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Derma Sciences Receives FDA Approval for Its Next-Generation Antimicrobial Silver Alginate Wound Dressing.

PRINCETON, N.J. -- Derma Sciences, Inc. (OTC: DSCI.OB):

--ALGICELL(TM) Ag Puts the Antimicrobial Power of Silver Within Clinicians' Reach by Offering a Cost-Effective Advanced Dressing; Marks Major Step Toward Reducing Overall Cost-of-Care Associated with Wound Management

Derma Sciences, Inc. (OTC: DSCI.OB) today announced FDA approval of ALGICELL(TM) Ag Calcium Alginate Wound Dressing with Antimicrobial Silver, a next-generation product for patients who require a topical antimicrobial as part of their advanced wound management protocol. Advanced wound care is estimated to be a $1 billion market and growing 10%-15% per year. This will be the first silver alginate dressing available that offers the full benefit of antimicrobial ionic silver combined with the proven wound management properties of pure alginate fibers. Additionally, the product will be priced cost-effectively to help reduce the common cost burden associated with silver antimicrobial dressings.

ALGICELL(TM) Ag is made up of 1.4% silver - released in its ionic form - and a proprietary blend of mannuronic and guluronic alginic acids. After significant internal research and development, 1.4% was shown to provide the ideal level of silver to achieve maximum antimicrobial effectiveness without harming healthy tissue. Ionic silver has been shown to have strong antimicrobial effectiveness against a broad spectrum of bacteria and fungi. The silver ions in ALGICELL(TM) Ag are slowly released in a controlled fashion to provide constant protection and extended wear-times. The proprietary blend of alginic acids is designed to provide an optimal gelling profile, promoting a moist wound environment conducive for wound healing and ease-of-use through easy removal during dressing changes, while minimizing fibrous residue commonly associated with these types of dressings. The dressing is made with more material than the leading brand, improving absorption by 16% and allowing for fewer dressings to fill deep wound cavities.

Importantly, the product will be priced cost-effectively to help reduce the burdensome costs associated with advanced wound management. Pricing has been established to more closely reflect the reimbursement levels of these dressings, currently a serious issue for wound care providers attempting to cover costs while still providing optimal care through the use of antimicrobial silver dressings.

"The approval of ALGICELL(TM) Ag marks a significant milestone in the successful implementation of the strategy Derma Sciences has been working towards over the course of the past several years," said CEO Ed Quilty. "We recently announced our best quarter ever, driven mostly by the strength of our growing contract manufacturing operations and successful integration of our recent acquisition, Western Medical, LTD. With this part of our operation in good shape, we are now focused on bringing several new and differentiated products to the market. Having differentiated products in our own brand will help to drive organic growth and improve overall margins." Quilty also stated that, "This product, differentiated by its price and by the fact that it is an excellent quality product designed to directly rival the market leader, is only the first in several new products we intend to launch over the coming 12 months."

Barry Wolfenson, VP of Marketing and Business Development, said that "our market research clearly shows that wound care providers perceive antimicrobial silver wound dressings to be too expensive. Current prices are not aligned with reimbursement levels, and that puts a strain on businesses trying to maintain profitability while still providing optimal care." Not wanting to come to market with a generic-type product that was merely acceptable, "we spent a good deal of time tweaking the alginic acid proportions, the absorbency, and the silver level, to ensure an ideal dressing," Wolfenson added. "This product, cost-competitively priced, will provide compelling value for our customers."

About Antimicrobial Silver Dressings

Silver has been used for centuries as an antimicrobial. Most expressions dealing with silver, such as "served on a silver platter" can be directly traced back to this usage. With the growing concern over penicillin resistant microorganism strains in the 1990's, wound care professionals turned again to silver as a strong topical antimicrobial. The US market for these dressings exceeds $80 Million, and is largely dominated by one alginate-type absorbent dressing Current pricing structures for most of the silver brands including the market leader do not align with reimbursement levels for these dressings. Recently, several companies petitioned the Centers for Medicare and Medicaid Services (CMS) to obtain higher reimbursement levels for antimicrobial silver dressings. Both in the Spring and then again this past Summer, the CMS reiterated its position that current HCPCS (reimbursement) codes covering antimicrobial silver dressings are adequate and that there should not be new codes issued nor should existing codes be increased.

About Derma Sciences, Inc

Derma Sciences, Inc. provides a full range of wound management, skin care, and specialty securement devices that are used primarily in the professional markets, specifically hospitals, nursing homes and home care settings. For more information about Derma Sciences, Inc., visit its home page on the Internet at: http://www.dermasciences.com.

Forward-looking Statements

Statements contained in this release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. Readers are cautioned that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements which may be made in this release or which are otherwise made by or on behalf of the Company. Factors which may affect the Company's results include, but are not limited to, product demand, market acceptance, impact of competitive products and prices, product development, completion of an acquisition, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements Include but are not limited to, those discussed in the Company's filings with the Securities and Exchange Commission.
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