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Good morning. Certain statements in this presentation are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in the company's filings with the Securities and Exchange Commission.
Welcome to the Smith & Nephew 2019 Q1 trading report. Please continue to stand by. Your conference will begin shortly.
Well, good morning and welcome to Smith & Nephew's first quarter 2019 trading update. I want to talk about three things today: firstly, the detail of our first quarter revenue; secondly, our update on our M&A strategy; and lastly, our strategic initiatives in digital surgery and robotics. So straight on to our Q1 results.
It's been a good start to 2019 across the whole of Smith & Nephew with a 4.4% underlying growth rate in the quarter. All three of our franchises accelerated from their 2018 performance. Orthopaedics and wound management each grew 4%, and Sports Medicine & ENT grew 5.3%. Importantly, this signals the potential of Smith & Nephew to grow ahead of its aggregate market growth rate of 4%. It's this kind of broad-based improvement that the shift to the franchise model was intended to deliver on at -- on a consistent basis. The U.S., which is around half of our business, grew 4%, sustaining the improvement that we saw in the second half of last year. Emerging Markets were again a highlight, this time with over 15% growth; and broad-based growth in the region, particularly strong performance from China which accelerated from mid-teens growth in late 2018 to well over 20% growth in the quarter. We expect China, along with India, to really drive the Asia Pacific sales growth for the remainder of the year and beyond. Other Established Markets was still slightly negative in the quarter. Within that, though, Europe returned to positive growth after a decline in the second half of last year.
So moving on to the detail of each of the franchises and starting with Orthopaedics, which grew 3.9% overall. Knees grew 4.1%, with 1% growth in -- 1.6% growth in the U.S. We returned to above-market growth globally, with JOURNEY II and LEGION Revision continuing to be our main drivers of growth. Hips grew 2.4% in the quarter. The accelerated growth in the second half of 2018 continued in the U.S. at 4%, but our growth overall has moderated with some supply issues and which we see improving in the second quarter and throughout the remainder of the year.
Trauma grew 4.8%, and that pleasing result was driven by our plates and screws business growing at 8%. As you all know, we have been rolling out our EVOS plating system and taking good market share across the regions of the world, principally starting in the U.S. Now there's still a number of components in the EVOS system to still launch, and equally, we're only beginning our launches in international markets after seeing really robust growth in the U.S. and responding to that demand. Other Reconstruction grew 6.9%. And under our new reporting structure, this includes NAVIO capital sales and our cement business. Of note, we recently achieved regulatory approval for NAVIO in Japan and indeed completed our first sale there in the quarter.
Sports Medicine & ENT was our highest-growth franchise at 5.3% growth in the quarter. Within that, the joint repair business grew 11%, which is the fastest quarter growth in several years. Growth was across all regions and with China being a major driver of the acceleration since Q4. In the U.S., REGENETEN and sales of REGENETEN again more than doubled. We also closed the acquisition of Ceterix in January. And NovoStitch Pro, which is a device for meniscal repair, can now add to our future growth as we move throughout 2019.
I talked about Arthroscopic Enabling Technologies. And it continued to decline, this time at 1.1% globally, but as I said in the fourth quarter, we expect to return to growth in the second half of 2019, and we're well on track to deliver that. ENT grew 4.2%, in line with the growth that we saw in the second half of 2018. And as a reminder, Smith & Nephew has a very focused portfolio in the ENT business, with revenue mostly coming from our COBLATION technology which is used for tonsils and adenoids.
Advanced Wound Management grew 4.1%, so I'm really pleased with the focus of the team and raising the performance of the franchise. Advanced Wound Care grew 2%, and trends in this franchise were similar to the second half of 2018. Really encouraging to see the U.S. again delivering double-digit growth, although some countries in Europe still under pressure. Advanced Wound Bioactives grew 0.4% over a relatively weak Q1, but the decline in the SANTYL volumes that we've experienced haven't fully stabilized but they're on their way. And we were able to grow REGRANEX at double-digit rates since we were -- we've removed the black box label from -- warning from our label. Advanced Wound Devices accelerated to 16.4% growth in the quarter. And that's principally driven by PICO, but I will note that RENASYS also delivered double-digit growth in the quarter.
So moving on to M&A. I'm really pleased with the strong execution from our team against our plans. We closed the acquisition of Ceterix in January. We announced the acquisition of Osiris in March and closed it in April. We announced and closed the acquisition of Leaf also in April. And we announced the acquisition of Brainlab's orthopedic digital assets in March, and we expect to close that in the second quarter.
