The recall handed Cochlear its biggest one-day gain in 18 months, sending its shares up $6.50 to $53.45 and easily making it the biggest winner of the top listed 200 companies on Friday.

It is yet another blow to Advanced Bionics, which has only just recovered from the damage caused to its reputation in late 2004 when it had to recall 440 hearing implants for reasons almost identical to the latest problem.

Cochlear's chief executive, Chris Roberts, said it was too early to predict the full benefits to his company because he did not know how long it would take Advanced Bionics to replace the recalled products.

However, Mr Roberts said the most immediate damage would be to his rival's reputation. "This is further significant reputational damage to them. Advanced Bionics has had major problems with reliability and this is yet another problem," he said.

Cochlear claims a worldwide share of the hearing implant market of more than 70 per cent and forecast a 37 per cent rise in earnings this financial year to at least $80 million.

Mr Roberts said Cochlear did not have enough information about the recall at this stage to justify any change to its earnings guidance or gauge the impact on its market share in the US.

Boston Scientific spokesman Paul Donovan did not return calls on Friday but in a letter to doctors dated March 8, the company's subsidiary said several implants had failed recently due to "elevated internal moisture".

In 2002, Advanced Bionics was forced to recall products due to a meningitis scare and was off the market for six weeks.

Macquarie Equities' private client adviser, David Halliday, said the US market was one of Cochlear's largest and the removal of a competitor's product for any length of time could have a significant impact on sales.

Mr Halliday said the medical profession placed great importance on brand reputation, which meant the impact of a product recall for a company like Advanced Bionics could be felt for longer than in other sectors.

Last month, Cochlear posted a better-than-expected net profit of $43.76 million, up 33 per cent, helped by record sales of its new Nucleus Freedom implant and higher-than-targeted sales of its Baha implant.

By Matt O'Sullivan
http://www.smh.com.au/news/business/cochlear-gains-14-thanks-to-rivals-woes/2006/03/10/1141701687727.html