Poor Far East sales will drive AorTech deeper into the red

Long-suffering shareholders in AorTech International, the Glasgow-based maker of heart valves, suffered another blow yester- day when the company said losses would be higher than expected as a result of poor sales in the Far East.

Bill Strachan, who was brought in as chief executive after a boardroom clear-out in July, said the company had been selling valves at unsustainably low prices, simply to keep its factories from falling idle.

He said the price of heart valves in Europe and the Far East had been driven down by aggressive competition. The volume of sales was disappointing, he said, the value of sales even more so.

"We took the business to boost volume, to get more volume through our plant. That is reasonable if the prices are not too far off, but these were very low. We will try to retrench to those areas of business which have a reasonable chance of making a profit," Mr Strachan said.

The disappointment calls into question the future of AorTech's manufacturing plant in Leeds, which employs 30 people. Mr Strachan said he would seek a partner to bring in new business.

Losses will be 40 per cent higher in the six months to 30 September than in the same period last year, with turnover down 45 per cent. The company has lost its two contracts to make medical devices on behalf of other companies, it said yesterday.

The company has an estimated £15m in the bank and has trimmed its annual cash burn to less than £8m by axing 100 of its 240 jobs. AorTech shares dropped another 21 per cent yesterday to a record low of 11.5p, valuing the company at £4.4m. At the height of the biotech boom in 2000, it was worth almost 100 times that.

Mr Strachan said it was unrealistic to expect shareholders would bail the company out, and ruled out a rights issue. "It would be a brave man who tried, given our track record. We don't have the credibility to go to shareholders," the chief executive admitted.

He said AorTech would seek partners to fund development work on its heart monitoring equipment and a novel plastic heart valve that does not require drugs to prevent rejection by the human body. Both programmes have suffered setbacks in recent months.