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The Medical House PLC

Distribution Agreement for the mhi-500 device in Benelux Countries

The Medical House PLC (“TMH”), the medical equipment and devices company, announces that it has signed a distribution agreement with Medical Service Europe BV (“MSE”) for the distribution of its mhi-500 needle free injection system in the Netherlands, Belgium and Luxembourg. The mhi-500 device is used for the needle free delivery of insulin to people with diabetes.

The agreement with MSE will run for an initial period of 3 years on an exclusive basis in the Netherlands, Belgium and Luxembourg. The agreement has been structured on the attainment by MSE of progressively increasing minimum quantities. Based on these indicative quantities, the sales of devices together with escalating sales of the associated consumables could give rise to revenues over the 3 year period in excess of £500,000.

MSE is a Netherlands-based private company, established over 12 years ago, focused on the distribution of medical products, primarily in the fields of haematology/transfusion, enteral nutrition, pulse oximetry and for the last 5 years it has been a distributor of needle-free delivery systems for the administration of a variety of drug products, including insulin, dental anaesthetic, local anaesthetic and hormones.

TMH announced in November 2002 that it had received approval from the PPA (Prescription Pricing Authority) for the admission of the mhi-500 device to the UK Drug Tariff, to be effective from 1 January 2003. This has enabled the device and the related consumables to be prescribed on a free of charge basis to the more than 500,000 people with diabetes in the UK who inject insulin daily. This makes TMH`s device the first needle free injection system for liquid pharmaceuticals to be available on the Drug Tariff.

Ian Townsend, Chief Executive, commented:

“Since Drug Tariff approval for the mhi-500 device was granted, we now have two distribution agreements in place that are expected to generate solid cash flow from this product over the coming years. Negotiations are ongoing with other potential distributors.”

Notes to Editors
The Medical House PLC (“TMH”) is quoted on AIM and specialises in the design, manufacture and distribution of medical devices and equipment. Its operations include: Eurocut, a company specialising in the design, development and manufacture of instruments for use in orthopaedic surgery; Creative Medical Design, a leading designer of medical devices and manufacturer of prototypes; and Medical House Products which undertakes the development and subsequent sale of medical devices.

Key Developments in Needle Free Devices
In April 2001, TMH signed an exclusive distribution licence with Bioject Medical Technologies Inc, a US needle free drug delivery company. Under the terms of this agreement, TMH was granted exclusive rights, for an initial five-year term, for the distribution of the Vitajet, a needle-free injection system for the delivery of insulin in the UK, continental Europe and Egypt.

Bioject also selected TMH as its development partner for a second generation of the Vitajet, the mhi-500 device. The IPR is shared jointly and TMH has an exclusive licence in perpetuity for the device in Europe. The mhi-500 device was awarded the CE Mark in December 2001 and deliveries commenced in January 2002.

In June 2002, TMH signed an exclusive agreement with BioPartners GmbH, the Swiss-based international biopharmaceutical company, for the development of a needle free injection system for the delivery of human growth hormone (“hGH”). The device, which is based on new proprietary technology developed by TMH, will initially be designed for the delivery of hGH to both children and adults. It is anticipated that the device will also be available, in due course, for the delivery of other pharmaceutical products, including insulin, interferons and heparin.

Drug Tariff Approval for mhi-500
In November 2002 the mhi-500 device attained Drug Tariff approval for the delivery of insulin, making it available to people with diabetes in the UK under GP prescription (effective 1st Jan 2003) and the only needle free injection system for liquid pharmaceuticals available on the Drug Tariff.

Background on drugs
Insulin: the number of people with diabetes and injecting insulin around the world is rising; it is currently estimated 150 million people in the world have diabetes. The World Health Organisation believes that in a decade that number will grow to more than 250 million. In Europe there are currently around 35 million cases of diabetes.

hGH: is known to act upon many aspects of cellular metabolism, but its most obvious effect is the stimulation of the growth of cartilage and bone in children. hGH has also been used with some success to combat the weight loss and general wasting characteristic of AIDS and cancer.

Interferons: are groups of proteins produced by the body that attack viruses. Interferons used as drugs include alpha-interferon, for hepatitis B and C, human papillomavirus, hairy-cell leukemia, and Kaposi’s sarcoma (a cancer associated with AIDS), and beta-interferon, for multiple sclerosis.

Heparin: is an anticoagulant which is extracted from animal tissues and used clinically to delay blood clotting.
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