Osiris increases our exposure to an attractive, high-growth segment of the skin substitute market in the U.S. The key products of Grafix and Stravix are growing above the market at 23% in 2018. And they're backed, and this is very important, with really strong clinical evidence. These products fit synergistically with our existing wound management portfolio and, importantly, share cold points with both our bioactives business and our negative wound therapies business. So I'm excited about the acquisition can do for Smith & Nephew, really pleased to welcome the team. We've begun our integration, and that's going well.
On Leaf. As a reminder, Leaf's patient monitoring system is based on a small wearable sensor. And that monitors patients' position and mobility and, combined with our leading foams and skin products, really creates a compelling solution for preventing pressure injuries. And that's the big move for us is the -- our sales force is really engaging in a solutions approach with our customers. Again, we expect that technology to accelerate the growth of our portfolio. With Brainlab, in addition to the orthopedic joint reconstruction business, our forward partnership also enhances our digital surgery and robotic ecosystem. And so let's move into that area and spend a little bit of time in the advances that we've made and announced principally at the American Academy of Orthopaedic Surgeons in March. Some of you were able to attend that meeting. We announced our next-generation robotic platform, along with the agreement with Brainlab.
So Smith & Nephew from here is not just going to be marketing a single device or robot going forward, but we'll have multiple assets in our digital surgery and robotics ecosystem. And specifically, in the second half of 2019, we'll be launching the next version of NAVIO, the next version of the NAVIO software; as well as launching Brainlab's hip software on the NAVIO. And that's one of the principal reasons that we acquired Brainlab, to immediately be able to allow customers to access more than just knee surgery on NAVIO. Beyond that launch, our next-generation platform, if you can look at the picture, you can see that we move from a card-based system with NAVIO to what is a laptop computer-sized robot. And that's a big deal for us because it allows us to put that robot onto our Sports Medicine stack. And then also you'll see just below that our robotic arms, which fit into our thinking that we can have modular approaches to each surgery. So as we think beyond the near term and -- we fully anticipate the broad-based use of robotics across Smith & Nephew's portfolio, so in multiple procedures getting beyond just knee replacement; and bringing in further technologies, which in our vision include technologies like augmented reality.
So finally, on a brief update on the shift in our operating model, which I've talked about before. It's just really pleasing to see us begin to deliver on the promise of the model, with each of the franchises accelerating their growth and in aggregate Smith & Nephew getting to growth above its market growth rate.
But in terms of the people, we recently announced the appointment of Myra Eskes to replace Rodrigo Bianchi, who retired, in Asia Pacific. And Myra joins us on May 20. She's -- she brings really tremendous experience. She was previously the President and CEO of GE Healthcare in South Asia, Korea, Australia and New Zealand; and a proven track record of high growth, driving profitability and managing complex portfolios. So a great add to our executive team; and also for a region which is doing so well already, to continue to build on that. So with that addition, our commercial leadership team is complete. And we've said that each franchise president would have an opportunity to speak with you about their franchise. And it's really a pleasure for me to introduce today Brad Cannon, who leads our global Sports Medicine & ENT business.
So Brad, please come and share with everybody.
Thank you, Namal. Good morning. I'm pleased to be able to present on the Sports Medicine & ENT business. Namal has covered some of the highlights from our quarter: 5.3% growth, strong across both geography and also product categories, with highlights such as China and also REGENETEN in the U.S. Let me go into a bit more detail about how we're driving acceleration across the business and the franchise model.
We started out by taking stock of the commercial organization and asked some really fundamental questions on whether we're set up to win. Do we have enough sellers, and are they being positioned in a way that they are being trained and working together in the right way? Does our comp plan incentivize the right behaviors? How effective are our launches? Do we work as a team? Do we have attractive development and career paths? Really fundamental questions about our sellers' preparation and ability to succeed in the market. At each turn, we found opportunities to put the team in a better position to win. Adjustments here also are the fastest way for us to be able to improve the customer experience.
Another thing that we're really interested in is how quickly can we make major changes that could have an impact in the short term and also would have an impact over a longer period of time as well? So since then, we've hired more specialists. They're focused on capital selling and also on REGENETEN to accelerate both AET and also the biologics business. Interestingly, as we do this, this also frees our territory managers to spend more time with customers. We've redesigned territories, with an eye towards driving greater efficiency and making them easier to cover and also to enhance teamwork across both our territory managers and also our specialist groups. And we've introduced a simple pay-for-performance comp plan.
