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August 19, 2003

Cochlear plans to tap US and British markets

From: Dial Infolink Manufacturing, Australia - Aug 19, 2003

Bionic ear maker Cochlear will look to the largely untapped United States and British markets to grow its business, promising a 20% growth profile going forward on Tuesday.

The ambitious prediction came despite the recent re-entry to the US market of major player Advance Bionics, which withdrew its products last year amid safety concerns from US authorities.

Cochlear on Tuesday reported a 45% jump in net profit to $58.2m for 2002/03.

Cochlear chief executive Jack O'Mahony said while the US business would have a difficult time in the short term with the renewed competition, the company aimed to maintain its market share.

He highlighted a recent study by the US Department of Health and Human Services, which suggested some 1.4 million Americans would benefit from a cochlear implant, while just 6000 a year were currently undergoing surgery.

"We've probably got about 65-70% market share coming into this financial year in the US and our goal is obviously to maintain that," O'Mahony said.

"We've got to expand the market...and there's plenty of room for expansion."

And research from the British Medical Research Council indicated that 150,000 adults in the UK suffered from acquired deafness, he said.

"If you look at the number of units implanted in the UK - it's under 1000 (per year) - so again, you're looking at a vast potential market there."

Cochlear's system sales rose 19% to 9328 units in the year to June 30, 2003.

Sales revenue in local currencies was in line with sales growth, but the stronger Australian dollar meant that domestic revenue was 13% higher at $290m.

O'Mahony said the result was a good performance given that the company had to deal with the war, SARS, a false meningitis scare and a stronger Australian dollar.

"The long term average growth trend of 20% in unit sales remains intact," the company said.

"Cochlear believes that along with this sales growth it can grow profit after tax by a similar percentage in F04."

The Americas region had a revenue rise of 19% to $142.2m, while in Europe, sales revenue rose 13% to $98.3m with growth in the second half much stronger than in the first half.

Analysts had been expecting a profit result in the $55-56m range.

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