Profit alert takes shine off Corin deal to sell hip joint

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The Independent Online

Corin, the Cirencester-based manufacturer of medical devices, has signed up the world's third-largest orthopaedics company to sell its innovative artificial hip.

The company unveiled the long-awaited US distribution deal yesterday, but the good news was somewhat undermined by a warning that profits this year will fall short of City forecasts. The US giant, Stryker, will sell Corin's Cormet, its new metal-on-metal hip joint, when it is approved for sale, probably next year. The deal pits the Cormet against a new hip product being launched by the FTSE 100 orthopaedics group Smith & Nephew, whose shares fell yesterday on the news.

Analysts said a distribution deal with such a significant player in the US market could earn Corin £8m in annual profits by the end of the decade.

Stryker was believed to be behind a tentative bid approach for Corin in October, but talks faltered as the companies preferred to seek a distribution agreement instead.

Corin, whose chief executive is Ian Paling, floated in May 2002 with a market value of £39m, raising £21m to fund the US development of Cormet. Its shares rose 2.5p to 400p yesterday, valuing the company at £164m. The new generation of US hip products are seen as being more robust than traditional hip replacements. They involve placing a metal jacket over the head of the femur, rather than replacing the head of the bone.

Corin said negotiations over a distribution deal for Cormet had contributed to the poor performance of the rest of the business.

Simon Hartley, the finance director, said: "The deal is vital for the future of the business and for our shareholders and employees. We are a small company and, while we have been putting pressure on our sales force over performance, inevitably we have got a little stretched."

Corin said group profits will be below City forecasts this year. Sales of spinal implants in the US fell more than expected and the company has also missed sales targets in the UK.

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