a few years.

"We believe the lower cost and reduced scope for human errors made possible by Syncera are attractive selling points to hospitals, and should ensure market share gains for Smith & Nephew," said Hans Bostrom and Mick Cooper, both analysts with Edison. "This may more than compensate for the lower profit per implant sold with Syncera, which would have a similar EBIT margin but lower price than under the traditional sales model. Initially, S&N intends to target competitors' clients (5%-10% of the market) with Syncera, but it is unlikely to avoid cannibalization of existing clients over time, in our view. However, the commercial impact of Syncera is only likely to be meaningful in a few years' time, as it requires adjustment to numerous stakeholders and procedures."