We've implemented a more rigorous sales process from targeting to close, and it's for all of our lead technologies. And so it's for areas like REGENETEN, like the capital -- like the tower for our arthroscopic technologies, Ceterix, FLOW 90 and the WEREWOLF platform. We've also begun to shift from being commercially focused on individual products to becoming a procedure-based portfolio company and competing in that way. I can't overstate how important this is for an orthopedic subsegment like Sports Medicine. Procedural thinking is the way that our customers think, the way that our surgeons thinks. It's also the way that administrators communicate, too. And it's part of our evolution to becoming an easier company to do business with.
Our ambition is to be -- overall is to be the most professional, highest-service, best-trained commercial organization in the industry; a destination for the best talent. And while our commercial practices are part of reaching that ambition, top talent is interested in top technology as well, and so it's -- it would be remiss not to discuss our approach to portfolio, too. In our joint repair business, it's a large and an attractive segment in a market that's growing 5% globally. While we already have a broad and competitive joint repair portfolio, there are opportunities for us to improve our position and to enter new segments. For every major joint category, there are a number of subsegment procedural categories that we can enter, and we can do it in different ways. We can do it by registering our products for that indication. We can also do primary innovation to innovate across the procedural line. Another way that we can enter new segments is through tuck-in acquisitions, like you've seen from both Rotation Medical and also Ceterix. In the case of Rotation, REGENETEN adds into a procedural category and addresses an unmet need within rotator cuff and other types of soft tissue repair, and so it's adding to a procedure that we already have a broad presence. Ceterix is a little bit different but no less exciting in that it actually extends our reach within a procedural category and allows us to address new types of -- new tear types within meniscal injuries. It's a complement to our FAST-FIX 360 platform, and we're going to go into a bit more detail in the next slide. Before we do, though, it's important to note that the procedural approach for us to think in how we enter new segments also applies to our ENT business. While we're primarily focused on a small number of soft tissue procedures today like tonsils and adenoids, there are a broad range of procedures beyond that, that are performed by the same types of surgeons and have an attractive overall profile. It is the -- makes these opportunities in ENT actually incredibly attractive for us and some -- and we're very, very optimistic for us to consider in the future.
Let's go a little deeper into Ceterix. Smith & Nephew is already the global market leader in the meniscal repair segment with our FAST-FIX 360 product. Interestingly, though, only 15% of meniscal injuries are repaired today. And it's important to note then that the other 85% -- approximately 85% of global meniscal tears are not repaired, and they actually are removed through meniscectomy. The broad clinical benefit of a meniscal repair versus a meniscectomy is in long-term outcomes, and we see opportunities for further market development. And you'll hear us often talk about saving the meniscus. And it's one of our catch lines that we talk about often internally just to keep ourselves focused on the opportunities to develop the underlying market. Ceterix gives our customers an improved tool for repairing specific tear types, and therefore it broadens our addressable market in this growth area. We are currently scaling manufacturing, training the U.S. selling organization and also pursuing registration outside the U.S. to take full advantage of the opportunity that we have in meniscal tear. We'll continue to invest in evidence and education as we see the standard of care develop towards more tears and more tear types being treated through meniscal repair. Our combined portfolio gives surgeons the best tools to do what is right for their patients.
Arthroscopic Enabling Technologies has been a drag on the growth of the overall franchise for a period of time, but as Namal has already mentioned, we expect AET to return to growth during the second half of 2019. In addition to the commercial changes that we've already talked about, we've been making targeted investments across the AET portfolio. From these investments, we'll see three critical launches in 2019 on PLATINUM blades, FLOW 90 on the WEREWOLF platform and also with LENS 4K. PLATINUM blades offer a unique design to deliver fast and precise tissue resection and bone resection to drive efficiency in the OR. And efficiency in the OR is something that both administrators and surgeons can readily accept as a valuable proposition for them. In Q2, we'll also launch FLOW 90 Wands, which brings WEREWOLF performance into the large shoulder segment for COBLATION therapies. WEREWOLF offers speed and precision as well and is truly the next generation of COBLATION. Finally, the launch of LENS 4K surgical imaging system will follow in the second half of 2019. And there's no doubt that we were late to market with this, and the 4K imaging technology really has become the new standard in surgical video. Our team is just flat out excited to have the opportunity to compete in this segment, especially when you consider the other launches across the tower technologies. It's important that we have this capability to compete in the tower, and we have further projects beyond this to help us reestablish our technological leadership.
