Delays put Medical House in the red

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The Medical House, a company which develops precision instruments used in hip and knee replacement operations, said regulatory delays for a new product would plunge the company into the red this year.

US regulators are demanding more trials of a new implant from a bigger orthopaedics company which is using the Medical House to supply at least one of the associated surgical instruments. It means supplies of the Medical House's instruments will not be needed in high quantities until the second half of 2006 - a year later than expected.

Shares in the Medical House fell 9 per cent to 67p yesterday, valuing the company at £41.2m.

The commercially sensitive nature of the delay meant the company was unable to name its partner or describe the product that led to the profit warning.

Michael King, analyst at Code Securities, said: "We don't know the product or who the partner is, but we know this is a relatively large product launch. With the regulatory delay, the partner is naturally putting the orders on hold."

The European launch of the product and stockpiling of instruments ahead of the US approval sent sales at the Medical House's orthopaedics division up 58 per cent on last year, which was still disappointing. The group as a whole will show a small loss for the year to 30 June, compared to a £46,000 profit last year.

There will also be a loss in the first half of the new financial year.