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October 22, 2002

Cochlear fingers FDA for deft deaf ear

From: The Australian, Australia
Oct. 22, 2002

By David King

BIONIC-ear maker Cochlear has accused the US Food and Drug Administration of protecting American interests with its claims of a link between inner-ear implants and an increased risk of meningitis.

Cochlear's departing chairman David Penington yesterday launched an unprecedented attack on the FDA, alleging it had acted in the interests of Cochlear's main US rival, Advanced Bionics Corporation.

"We are completely satisfied that there is no enhanced risk of meningitis from our own Cochlear implants," he told the company's annual meeting in Sydney.

"But that's not the way the matter has been handled by the FDA, looking after the interests of the American company ABC, which is the source of the problem."

Professor Penington said a number of cases of meningitis had been reported in recipients of a device made by ABC – which had since been taken off the market.

"There is certainly a perception in the community at large that this is a problem for the industry as a whole, which is what ABC wanted people to believe," he said.

Cochlear's share price jumped 13 per cent yesterday, after the company said it expected 40 per cent growth in the 2002-03 financial year.

"It's clear to us that we have gained significant market share," Professor Penington told reporters.

"We had previously around 65 per cent worldwide market share in financial year 2002, and we now believe we are now moving up towards 70 per cent."

Chief financial officer Neville Mitchell said Cochlear had a long-term growth trend of about 20 per cent.

"But this year, obviously because of events, we're seeing a movement slightly ahead of that," he said.

Chief executive Jack O'Mahony said the outlook for Cochlear remained strong, but the company would look to increase its market share.

"We're really interested in expanding the market," he said. "At this time, approximately 75,000 people would benefit from a Cochlear implant every year.

"The reality is that there are only going to be about 12,000 implants done."

Cochlear also announced that Tommie Bergman would take over from Professor Penington as chairman.

Professor Penington has chaired Cochlear since 1995 when it listed on the Australian stock exchange.

Cochlear shares closed up $3.99 higher, at $33.93.

© The Australian