And through these launches, we like our enhanced position in AET, but it -- really the good news is it doesn't stop there. In the medium term, we'll be leveraging our robotic investments and allow us to bring robotic capabilities to the tower for Sports Medicine and other types of indications. This will enable us to deliver precision and versatility in a small footprint where we already have an installed base. We're excited about the technology that we have today and also the pipeline that we have in AET.
Finally, while there are a lot of exciting opportunities for us in the short and medium term, we're also very optimistic for the positioning of both our Sports Medicine and ENT business over a -- over the longer term. We are well positioned to benefit from the overall market trends. And where more patients are seeking better outcomes but overall budgets are constrained, companies that can deliver both clinical and economic value will win, and we believe that our franchise can deliver both. Favorable demographics; demand for faster recovery and also healing; and procedures moving, and point of care, from the hospital into the ASC are all trends that we're well positioned to serve with both our broad portfolio and then also our global reach.
Overall, we're pleased with our results, and we have optimism for what lies ahead.
So with that, I will now hand it over to Graham. Thank you.
Thanks, Brad. And good morning, everyone. With acceleration in all three of our franchises and overall underlying growth of 4.4% in Q1, we've made a good start to 2019 slightly ahead of our plans. This strong start has increased our confidence in delivering full year underlying sales growth in the upper half of our 2.5% to 3.5% guidance range. Based on rates prevailing on the 26th of April, foreign exchange will reduce our reported growth rate by around 200 basis points for the full year, while the completion of the Osiris Therapeutics and Leaf Healthcare deals will add 240 basis points. So we therefore expect reported sales growth for 2019 to be between 2.9% and 3.9%. We continue to expect full year trading profit margin to be between 22.8% and 23.2%.
So to recap. A strong performance in Q1 with solid revenue growth across all three franchises, rapid progress closing growth-accretive M&A transactions. And we're increasingly confident that the full year sales outlook will land in the upper half of our guidance range. What a difference a year makes.
With that, we can move to questions.
Yi-Dan, we can start with you.
I have two questions for Brad and then one question on the guidance. So Brad, looking at the list of changes that you're making, one common theme is that it's all to do with sales and marketing. So just curious on how that has turned out. Clearly, as you reviewed the business, was that the weak point that has hampered Smith & Nephew's performance in the past? Or is it a case that you haven't got to the product portfolio yet and that's the -- a stage 2 of your plan? And relative to your plan, how do you then match up to your competition? That would be helpful.
Sure. So the starting point was to make sure that we are getting all that we could out of the assets that we currently own. The good news is that we have the right assets. We are well positioned within the market on a portfolio basis. We have the right innovations in critical areas of the current market, and we don't feel like we're disadvantaged by our portfolio today. And so sales and marketing; and making sure that we're doing the right things within the marketplace to take better care of customers; and also take better care of our team, to give them the resources they need to win was the primary focus and the starting point to make sure, again, that we're getting the most out of the assets that we already own. And so we started in sales and marketing, specifically within the selling organization, to make sure that they're set up to take better care of our customers by having the right incentives, the right level of training; that they have manageable territories; all of those fundamentals that you need to have in order to succeed if you're part of the team.
And how does that match you to competitors? Are you then on par with your competition with these changes, or would you say you're advanced of your competition?
I think our portfolio stands on its own. I mean it's highly competitive within the industry. I think we're very well positioned to perform.
Okay. And then on guidance, Namal, I think, when you gave the guidance for the full year, there was a bit of flexibility built in for your managers to tweak the business for better performance later. Where are you on those? I mean, have you seen the disruptions that you wanted -- you might see, you're expecting to see? And hence is that the reason why the guidance is just reflecting the outperformance that we're seeing in the first quarter?
