July 29, 2002

Compumedics Ltd (ASX:CMP) headquartered in Melbourne, Australia, and Pre & Post Hospital Care, a division of Dräger Medical AG & Co. KGaA, headquartered in Luebeck, Germany, have signed a letter of intent for the supply and development of sleep diagnostic technology.

Compumedics expects to realize an additional sales revenue of approximately AUD$ one million (approx. €0.55 million) in the initial 12-month contract period. Dräger Medical will have exclusive sales and marketing rights in Germany for Compumedics’ Somté™ cardio-respiratory monitoring units and non-exclusive rights in France and Benelux. Both parties have also confirmed their intention to cooperate on a broader technological and strategic basis.

The Somté™ system is a first of its kind – a lightweight medical recorder that combines features of diagnostic sleep systems and cardiac holter recorders. The very small (200 gram) device can be used by a patient at home to provide information for early detection of cardiac dysfunction. Somté™ was released to the European market only three months ago after receiving the required European Union CE regulatory approval.

Compumedics Executive Chairman, David Burton said, “To have a partner of the international standing of Dräger Medical is a significant boost for Compumedics. The relationship will not only provide ready access to an important part of the European sleep diagnostics market, but also give us a technology partner without peer to work with on the commercialization of new products.”

The link is important for Compumedics’ revamped international distribution strategy. “We are now able to work with world class companies such as Dräger Medical to take Compumedics’ sleep technology to European customers,” David Burton added.

Dr. M. Thijs A. Teeling, General Manager, Pre & Post Hospital Care, Dräger Medical said, “The portable Somté™ diagnostic system is ideally suited for the home health care sector, which has become a major area of focus for our business. We are a leader in state-of-the-art medical technologies, so adding the supply of sleep diagnostic technology to our current product portfolio was a natural fit. Finally, we look forward to working with Compumedics to develop other products for the European markets.”

The diagnosis and treatment of sleep disorders is a rapidly growing field of medicine worldwide. In the United States alone, there are already 2400 specialist sleep treatment centres, with the market growing at over 10% per annum.