Inion signs exclusive distribution agreement for its Spinal product range in the US and Canada with Aesculap Inc. and provides an update on current trading

Tampere, Finland and Takeley, UK. 8^th December 2005…Inion [LSE: IIN.L], a company focused on the development of novel biodegradable medical implants, announces today that it has entered into an exclusive agreement with Aesculap Inc., USA for the marketing and distribution of the Inion S-1^TM Spinal range of biodegradable medical devices in the United States of America and Canada. The agreement is initially for a period of three years.

Aesculap Inc., USA (‘Aesculap’) is part of the internationally represented B. Braun Melsungen AG, one of the world’s largest surgical instrumentation manufacturers, which provides an extremely broad range of supplies to the surgery market. In the US, it is also a major player in orthopaedics and spinal surgery. Inion has an existing distribution agreement in the field of sports medicine with Aesculap since June 2004, covering Germany and Austria.

The combination of Aesculap’s widely respected product range and Inion’s advanced biodegradable technology implants will be marketed and sold through a direct sales organisation of specialist sales representatives.

The Inion Spinal products are already sold in selected territories in Europe through a network of specialist distributors, including several long-standing independent Inion partners, and globally target a combined and growing market worth an estimated US$3.9bn.

The first system to be launched in the Inion Spinal range is the Inion S-1^TM Cervical Fusion System, which is used in cervical fusion procedures. These procedures are carried out as a treatment for a range of spinal conditions including ruptures and displacement of inter-vertebral discs.

Inion plans to develop and introduce further systems within its Spinal range over the forthcoming period. These will develop into a comprehensive suite of implants, fixation devices and instrumentation covering all the major spinal surgery applications.

The signing of this agreement is expected to bring first revenues in 2006. The Directors anticipate that overall revenues for 2005 will be below the current range of revenue expectations in the market, but remain above the revenues achieved in 2004.  This is due to poor sales under the Stryker Trauma agreement, which have been substantially lower than expected. This is the only area in which sales have been below expectations.  In response to this, the Company has reached agreement with Stryker to make the distribution agreement for Trauma in the US non-exclusive. The Company is therefore in the process of bringing in  further distributors for the Trauma products in the US.

Dr Auvo Kaikkonen, CEO of Inion commented, “We are very pleased to have signed this new distribution agreement with Aesculap. It is a clear endorsement of our technology to have partnered with such a prestigious organisation for the US launch of our ground-breaking Spinal range. The development of this relationship will add a further revenue stream to Inion going forward and will expand our presence in the fast-growing Spinal sector of orthopaedics.  Today’s trading update, which shows that revenue growth this year will be slower than anticipated, is due to issues with Stryker Trauma.  However, the sales growth that we are seeing across the other areas of the business is above expectations, and continues to reinforce our view that biodegradable implants are gaining greater support in the orthopaedic industry.”  

Commenting on the agreement, Dirk Kuyper, President of Aesculap Inc., USA, commented: “This is a very exciting step forward for us into the field of biodegradables. Working with Inion will allow us to be at the very leading edge of this technology in the US. In this type of surgical application the early entrants hold a significant advantage in the market place and we are thrilled to be able to be among the first to offer this innovation that will bring real benefits to patients and clinicians alike.”

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For further information, please contact:

Inion Oy      

Dr Auvo Kaikkonen, Chief Executive Officer                     +358 3 230 6600

Tim Hirst, Corporate Communications                            +44 1279 874 222

Citigate Dewe Rogerson                                                     +44 2076 389 571

David Dible / Mark Swallow / Helena Podd

Aesculap Inc., USA                                                               + 1 800 227 2862

Dirk Kuyper, President                            

Oliver Burckhardt, Vice President of Sales and Marketing

Ron Grim, Media Relations                                              +1 517 290 4853