Britain's Smith & Nephew Plc played down speculation about consolidation between big orthopaedics makers as it reiterated new products should help it recover from a slow first half of 2006.

"Consolidation in the orthopaedics industry is actually quite difficult to do if there are two big companies. There are no synergies in the biggest cost area (sales forces)," Chief Executive Officer Chris O'Donnell told a Piper Jaffray health conference.

Smith & Nephew (S&N) has been cited perennially as a takeover target, with investors speculating on possible bid interest from a number of large US groups, such as Bristol-Myers Squibb and Johnson & Johnson.

There have also been suggestions the British joint implant maker might itself bid for US rival Biomet Inc.

Mr O'Donnell said there were disadvantages to S&N being smaller than its major US rivals.

"There are some economies of scale here where our peak margin in our orthopaedics business would not be as high as the big players by about "3 per cent."

"But we don't see it as a survival issue at all," he said. "What we deliver to the market is innovation."

S&N lost a bid battle to buy Switzerland's Centrepulse in 2003 when was beaten by US group Zimmer Holdings Inc.

Mr O'Donnell said Centrepulse was attractive because its shares were undervalued, but this was a rare opportunity for a deal.

"You cannot say it is impossible but it is very, very difficult. You need a really, really compelling financial argument," he said.

Mr O'Donnell added, however, that the pace of smaller "bolt-on" acquisitions could pick up as big implant makers look for new technologies in a market where growth has slowed somewhat.

S&N has been under pressure since late April, when it cut its 2006 growth forecast following a weaker than expected first quarter, and the stock is currently trading at its lowest level since October 2003.

Shares in the group were 0.4 per cent lower at 425 pence by 1115 GMT in a steady overall London market. Mr O'Donnell said he remained cautious on the current quarter. "We have indicated to the market that the second quarter will be not dissimilar to the first quarter," he said.

But he reiterated growth should pick up in the second-half, helped by product launches such as its new Birmingham hip implant which was approved by US regulators last month.