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November 26, 2003

Cochlear hits out

From: Melbourne Herald Sun, Australia - Nov 26, 2003

Olga Galacho

COCHLEAR'S new chief executive, Chris Roberts, yesterday hit out at health services here and in the US that "waste money on administration" which could go towards more bionic ear implants for deaf children.

The world's biggest maker of hearing implants announced the appointment of ResMed executive Dr Roberts, 50, yesterday to replace Jack O'Mahony, who will step down at the end of January.

"There is a lot of dysfunction," Dr Roberts said in reference to government health spending.

Dr Roberts will quit his position as executive vice-president for Europe and Asia at sleep disorder device maker ResMed to move to Cochlear.

He will remain on ResMed's board until November 2004, when he comes up for re-election, but said yesterday he had not decided whether to stand again.

ResMed's marketing manager for Asia Pacific, Paul Eisen, will take over Dr Roberts' role.

At about $1.8 billion, ResMed and Cochlear have comparable market capitalisations and both companies export more than 95 per cent of their medical devices.

However, the share price of the more tightly held Cochlear is more than five times greater than ResMed's.

Dr Roberts said yesterday he was unlikely to lobby for a share split to improve Cochlear's tradeability.

"They do not have a liquidity problem. Share splits sometimes give the illusion of doing something, but I'm not sure that they actually do," he said.

He added that he was comfortable with Cochlear's research and development spending, which at 15 per cent of sales is double the ratio spent by ResMed.

Similarly, Dr Roberts said he was not concerned at the threat to Cochlear's sales of the resurgence of its major rival Advanced Bionics.

"The market (for hearing implants) is so under-penetrated. The issue for Cochlear is how do you develop the market.

"You need other players, a number of robust competitors to help get the message about implants out," he said.

Dr Roberts said he was looking forward to taking Cochlear "to bigger greatness".

"Turnover of $500 million is within sight and there's no reason why we can't then go on to $1 billion with this great technology.

"I'm excited to be part of the next phase of growth."

Dr Roberts' total pay package will be $661,000 a year with additional short-term and long-term, performance-related incentives of up to 50 per cent of his salary.

Based in Sydney, he is married with four teenage daughters.

Dr Roberts is a fellow of the Academy of Technological Sciences and Engineering.

Before becoming a founding director of ResMed in 1989, he was a key executive at Nucleus.

He sits on the boards of Portland Orthopaedics, Research Australia and DFAM -- all private companies.

Yesterday, Cochlear shares fell 17c to $29.60.