Press Release

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info@osmetech.plc.uk

Osmetech plc, ("Osmetech" or "the Company") the developer of medical diagnostics devices, has signed a letter of intent to acquire the assets ("the Acquisition") of the Atlanta-based point of care 'OPTI' product line of blood gas analysers owned by Swiss healthcare company Roche Diagnostics ("Roche"), for a net consideration of approximately $2.5 million.

A sale and purchase agreement is expected to be signed in the near future and the Acquisition is expected to be completed on 31 March 2003. Osmetech will pay $3.5 million, subject to adjustment for final inventory levels, over a 12-month period, depending upon final inventory levels.

On completion, Roche will invest $1 million in Osmetech by way of a subscription for up to a maximum of 22 million ordinary shares of 1p each. This would represent 4.47% of the current issued share capital.

The OPTI business is focused on portable instruments incorporating optical sensors for blood gas, electrolyte and metabolite analysis. These are primarily set in the emergency room and cardiac monitoring hospital settings. Roche will retain its other higher throughput hospital laboratory blood gas analysis products of the well established OMNI-line based on electrochemical sensor technology, which are produced in Graz, Austria.

The OPTI business has established market positions throughout the world with an existing customer base of approximately 4,000 instruments already in use. Revenue is generated through sales of new instruments and ongoing repeat sales of proprietary reagents to facilitate analysis. Reagent sales to existing customers are expected to account for over half of the Directors' total estimated revenues which they believe will be in excess of $7.0 million during the 12 months from the date of the Acquisition.

An experienced team of about 50 employees under the management of Alfred Marek, who pioneered this business, will be transferred to Osmetech.

Osmetech will continue the development of a new hand-held blood gas analyser, which will have significant technological and commercial advantages over other products available for point of care blood gas analysis. Roche has retained an option to sell and distribute the finalised product.

James White, Chief Executive of Osmetech said:

"We have acquired an established business in the near patient testing field, providing us with an important presence in the vast US healthcare market. At the same time we have gained valuable technical and commercial expertise to assist with the development and launch of our integrated vaginal infection product based upon our innovative electronic nose technology.

"This acquisition affirms our strategy of creating a significant presence in the growing point of care diagnostics market, where the key opportunities lie for Osmetech's own product pipeline.

"Osmetech will become one of the few small European healthcare companies to move swiftly from the position of a pre-revenue research organisation to a business that has a robust revenue stream supporting ongoing product development projects. It signals a significant change in the risk profile for the business. Moving forward, the Company should have a new lower 'cash burn rate' reflecting the Company's reduced cost base, combined with the beneficial impact of the OPTI acquisition."

Michael Heuer, President Roche NPT diagnostics division, said:

"This deal is a good example of the way in which a small, innovative, research and development company can work alongside the world's largest diagnostics company to achieve technological and commercial success to the benefit of both parties."

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Notes to Editors

* Osmetech's strategy is to build a healthcare diagnostics business in the fast growing near patient testing and point of care markets.

* Osmetech's e-nose technology is based around an array of conducting polymer sensors that are designed to detect ("sniff") the volatile components emitted by bacteria as they metabolise. The sensors can therefore screen patient samples and test for the presence of infection-causing bacteria.

* The Company, which is based in Crewe, is currently focusing its e-nose IP development on sensors that can detect bacteria associated with a number of healthcare applications in the near patient and point of care testing markets.

* On 22 November 2001, Osmetech announced that it had received FDA approval for its UTI sensor product. This was the first time the FDA had approved e-nose technology for use in the healthcare diagnostic industry.

* On 29 January 2003, Osmetech announced that it had received FDA approval for its bacterial vaginosis (BV) sensor device. This sensor is now being incorporated into a new integrated point of care device for diagnosing and differentiating between the most prevalent and clinically important vaginal infections, including chlamydia and gonorrhea.

* Roche purchased the blood gas analyser business based in Atlanta, US and Graz, Austria from AVL in 2000. The product range consisted of the OPTI product line of portable, point of care devices and the OMNI range of bench-top/laboratory devices.

* The OPTI product range first came to the US healthcare market in 1995, although AVL had been a leading competitor in the blood gas analyser industry since 1967. To date over 4,000 devices have been sold worldwide, approximately one-third in the US. The clinical setting for these devices tends to be smaller hospitals and in the emergency room.

* The OPTI analysers utilise a sensor technology based on optical fluorescence sensors and the process of optical reflectance. The major advantages of this technology are its reliability and stability, which makes the technology superior to electrochemical based systems.

* The OPTI product range will continue to be developed and manufactured from the current facility in Atlanta, Georgia in the US.

* A market survey of 584 larger hospitals in the USA conducted by Enterprise Analysis Corporation (EAC) in 2001 concluded that point-of-care blood gas testing is growing, with 50 per cent of hospitals using a point-of-care device, up from 34 per cent in 1999. Blood gas devices were used throughout hospitals. Operating suites and ICU were the most common locations, but the emergency room, general wards, cardiac catherization laboratory and even outpatient departments were using the devices. EAC concludes that strong growth will continue, with more than 60 hospitals from the sample considering adding blood-gas point-of-care testing within a year.