WAYNE, Pa., March 5 /PRNewswire/ -- Escalon Medical Corporation
(Nasdaq: ESMC) today announced the transfer of its license and distribution
rights for Betadine(R)5% Sterile Ophthalmic Prep Solution, as well as all
related inventory, to a major pharmaceutical company.  Escalon had licensed
Betadine(R)5% from The Purdue Frederick Company.
    Escalon received a cash payment of approximately $2.0 million for the
license, distribution rights and inventory of Betadine(R)5% Sterile Ophthalmic
Prep Solution.  Betadine(R)5% represented 16% of Escalon Medical's sales in
fiscal 1998.
    "The divestiture of Betadine(R)5% will better focus Escalon Medical on
products that it owns, such as the recently acquired vascular access business,
or controls the rights to, such as Ocufit SR(R) and povidone-iodine 2.5%,"
said Chairman and Chief Executive Officer, Richard J. DePiano.
    Mr. DePiano continued, "As a business, Betadine(R)5% has matured over the
eight years Escalon has held the license.  Selling the distribution rights and
inventory will provide an excellent fit with the acquiring company's growing
surgical product franchise, and the cash received in the transaction will be
used to pay for our recently completed vascular access business acquisition,
where we see greater long term growth potential."
    Mr. DePiano concluded, "Our goal is to create value for our shareholders.
We believe that by investing in profitable niche products and markets where
the Company can become a leader, diversifying our target markets and focusing
less on distributed products and more on products that we own, we should be
able to continue to grow our business and provide the necessary funding for
our promising R&D programs."
    Founded in 1987, Escalon develops, markets and distributes ophthalmic
surgical and pharmaceutical products which provide a base of positive cash
flow 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, Pa., and manufacturing
operations near Milwaukee, Wis.
    Except for historical information contained herein, this press release
contains forward looking statements which include statements about the future
potential of Escalon Medical's products and its recent transactions, the
accuracy of which is necessarily subject to risks and uncertainties.  Actual
results may be affected by, among other things, risks and uncertainties
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, and other risk factors and matters set
forth the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1998 and Amendment No. 3 of the Registration Statement on Form 3
(Registration Statement No. 333-44513), which has been filed with the
Securities and Exchange Commission.

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