Possible Acquisition

Smith & Nephew Plc
11 October 2002

11th October 2002

SMITH & NEPHEW PLC SEEKS TO ACQUIRE DERMAGRAFT JOINT VENTURE DURING ADVANCED
TISSUE SCIENCES CHAPTER 11 PETITION

Further to the announcement by Advanced Tissue Sciences, Inc. (ATIS) that it is
filing a voluntary petition for reorganisation under Chapter 11 of the US
Bankruptcy Code, Smith & Nephew plc, the global advanced medical devices
company, announces that ATIS is petitioning the court concerned to allow Smith &
Nephew to acquire ATIS' 50% share of the Dermagraft joint venture for $12m.

ATIS is a US-based tissue engineering company and Smith & Nephew's partner in a
joint venture for the marketing and manufacture of Dermagraft(R), a
tissue-engineered dermal replacement for use in treating hard-to-heal diabetic
foot ulcers, and TransCyte(R), a temporary skin cover for treating serious
burns.

Subject to certain conditions and the approval of the bankruptcy court, the
acquisition should be completed by the end of the year.  In the meantime Smith &
Nephew will work with the management of ATIS and advance up to $5m of the
acquisition consideration, so as to maintain continuity of supply of Dermagraft
(R) and TransCyte(R) and achieve an orderly transition of skills and resources
from ATIS.

The acquisition of ATIS' share of the joint venture will require Smith & Nephew
to bear an increased share of the start-up costs of the venture of some $18m
over 2003 and 2004. This is more than counterbalanced by the benefit of
attaining full control and with breakeven targeted in 2005 and 100% of profits
thereafter.  Smith & Nephew's underlying mid-teens EPS growth target remains
unchanged.

Since the US launch of Dermagraft(R) last year, clinicians have received the
product favourably and reimbursement for Dermagraft(R) is progressing to plan.
Coverage policies for the use of Dermagraft(R) in treating diabetic foot ulcers
have now been established to cover about half of the potential Medicare
beneficiaries. Combined sales of Dermagraft(R) and TransCyte(R) are expected to
reach $8 million during 2002.

Chris O'Donnell, Chief Executive of Smith & Nephew, said: 'Dermagraft(R) and
TransCyte(R) are offering excellent therapeutic benefits to patients. Whilst it
is disappointing that Advanced Tissue Sciences cannot continue to fund the
Dermagraft(R) joint venture, we believe it will benefit both Smith & Nephew and
wound care patients to acquire control and realise the full potential of these
products.'

Enquiries:

Chris O'Donnell, Chief Executive                      Tel: [phone]
Smith & Nephew plc

Peter Hooley, Finance Director                        Tel: [phone]
Smith & Nephew plc

Angie Craig, Corporate Affairs Director               Tel: [phone]
Smith & Nephew plc

David Yates/Jonathan Birt                             Tel: [phone]
Financial Dynamics

                      This information is provided by RNS
            The company news service from the London Stock Exchange