Market reacts to health scare at Nobel Biocare
Shares in Swiss-Swedish dental implant maker Nobel Biocare fell on Wednesday amid uncertainty about the safety of one of the firm's key products.
Analysts say the market is beginning to react to claims – which the company denies – that a particular brand of implant could lead to bone loss in the jaw.
During trading on Wednesday Nobel Biocare stock fell to SFr265 ($207.50), its lowest level since last July.
Shares in the firm rose more than 40 per cent in 2005, but shed some of their gains late last year after reports surfaced that the Swedish medical authorities were investigating the firm’s NobelDirect implant brand.
The investigation was sparked by criticism from two professors at Gothenburg University, who say that data taken from 300 patients shows that the implant leads to higher bone loss in a third of cases compared with older implants.
Nobel Biocare has rejected the claims, saying they contain no scientifically or statistically relevant evidence.
The company added that it was optimistic about the outcome of the investigation by Swedish regulators.
But on Tuesday the head of a Swedish dental practice also said he had seen bone loss around the implant and would withdraw from a clinical study of the device.
Patrick Laager, an analyst at Bank Vontobel, told swissinfo that the markets were becoming increasingly concerned by the reports of problems.
“It’s always the same story in the medical technology market… whenever one product goes wrong from a clinical point of view, there is a pressure on share prices,” he said.
“So even if it’s only two professors who are saying there is a problem with NobelDirect, this is enough to put price pressure on the stock.”
Waiting game
Laager said the current erosion of market confidence might prove to be just the “tip of the iceberg”, but stressed that no conclusions could be drawn before the results of the official Swedish investigation.
“That said, what we are seeing might be a clear indication that Nobel Biocare does now have a problem with this implant.”
The authorities in Stockholm are not expected to report their findings until the middle of the year.
Laager believes that a negative outcome could have serious consequences for the company, particularly if it is forced to withdraw the product from the European and United States markets.
“If this happens, it would be extremely bad news for Nobel Biocare, not just in terms of sales but also in terms of its reputation,” said Laager.
According to the analyst, Nobel Biocare’s biggest rival – Basel-based Straumann – initially benefited from the dental-implant reports.
“If you look at the stock before Christmas, there was a kind of shift from Nobel Biocare to Straumann… but in broad terms what has happened is bad news for both companies.
“That’s the reason why if you look at the share-price development at the moment, it is negative for both, not just for Nobel but also for Straumann.”
swissinfo with agencies
Nobel Biocare is the world number one in the dental implant market ahead of Straumann.
First-half figures for 2005:
Nobel Biocare: Net profit – €87.9 million (SFr136.4 million), up 128 per cent over the 2004 figure.
Straumann: Net profit – SFr68.1 million ($54.39 million), up 25 per cent over comparable period last year.
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