Smith and Nephew this morning revealed it has dropped wound care product Dermagraft after the US Food and Drug Administration knocked back a regulatory filing for its use in venous leg ulcers, and requested additional clinical data that would have set launch timelines back at least 18 months.

S&N acquired Dermagraft in 2002, a tissue-engineered, human-based living substitute of the dermal layer of skin, from former partner Advanced Tissue Sciences [[25/11/02g]]. However, it has failed to achieve the expected-for market penetration, with S&N noting that there is a lack of clear regulatory frameworks for tissue engineered products which has resulted in “commercially unacceptable” delays.

The exit from Dermagraft operations has resulted in a £15 million charge this quarter and a £25 million charge in 2006. In addition, the company expects revenues to be impacted to the tune of £14 million next year, but to benefit by £7 million on cost elimination.

This was the only sour note in what was otherwise a mostly positive third quarter for S&N: although growth in revenues and profits slowed slightly, they still put in double digit performances, with group revenue up 10% to £341 million and trading profit boosted 11% to £65 million. Commenting on the results, Sir Christopher O’Donnell, chief executive of S&N, said: “Although our growth in revenue and profits slowed slightly in the third quarter, orthopaedics continued to grow at a market leading rate. We are confirming our guidance of earnings per share growth for the year of 12%-13%.”