So thank you. I mean, firstly, there's good start to the year. So 4.4% growth overall and each of the franchises continuing to accelerate. It's a really good market for us. And so with that, we're more confident that we'll get to the upper end of our full year revenue guidance. In terms of my expectations a year in, I mean, as Graham said, what a difference a year makes. A year in, we've made really good progress as an organization. And Brad talked about what he's specifically done within his franchise. Moving to the franchise model just brings more focus. And not only do each of our franchises accelerate their growth. They can get good growth at or above market in the first quarter, but our regions also did what we had hoped and wanted them to do. So we're on track now. We just have to keep going and sustain our growth in each of our businesses. So good start.
And the disruptions, is -- are you seeing more or less than what you were anticipating?
What do you mean by disruptions?
Well, when you make changes to a business, it's never going to be smooth, as we have seen with other companies. And therefore, the expectation that you gave at the time you issued the full year guidance is that you're giving your managers some flexibility for that to occur. And so I'm just wondering where you are at this stage of the year, whether those disruptions that you were anticipating have started. And are you in line with what you have planned? Or have they not started yet and we need to be a little bit more considerate of that in the rest of the year?
Look, I think that change management is part of what leadership does, and I think I'm really pleased with how our organization has positively responded to what we're doing at Smith & Nephew. We've got a great spirit in our team. And I talked a lot about culture. And those things have really helped us move through each successive quarter with improved results and positioning ourselves to deliver on our plans better. So I think we've really minimized any disruption throughout making the changes and big changes to the operating model, how we actually run the company. So actually very pleased. I'd call it minimal disruption in terms of what could have occurred than if, -- as you say, a significant change. So yes, pleased with progress. Patrick?
Two questions for me. The first, maybe Brad, on the sports med side. Very, very strong numbers. It sounds like China is going very, very well. It'd be helpful to sort of help us understand how we should be thinking about that business going forward. I mean 11% is a big, big number. Comps get a little bit tougher, but how would you, if you were in our shoes, think about that business? And have you seen a change in China? Or is this just a slow, steady increase in adoption of minimally invasive techniques? That will be the first question. The second one, obviously still lots of headlines on the M&A front. And everyone has tried to ask this question in hundred different ways, but I'll try another one. What does financial discipline mean to you as a phraseology, as a team? What does that mean to you? That would be helpful.
Yes. So why don't you go first, Brad, and talk about sports and...
Sure. So as Namal said and for our Sports Medicine and in actually across all of our franchises, but in the case of Sports Medicine & ENT, our expectation is to grow at or above market. Joint repair, we believe that we're well positioned to grow at or above market. And we have some very unique assets and we also have some very unique geographic positions as well. And so we feel well positioned to deliver on the expectations within joint repair and across AET, which we've covered as well.
And then to your question regarding M&A. We're not trying to be elusive in any way. We're really clear that M&A is a very important part of what Smith & Nephew does as a portfolio medical device company and, as I said this morning, really pleased with our execution. The team has executed well on getting the assets that we found and then the announcement closed. And I think maybe the simplest way of saying it is people see what we buy. People don't see all of the things that we didn't buy. And we've assessed so many things in order to come up with the things that we closed on, and I think that's a really important thing. And I've said this in the past. I don't think there's one single lens that we look through. We look through multiple financial lenses, and that relates to running a business the way we want to. Not all of it, we want to talk about, all of those lenses, but I think that the traditional measures of return on investment are applied. And we feel very good about the financial outcomes we'll achieve with the acquisitions that we've announced to date, and I think that's the track will stay on going forward and a lot more to do. David?
David Adlington, JPMorgan. Three questions, please. So just maybe for Sports Medicine but also maybe overall, in terms of the investment that you've put in, new sales people, new incentivization, the source of geographic growth in terms of mix, how should we be thinking about that impacting the margin versus the operating leverage that you're getting out of the top line? Secondly, just on hips. You mentioned a supply chain issue. Maybe some further color around that and how it's being resolved and how quickly we should see it come through. I think you said, I think, "pretty quickly." And then also -- finally also on M&A, just slightly differently as well. Maybe you could talk about your opportunity and appetite to do lots of smaller Osiris-style acquisitions rather than single larger acquisitions.
And thank you for those questions. And Graham and Brad, chime in wherever you'd like. I would -- so first, I want to say I've said in the past, and this is what we continue to believe, as we accelerate our top line growth as we have done, we will make investments and reinvest in the business. It's really important because ultimately we're just building a stronger company for the long term. And we feel very good about the investments that we make in the business. That being said, we'll also concomitantly expand our margins all along the way, and we feel confident that we can do that too. And obviously, we will report our margins at the -- after the second quarter, but we're on track there. And in terms of -- I don't know if you want to add to that in terms of how you manage your P&L, Brad, but I mean -- and...
