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Smith & Nephew Hip Resurfacing Cups Recalled in U.K. (Update4)

By Christopher Elser and Kari Lundgren – August 16, 2007 11:50 EDT; This article from Bloomberg [Click here].

Aug. 16 (Bloomberg) — Smith & Nephew Plc recalled 185 hip- replacement implants in the U.K. and U.S. after at least two patients were forced to have surgery to replace improperly fitting devices. The shares fell the most in more than a year.

Batches of the Birmingham Hip Resurfacing product were mislabeled, causing a mismatch between two implant pieces, the U.K. Medicines and Healthcare products Regulatory Agency said. Stephen Hallworth, a spokesman for the MHRA, said today that the agency didn’t know how many patients were affected. The company said some devices may have been sold in Australia and Europe.

The recall comes as the London-based company’s product, known as the BHR, is facing new competition in the U.S. from a similar system from Corin Group Plc and Stryker Corp. Smith & Nephew has been growing faster than the market for replacement hips and knees, helping it gain on Zimmer Holdings Inc., the world’s largest implant maker. The BHR helped boost second- quarter hip sales in the U.S. by 50 percent.

“It’s an irritant,” Jack Scannell, a London-based Sanford C. Bernstein & Co. analyst, said in an interview. “Smith & Nephew have had this market to themselves and have done very well. The ability to win and grow this market in the U.S. is more commercially important.”

Smith & Nephew doesn’t know how many of the 185 devices have been implanted, said Jon Coles of Brunswick Group Ltd., an outside spokesman for the company. People who have already received the implants are being X-rayed to see if the devices are fitted correctly, he said.

The shares fell 36 pence, or 6.1 percent, to 552.5 pence at the close of trading in London. That’s the biggest decline since April 2006. They’ve risen 3.7 percent this year.

The mismatched pieces can cause the implant to fit loosely, the MHRA said. Doctors should review post-operation x-rays to see if patients have improperly fitting implants, and consider another operation, the agency said. Unused products should be returned to Smith & Nephew, the agency said.

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