Smith & Nephew in the Health Care Industry (review)

The company that became Smith & Nephew began when Thomas James Smith opened a pharmacy in Hull in 1856. By 1857–58 commercial pressures had prompted Smith to turn from retailer to wholesaler, supplying especially cod-liver oil to hospitals, dispensaries, and the medical profession. In 1896 Smith’s nephew, Horatio Nelson Smith, joined him in partnership. Smith the uncle died that year, and Smith the nephew took over. The nephew directed the company away from cod-liver oil and, in 1904, toward the production and supply of bandages and surgical dressings. Demand for these products escalated in 1914, and the company expanded to meet the wartime demand, only to fall on hard times as the war ended. After 1918, Smith & Nephew changed from a family business into a professionally managed multidivisional firm and broadened its interests in textile-based products. It diversified into women’s underwear, first-aid kits, and sanitary towels (1926), and acquired licenses to market and produce the Elastoplast range of bandages (1928) and Gypsona, a plaster-of-paris bandage (1930). The Lilia sanitary towel, Elastoplast, and Gypsona product-lines provided the basis of the company’s commercial growth during the interwar years and through the Second World War.

After the war, the company further diversified into cosmetics (notably Nivea Creme in 1951), hypodermic syringes and needles, and pharmaceuticals. In 1951 it took over Herts Pharmaceuticals for its antitubercular drug PAS and its research department. But PAS proved problematic: prices fell following the entry of large American pharmaceutical companies into the British market, and revenue from sales dropped dramatically in the early 1950s. Also, Smith & Nephew had little understanding of or commitment to pharmaceutical research, and the acquisition resulted in few marketable products beyond antitubercular drugs. Despite the postwar diversification, textiles, dressings, and sanitary towels remained Smith & Nephew’s core business. In the 1940s and 1950s, the company consolidated and developed these areas through rationalization and investment. However, in the late 1950s and early 1960s textiles gave way to plastics. Smith & Nephew developed a plastic bandage (the Airstrip), a polyurethane surgical dressing (OpSite), and a plastic netting used in clothing, dressings, horticulture, sanitary towels, and biomedical filters (Net 909).

The latter portion of the book examines the finance and management of the company from the 1950s, and includes an account of the failed 1968 Unilever takeover bid. It also deals with Smith & Nephew overseas: in the nineteenth century, the business depended on overseas trade for materials and techniques for use in Britain; during the twentieth century, overseas markets began to account for a growing percentage of the company’s sales. Sales focused initially on the Empire and Commonwealth, especially South Africa, Canada, Australia, and New Zealand. With the prospect of Britain’s entry into the Common Market, the company began to acquire European companies in the 1960s. Expansion into the United States was more difficult due to licensing agreements that excluded its best-selling products from that country. It broke into the U.S. market in the 1980s, when it also increased manufacturing investment in newly industrializing countries in Asia and Africa.

This book is primarily a business history, aiming to “unlock the secrets of competitive success” (p. 228). Historians of medicine will look to it for a commercial perspective on the histories of surgery, first aid, and women’s health. It illuminates the neglected histories of bandages and dressings and their connections to the textile and plastics industries. It also provides insights into the complex relations between the cosmetic and pharmaceutical industries, and the links between medical innovation and business organization and culture. But readers of this journal will be frustrated by the author’s limited engagement with recent medical historiography, and critical of the progressivist assumptions behind his characterization of the health-care market. This is a book to be welcomed, but approached with caution.