Right now, within all the expectations that have been set by Namal and Graham, we don't feel constrained within the business.
For M&A, I'd -- I will just say that we have got a great plan with M&A with respect to all of our businesses. They have different market structures, and so we have to consider what's important for us to do to compete well. And Brad talked about his own business. You've done a couple of, I think, great deals. And it just makes sense what is -- well, we've got several hundred people selling something. Give them some portfolio that expands that opportunity and visiting those customers every day. The logic is there in terms of how we want to succeed. Or was there a nuance to your question, David, that you wanted to get at beyond that in terms of the fit?
Just in terms externally at least. Just lots of smaller acquisitions seem to be lower risk than doing one large acquisition [indiscernible].
Yes. So look. We'll be opportunistic and look at what's available. And we -- as I said, we'll really strongly assess the market, but now that we've got the company working like this, I will just say the teams are lifting the opportunities up through the company much more than they did before. And so we see a lot of opportunities. And people are coming to us very proactively now. So we have those smaller opportunities coming up, but it's not that we are only focused on these smaller things. We -- there are a lot of good assets out there. Medical device is a $400 billion marketplace. And our -- and we believe we can operate medical device companies very well. And so picking the end markets that we want to be exposed to; picking the synergies in some of our really big ticket items like robotics and digital surgery, which is a really strong emerging strength of ours, they're things that we look through at all times.
[Indiscernible] some calls on the line [indiscernible].
Yes, yes. We could take some more questions on the line and webcast, on others, if there are any questions coming through.
Your first question on the phone line comes from the line of Michael Jungling from Morgan Stanley.
I would like to ask three questions. Firstly, if I look at the hip and knee market, with you having reported, it seems to have slowed down materially on a comp-adjusted basis by almost 2 percentage points. Do you feel that the ortho market has slowed in the first quarter? Or is there some sort of abnormality that would point to a substantial weakness in the recon market? And question number two is on price pressure. And can you provide an update on discussions in some of the European countries where there is a focus on price and some new tenders like in France; and some commentary whether this could be impacting your business later on this year, especially when it comes to wound care? And then thirdly, when it comes to Trauma and the 4.8%, is that a clean number? Or was this influenced by some meaningful tenders in the quarter?
Thanks, Michael. So I'm going to ask Graham to respond to the price one. I missed David's question on hips and product supply. Look. These things happen. I think that we had really good growth in the back half of last year. And part of bringing good change to the company is changing some things and improving some things. We had some work to do. So missed on supply of some of our important hip products. That will resolve in the course of this year. And what I've said most importantly in hips is we've got some of the best products in the marketplace. And we've got some launches coming in the second half of the year, which gives me confidence that we can accelerate and particularly in the back half of the year again from where we are, which is what we plan to do. So Graham, do you want to just address price overall...
Sure, sure. I mean the -- I think the overall message is we're continuing to see an steady price pressure in the markets in Europe. Europe is a tough market, but price is an important part of the conversation. But we're not seeing any particular discontinuities there. In the wound segment, if you're talking specifically about France, there are some price cuts coming, but they're at a much, much smaller level than in some of the other subsegments of the market that I think some of our competitors have referred to. So overall I don't think any really major new news for us there.
And then Michael, you asked about the hip and knee market and any thoughts on the market growths and variances. I personally don't get too worried about each quarter with respect to market growth. There's variances all the time with respective quarters, but the annual growth rates are really solid. These are good markets to be in. And we see a little bit of price headwind, but we see such good sources of volume. So these are attractive markets. And we continue to see robust growth going forward. And we see our ability to grow into those markets as strong. So we feel good about joint replacement. And then Trauma, is it a clean result? Or is it somehow affected with tenders, et cetera? No. So really the biggest factor I could tell you is about EVOS. And Smith & Nephew's had a great nailing range forever and particularly with our hip fracture portfolio. And we've been needing to update our plating and screw range. And now that we have not only a new product but a great new product, we're seeing the benefits of that. And so 8% growth in plates and screws in the quarter. We see that continuing growing as we begin to launch internationally. So I like our prospects in Trauma because of these launches in plates and screws. So thanks, Michael.
And your next question comes from the line of Julien Dormois, Exane BNP Paribas.
