Biocompatibles International, the contact lens and cardiovascular research business, saw its share price tumble last week after it announced it would pay royalties to US rival Johnson & Johnson.
The share price fell by 30 per cent after an agreement with J&J over heart product royalties was made, reportedly to avoid a legal suit.
In 1999 Biocompatibles managed to increase its contact lens market share from 2 to 9 per cent on the strength of Specsavers OpticiansÕ easyvision all day brand which it manufactures. However, the company stated that its agreement with J&J regarding heart products meant it would fail to break even this year.
ÔIn entering into the agreement Biocompatibles recognises the risk that litigation could involve significant costs over a potentially long period of time without any certainty of outcome,Õ the company said.
BiocompatiblesÕ special coating, which masks foreign objects in the body by mimicking the surface of human cells, has been developed for use on stents, devices which prevent arteries from collapsing in patients at risk of heart attack. Cordis, a division of J&J, already holds several patents for stents and stent-delivery systems in the US and was determined to protect them. Under the deal, Biocompatibles will pay royalties to Cordis on all the coronary stents it sells in the US.
BiocompatiblesÕ chief executive Crispin Simon said: ÔWhilst our breakeven has been postponed, a risk has now been eliminated.Õ
In March 2000 the company bought Hydron for £38m (News, March 17 2000) with the aim to expand its contact lens sales force and improve Biocompatibles distribution capabilities.