Surgical set to cash in on the boom in hip surgery

The Leeds-based company has developed new tools that can shave spurs and debris from the hip joint, prolonging its life and avoiding a full-blown replacement.

SI’s chief executive Graham Bowland said that this kind of minimally invasive surgery was pioneered on athletes and, while the market is starting from a very low base, it has huge potential.

“Hip surgery is really set to take off. We can operate on patients through a 5mm hole,” he said.

He was speaking yesterday as SI announced disappointing half year results, partly due to the phasing of orders which will now fall in the second half.

The company said half-year revenues to June 30 fell five per cent to £3m and pre-tax profits were flat at £475,000.

Mr Bowland said the company plans to focus on its higher margin SI branded business rather than lower margin work for other manufacturers.

“When we deal with OEM (original equipment manufacturer) customers, we’re at their beck and call. They often have competing technology,” he said.

The plan is to switch the focus from 70 per cent sales from the SI brand and 30 per cent from OEMs to 80 per cent sales from the SI brand and 20 per cent from OEMs.

While the group has no plans to exit the OEM market altogether, especially in the US, it is hoping to push its SI branded products in Europe.

A 28.5 per cent fall in OEM sales to £900,000 accounted for the shortfall in the first half. In contrast, SI branded sales rose 9 per cent to £2.1m.

Analyst Michael King, at Nomura Code, said: “In order to meet expectations, SI clearly still has a lot to do in the second half. However, the visibility the company has on its output for the remainder of the year gives us confidence for a return to growth for the full year.”

Analyst Eric Burns, at WH Ireland in Leeds, said: “First half numbers were a mixed bag: a weaker OEM segment (due partly to order slippage) masked a decent performance at the core SI branded segment in what is traditionally the quieter half.”

Mr Bowland said SI is keen to drive its expansion in the US.

“Some 54 per cent of medical devices will be sold in the US,” he said. “Compare that with China which will account for just two per cent.”