WAYNE, Pa., Jan. 18 /PRNewswire/ -- Escalon Medical Corp. (Nasdaq: ESMC)
today announced that it has acquired Sonomed, Inc. of Lake Success, New York,
a privately-held manufacturer and marketer of ophthalmic ultrasound diagnostic
devices.  The purchase price was approximately $12.5 million in cash.
    Sonomed, Inc., founded in 1983, is a premier ophthalmic ultrasound company
offering a full line of A, B and Pachymeter ultrasound systems to measure the
eyes and detect and examine abnormalities.  The company's products are
benefiting from the growth in refractive and cataract surgery and intraocular
lens implants.  Sonomed is profitable, with 1999 revenue of approximately
$7.0 million, and will be run as a subsidiary of Escalon Medical.  Existing
management will remain at the company.
    Escalon Chairman and Chief Executive Officer, Richard J. DePiano,
commented, "The acquisition of Sonomed moves us further along on our strategy
to focus the Company on profitable niche products where we can be a leader.
Sonomed is a recognized expert in diagnostic devices to the ophthalmic
industry and expands Escalon's own ophthalmic product offerings, creating
additional synergies in the marketplace."

    Ocufit SR(R) Trial Discontinued
    Escalon Medical also announced that it has discontinued the Phase I human
clinical trial for Ocufit SR(R), the Company's ophthalmic drug delivery
system, which was being jointly developed with West Pharmaceutical Services,
Inc. (NYSE: WST).
    Mr. DePiano commented, "Unfortunately, current results from the clinical
trial do not justify the continued investment in this product.  While most
costs related to Ocufit SR(R) have been expensed, we expect to take a charge
of approximately $170,000 in the fiscal second quarter to write off certain
capitalized costs.  Although we are disappointed to have to discontinue our
development of Ocufit SR(R), we will now be able to reallocate our research
and development spending into areas that show greater promise, such as
povidone-iodine 2.5%."
    Mr. DePiano concluded, "With the recent sale of our Adatosil Silicone Oil,
the expected write-off from Ocufit SR(R) and rising research and development
expenses due to the clinical trials of Ocufit SR(R) and povidone-iodine 2.5%,
we expect to report a net loss in our fiscal second quarter, which ended
December 31, 1999."
    Escalon Medical expects to report results for its fiscal second quarter in
mid February 2000.
    Founded in 1987, Escalon develops, markets and distributes ophthalmic
surgical and pharmaceutical products as well as vascular access devices to
fund a targeted research and development effort.  The Company utilizes
strategic partnerships to help finance its development programs and is also
seeking acquisitions to further diversify its product line to achieve critical
mass in sales and take better advantage of the Company's distribution
capabilities.  Escalon has headquarters in Wayne, Pennsylvania and
manufacturing operations near Milwaukee, Wisconsin.

    Note:  This press release contains statements that are forward-looking,
including statements about the Company's future prospects.  They are based
on the Company's current expectations and are subject to a number of
uncertainties and risks.  Actual results may be affected by, among other
things, uncertainties related to recent acquisitions, uncertainties and risks
related to new product development and introduction cycles, research and
development activities, including failure to demonstrate clinical efficacy,
delays by regulatory authorities, scientific and technical advances by the
Company or third parties, introduction of competitive products, third party
reimbursement and physician training.  Further information about these and
other relevant risks and uncertainties may be found in the Company's report on
Form 10-K, and its other filings with the Securities and Exchange Commission,
all of which are available from the Commission as well as other sources.

    To receive additional information on Escalon Medical Corp., via fax, at no
charge, dial 1-800-PRO-INFO and enter code ESMC.

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