Healthcare Industry News:  Covalon Technologies 

Devices Wound Care Distribution

 News Release - January 12, 2006

Covalon Enters Into Significant International Distribution Agreement for New Antimicrobial and Regular Collagen-Based Wound Dressings

MISSISSAUGA, Ontario--(HSMN NewsFeed)--Jan. 12, 2006--Covalon (TSX VENTURE: COV ) is extremely pleased to announce that it has entered into a non-exclusive global distribution contract with a major arms length distributor of wound dressings. The distributor will sell a collagen-based sheet dressing and an antimicrobial silver ion releasing collagen-based sheet dressing. Both advanced dressings will be made by Covalon using its proprietary technology.

Reports from Frost & Sullivan of Palo Alto, CA, indicate that revenues for the advanced wound management products market will continue to grow at a compound annual rate of 26.9% and will reach an estimated $2.4 billion in 2006. That figure represents a substantial increase over the $455 million market in 1999.

Dr. Frank DiCosmo, President and CEO stated: "The contract is significant for Covalon as it sets a one year dollar volume in excess of $3.5 million US before the distributor gains volume discounts. The Company expects the new product line to generate significant revenue. Covalon should start delivering product in April 2006. In the wound dressings market, silver dressings growth outperforms all others in the category." Furthermore, said DiCosmo: "many medical studies highlight the benefits of using antimicrobial silver ion releasing products to treat advanced wounds, in patients such as diabetics and the elderly at increased risk for skin breakdown, slow healing and infection. We look forward to working with our partner to maximize the potential of the new silver ion releasing products in improving wound care choices for clinicians and patients."

There has been a continuing shift toward antimicrobial silver products in treating advanced wounds. The April 2005, Trends and Forecasts states that silver-releasing dressings provide optimal healing for decubitus and minor wounds. In the hospital market, HPIS reports a 32.6% sales increase in the silver/active dressings product class for second quarter 2005 over the same period in 2004 outpacing the overall wound care category growth rate of 9.3%. Collagen dressings, grew 25.5%. In wound care annual distribution sales to the acute care market increased 6.7% through the second quarter 2005. Wound care-related products exceeded overall acute care sales with an increase of 9.3% during the same period, while quarterly growth rates have increased over the last two periods, peaking at 3.1% in second quarter 2005 (Source: HPIS(TM) (a Neoforma CompanyŽ)).

Covalon Technologies Ltd. is a company with advanced medical products that has developed and patented advanced therapeutic biomaterials for wound care and surgical applications and coatings. Polymer chemistry and surface coating technology have been combined to create a range of time-release drug delivery platforms that are applied to many medical devices to treat many critical conditions. A variety of applications for these technologies have been identified and specific products have been developed. The products offer features and benefits providing solutions to many of the problems caused by current devices and their material properties which are used by most medical device manufacturers and suppliers. The problems include infection, poor biocompatibility, and microbial attachment.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved of the contents of this release.

Source: Covalon Technologies

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