I have two. The first one relates to the growth slowdown you had in ENT which relates to NAVIO and cement. Just curious whether there is a one-off factor there. Or is it maybe just because the teams are waiting for the launch of the NAVIO 7.0 in H2? So just curious how you see that. And the second question is also on NAVIO but more on the next-gen platform. When do you expect to be able to launch that product? And I think you said it's going to be for many different specialties, but how do you see the rollout? Will it be in knee and hip first and then expansion or -- interested in that.
Okay. So first of all, I think you meant in our Other Surgical Businesses. Our Other Surgical Businesses grew 6.9% in the quarter. We don't -- we see normal seasonality in terms of how we -- how those assets perform. We feel very good about how NAVIO is going to perform this year and going forward, so nothing really to comment on executing against the plan that we have internally and how sales will develop throughout the course of the year. With respect to our, with our new product, our next-generation robot, I can tell you this -- we're very excited about this. It's a radical change to be able to change the footprint of the robotic platform in this manner. And when you see what else is available in the marketplace, we have a unique advantage. We'll be able to put our robot on our Sports Medicine tower. And then at the American Academy of Orthopaedic Surgeons, we also announced and showcased the surgical robotic arms that we can attach the bedsides, and we look forward to bringing that to market and initially going into trial some time next year with the robotic arms. The actual new robot starts going into clinical use back end of this year. So these things are happening in the near term.
And I would say also we've had NAVIO for a period of time now, but it takes time for organizations to learn how to use these technologies and to train their customers. And so it's still early days in the grand scheme of things for robotics for Smith & Nephew, but with these new assets, we're adding to our organization. We are adding to the R&D. We've got a new headquarters planned with a massive increase in space in our Pittsburgh facility to cater for our investments into robotics. And then our commercial forces around the world, dedicated forces that are really focused on understanding and then promoting these technologies. So we feel very good about the next-generation robot getting across from just knees into other fields of surgery. And the fact that the new robot's footprint is so different, it goes onto our Sports Medicine stack ultimately.
Your next question comes from the line of Veronika Dubajova of Goldman Sachs.
I will keep it to two, please. The first one is a follow-up on some of the M&A questions that have been answered. And I appreciate, Namal, you don't want to tell us what you're going to buy before you do buy it, but I am just curious. How comfortable are you with the organization's ability to absorb a -- I think the quote this morning in the press was a multibillion-dollar acquisition. That is not something that Smith & Nephew has done in the past regularly. And arguably, the past experiences we have as shareholders -- investors and shareholders have, I think, is -- have been mixed with deals like that. So can you maybe talk about your appetite to do a multibillion deal and whether you think that the organization is ready for such an endeavor at this point in time? And then my second question is a much briefer one on -- for Graham. Graham, can you confirm that the margin guidance now includes the dilution from the transactions you have announced to date?
Graham, why don't you do the margin one, first?
Sure. I mean, as you rightly highlight, Veronika, we haven't made any change to the guidance. It does reflect obviously both Ceterix, which was already in the bag when we put the February announcement out; and the two completed acquisitions of Osiris and Leaf.
Thanks. Veronika, on the M&A side, look, I've said it before. We are very comfortable with thinking about deals of different sizes, including a larger deal if it makes sense to us. And we organized ourselves in a way where we get all of our jobs done as a medical device portfolio company. The franchise model allows our presidents like Brad here to run hard and make sure that each part of our portfolio does well all the time. The representation of the regions on my executive team allow for us to ensure that our regions are being served and again can serve our customers, very importantly, just be customer-centric. And then I'm really pleased with how Phil has led our business development team to great execution. We've -- as I said, we see what we bought and see what we didn't bought. The team works very, very hard. They do a fantastic job of analyzing things. And then they have a great process. And I'll say that we've appointed a dedicated integration manager for Osiris that came from within our organization, senior executive. And that's because we care. We want to make sure that our new employees from Osiris are really welcomed and do well as they join Smith & Nephew. So we feel good about our ability to do M&A of different sizes, and there's no preference on timing. We evaluate things consistently and at all times. And we're progressing, looking at a lot of things at any one time because you have to look at a lot of things to pick a couple up. And that's what we do. So hopefully, that's helpful.
That is extremely helpful.
Your next question comes from the line of Sebastian Walker from UBS.
