Shares in hearing implant maker Cochlear have fallen heavily after delays in regulatory approvals for new products contributed to a 73 per cent drop in half year profit.
Cochlear made a net profit of $21 million in the six months to December 31, down from $77.7 million in the same period one year ago.
The result included an after-tax provision of $15.8 million related to an adverse verdict in a patent infringement lawsuit in the United States.
Cochlear chief executive Chris Roberts said 2014 was a key year for the company because it wants regulatory approval for the launch of new products in all markets and product categories.
“But we started fiscal `14 with no regulatory approval for any of those products in any of our key markets, and we started with slowing sales because there is an expectation of the (new) product coming out,” Dr Roberts told reporters.
Cochlear shares dropped by as much as 12 per cent on Tuesday, but recovered some ground to close $5.21 lower, down 8.85 per cent, at $53.68.
Cochlear’s flagship product – the Nucleus 6 sound processor – has been approved and launched in Europe since the end of 2013, and a cut-down version of the Nucleus 6 had been approved and launched in the US.
But other approvals were needed still in the US for the fully featured version of the Nucleus 6, and it could take the rest of the 2014 calendar year to obtain all approvals.
Dr Roberts said Cochlear expected to make up for the delayed sound processor sales.
But Cochlear’s market share in the US may have fallen from about 70 per cent to 60 per cent over the last 12 to 18 months.
As a result of not yet having all of the regulatory approvals in the US, plus pressure on margins, Cochlear expects a profit of between $70 million and $80 million in the second half of the 2013/14 financial year.
Dr Roberts said Cochlear had a lot of confidence going into the second half of 2013/14 and into the 2014/15 year.
As approvals for various new products started to come in at the end of the first half, sales had rebounded, up 30 per cent in the December quarter, compared to the prior quarter.
