MELBOURNE (Reuters) - Cochlear Ltd, the world’s biggest maker of hearing implants, pledged on Tuesday to relaunch its top-selling implant after pulling it from the market due to a manufacturing defect, but disappointed investors by failing to give a time frame.
The company’s shares fell as much as 8 percent as it remained vague on its plans, and full-year sales and profit came in below forecasts.
Cochlear, which has 65 to 70 percent of the global market for hearing implants, said it intended to bring its Nucleus CI500 series back to market, but would not say when for competitive reasons.
The company, which typically posts double-digit sales growth, said 2011/12 revenues fell 4 percent to A$779 million, including a decline of 2 percent in the Americas, which account for 42 percent of total sales.
“The sales are soft and there has been a real risk of market share loss post the recall,” said Karara Capital portfolio manager Akshay Chopra.
“Their track record was unblemished, but now it is a level playing field for all competitors,” Chopra said.
Cochlear’s competitors, including Swiss hearing aid maker Sonova’s Advanced Bionics, have taken advantage of the Nucleus recall, ramping up sales efforts for their implants to try and win market share.
Cochlear shares lost more than a quarter of their value when the company voluntarily recalled the entire range of unimplanted Nucleus CI500 devices last September.
Before Cochlear can resume manufacturing the Nucleus range, it needs to test potential changes to the manufacturing process and win regulatory approvals in each of its major markets, including the United States.
“We are well progressed in what we need to do to bring that back,” Cochlear Chief Executive Chris Roberts told reporters.
Roberts added the company had not yet applied for approval from the U.S. Food and Drug Administration.
The problem related to a fault during the manufacturing process that allowed tiny cracks to develop, which could let in moisture and lead to implant failure.
The company was able to substitute the recalled Nucleus with the implant component from its previous Freedom range.
The overall failure rate of Nucleus implants has continued to rise. In a separate letter to clinics released on Tuesday, Cochlear said the failure rate was 4.2 percent, up from rates of 2.4 percent in February and 1.9 percent in December.
Cochlear said its full-year net profit before recall costs fell 12 percent to A$158.1 million ($167.31 million) from A$180.1 million a year ago. That compared with consensus forecasts of A$162 million, according to Thomson Reuters data.
Cochlear said it did not add to the total charge for the recall, after making a provision in the first half of A$138.8 million.
Net profit fell to A$56.8 million after the recall costs, which totaled A$101.3 million after taxes.
Its shares fell as much as 8 percent, before recovering to be down 4.1 percent.
($1 = 0.9450 Australian dollars)
Reporting by Victoria Thieberger; Editing by Richard Pullin