So two, if I could. First of all, on the phasing throughout the year. So you previously guided to a back-end-loaded year. I was wondering if you could give us any updates there on what you're thinking. And then within Advanced Wound Care: So you alluded to -- just a little bit on the European weakness, but I was wondering if you could comment on the competitive situation there, whether you're seeing a lot of value players entering the market and that might be explaining some of the weakness.
So Graham, do you want to start...
Sure. So our normal pattern is somewhere between 50.5% and 51% of the sales coming in the second half of the year, and I expect we'll be somewhere like that. So nothing particularly unusual.
And then -- and I've commented on Advanced Wound Care, again, in the past. And I'd just stay consistent and say that a portion of our portfolio sees, compared to those which are smaller in nature and rely on price, to gain market share. That continues. And I think that we have the metrics around our tender responses now for just select tenders that we've taken a portfolio approach for, particularly in Europe. That has been positive for us. So we feel like we're learning how to respond better to the market structure for wound care in Europe. And I'm not done yet, but I will just also say, on a global basis, first job, we're succeeding as a franchise: getting to 4% growth for our wound franchise; obviously appointing Simon Fraser on -- as our global president, bringing in someone new to do that. We've had really, I think, great success. And the positive is the U.S. market that we're doing so well in. And so I'm pleased with the progress in terms of how we're addressing the market issues in Europe but also overall seeking to be successful as a global business.
Great. Just to follow up. I was wondering if you could provide any more detail on the growth you achieved in U.S. and Europe in the quarter for wound care.
I think everyone knows how much I love this PICO product, but -- and 16% growth in negative pressure. And not only PICO but doubled-digit growth for RENASYS. Just having that product back. It's taken a little bit of time to get started in that, but I foresee that in -- RENASYS will continue to do well. And because of that, I think, just like Brad has made enhancements to how his commercial organization goes to market and similarly in our wound business, we've done that also. So I'm actually really pleased with the changes that have been implemented since really January. Because you're going to have to go follow the natural cycle of when you look at commercial changes. I spent time at the U.S. national sales meeting with actually all of our organizations, and the spirit of our sales organizations was just fabulous. And people are positive about their prospects. They understand their opportunities. They're getting trained on our focus products. They're the things that really help. Getting those things right help us get [indiscernible]. The devices, all of the negative pressure stuff is going fantastically well. And wound care as well, yes, and double....
[Indiscernible] U.S. double-digit growth. And we've been under pressure in Europe. And we've seen some decent performance in 1 or 2 markets that have been challenges for us, but we're not fully out of the woods on wound care in Europe yet.
Yes. But U.S. is -- the last few quarters...
There's been very, very strong growth in wound care in the U.S.
Any other questions in the room or online?
I do have one more question on the line.
Another question. Okay, we'll take one more question.
Okay. Your question comes from the line of -- sorry. Your question on the phone line comes from Kit Lee from Jefferies.
I have two questions, please. And firstly, just coming back to Advanced Wound Care. I think you started making some changes to the business a few years ago, but so far, I think 2% has still been the performance in AWC, so I'm just wondering if low single-digit growth is the new normal from this point onwards. Or do you still see an inflection point somewhere down the road in the next few years? And I'll come back with second question.
So look. We're never satisfied with our growth. We're looking to see how we improve all the time. And we have the portfolio. Solutions like Leaf Healthcare allow us to engage our customers in a different way. And I will say two things. One, we focus on our strengths. So with the strength we have in our U.S. market, we will continue to support that team to continue to do great. And then we're going to resolve issues where we're not succeeding in some markets in Europe, not all of Europe but some markets of Europe. We've got to do better. And so I don't know about new normal. All I'll say is that we just look for continuous improvement, and that would be more of the attitude we have. You said you had a second question.
Yes. Okay. And just on the robotic development and, I guess, the extension of that to the Sports Medicine franchise, what do you think will be the time line? Is that a three year kind of development cycle, or shorter or longer?
I think that we haven't announced any specifics around when we get into each procedure, but once we have the base platform technologies, it's -- and with the software that we have, it's easier for us to get across. So it's actually harder to get the overall base platform. And then after that -- and the base platform being that new robot at the end of the year and the base robotic arms. After that, it's easy to get across. So we haven't announced when we're going to launch in sports, but I would say it's not a difficult thing for us to get across to, working with the right people to do that.
So I'm going to close with that. I just want to say thank you for your interest in Smith & Nephew. And pleased with our first quarter.
Have a good day.
Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.