July 23, 2007

Leading Australian-based diagnostic medical-devices company, Compumedics Ltd., has completed at Letter of Intent to enter into an agreement with Medigas Italia Srl. a subsidiary of Praxair, Inc., a global player listed on the New York Stock Exchange.

The following is from the Australian Investor feature article on 23 July 2007.

Leading Australian-based diagnostic medical-devices company, Compumedics Ltd., has completed at Letter of Intent to enter into an agreement with Medigas Italia Srl. a subsidiary of Praxair, Inc., a global player listed on the New York Stock Exchange.
The deal is for the distribution of Compumedics’ new sleep apnoea treatment products, SomniLink® SPAP®, in Italy, and potentially wider territories.
Compumedics is a global leader in the $250 million sleep-disorder diagnostics capital-equipment market. This move takes the company into the $2.1billion global sleep-treatment market.
The CEO of Compumedics, Mr. David Burton described the move as a natural step-out for the company.
“The development of advanced products for treating sleep apnoea is a natural step-out from our traditional diagnostics business, and leverages the company’s knowledge and experience in the field to develop advanced, next-generation solutions for the management and treatment of an increasingly prevalent problem.

“This is a major milestone for Compumedics, as the development of new and innovative products in the sleep-treatment market always have been part of our long-term vision for the company.
“While some experts see sleep treatment primarily as addressing deficient respiratory function, our development of the SomniLink® SPAP® system is based on the premise that both quality of life and sleep quality are integral to the optimal treatment for sleep-disordered breathing conditions, including sleep apnoea.
“The current global sleep-treatment market is a multi-billion dollar, high growth sector.
“The relationship with Medigas Italia to prepare the SomniLink® SPAP® for distribution, and introduce it into European markets represents another step in the execution of our strategic plan to complement our core sleep-diagnostics business with sleep-treatment systems,” Mr. Burton explained.
The agreement should realize revenue of over $2 million for Compumedics, but presents a promising outlook for the Company as this deal only covers 1 to 2 % of the total global market.
Mr Burton told the Australian Investor, Compumedics had taken many years to realize this potential to expand into a much larger market sector.

“It has taken 10 years to build up the patent and other intellectual property portfolio, and five years to do all the necessary clinical trials.
“To expand successfully, we have had to augment our product range, and we have directed the intellectual property into new markets.
“Capital equipment is a tough game, and we have now restructured both the cost base and corporate governance of the business.
“Since 2005 we have completely turned the business around, and we are back on track with the core fundamentals.
“We will achieve a minimum of $10 million incremental sales over the next 3 years in the core diagnostics business attributable to distribution contracts additional to established revenue channels. We have the latest technology, and we are now turning our technological dominance into sales.

“90% of our business is export-oriented, and our core business goal is successful market penetration.
“We have formed some very strategic alliances, and our new relationship will give us very good market access as our two major partners, Teijin Pharma Ltd in Japana, and Praxair Inc worldwide represent combined revenue over US$18 billion annually, which makes them very good international partners.
“I resolved to fix the company and then tell the market…words are pretty useless without achievements. And I believe our stock is now very conservatively priced given our latest technology and our new focus on international activity and bigger market sectors,” Mr. Burton explained.

For Further information:

Mr David Burton
Executive Chairman, CEO
Phone: + 61 3 8420 7300
Fax: +61 3 8420 7399

About Compumedics

Compumedics Limited, founded in 1987, is a global leader in the design and manufacture of diagnostic technologies for sleep disorders, neurophysiology and cardiology. In 1987 Compumedics established Asia Pacific’s first fully computerised sleep laboratory. Compumedics holds 80% share of the Australian sleep-diagnostic market, and has a major and rapidly growing presence in the US, European and Asian marketplaces for its sleep, neurological, and Doppler blood-flow diagnostic monitoring devices.

In 1995 the company was selected to supply equipment to the US Sleep Heart Health Study, the world’s largest sleep study of its kind, currently exceeding 14,000 studies with 20,000 patients scheduled by 2008.
The company has corporate headquarters in Melbourne, Australia and offices in the United States, Asia and Europe.
In 1998 Compumedics was awarded the overall Australian Exporter of the Year.
In 2000 Compumedics was listed on the Australian Stock Exchange.
In 2002, Compumedics acquired US-based Neuroscan – the world’s leading supplier of instruments for brain-research.
In the US – the world’s largest medical device market – Neuroscan hold around 90% of the market for brain-research products. This acquisition has enabled Compumedics to take advantage of the synergies between research and clinical-based Neuro Diagnostic technologies, re-affirming our commitment as a world-class developer of both sleep and neuro-diagnostic systems.
In 2003 Compumedics was awarded the Frost & Sullivan Award for Market Expansion Strategy.
In 2004, Compumedics acquired German-based DWL Elektronishe GmbH, enabling Compumedics to expand its global operations into the neurovascular and cardio-vascular diagnostic fields.
In 2006, Compumedics was awarded the Frost and Sullivan Technology Leadership award for the innovative Somté recorder product.
In 2007, Compumedics and its Chairman were inducted into the Victorian Manufacturing Hall of Fame for their pursuit of excellence in manufacturing.

Compumedics has grown to become a global diagnostic medical device company with world leadership in three of the most exciting high-growth sectors and some 12,000 systems installed Compumedics businesses now include their core and pioneering sleep-diagnostics (Sleep Division), Neuro-diagnostics (Neuroscan and Neuroscience Divisions), and non-invasive blood-flow diagnostics (DWL Division). All of these fields were pioneered or discovered in the 1980s, validated in the 1990s and are only now undergoing rapid commercialisation into the rapidly expanding $1 billion plus global market.

The company has increased its sales more than 4 fold from $9 million (1999) to $38 million (2006), reflecting its continued commitment to an effective sales and R&D organisation.