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British makers of precision tools and implants for use in surgical procedures stand to benefit from two trends: increasing demand for orthopaedic procedures from younger people and a preference for minimally invasive 'keyhole' surgery over full-scale operations.

Leader of the pack in the first category is Corin, which produces artificial hip joints able to withstand greater tension than traditional alternatives. These appeal to the 'active elderly' keen to have hip replacements done at an earlier age than in the past.

The company was one of the few to float on the main market in 2002 and has seen its shares rise over 150 per cent since then. In the first half pre-tax profits rose 18 per cent to £2.7 million on sales ahead nine per cent at £12.9 million. This strong performance has prompted a bid approach, which failed to proceed last month.

AIM-quoted The Medical House also operates in the orthopaedic sector, producing instruments (through its EuroCut division), which perform specialised functions during hip and knee operations. These allow surgeons to use cameras so that their procedures are more accurate and minimally invasive.

Profits from this division have been used to fund the development of a needle-free drug delivery system, which shoots liquid into the blood stream. The device, initially developed for diabetes sufferers, has been adapted to deliver other drugs. A major deal has now been signed and this should transform overall group profitability for the year.

The fast growing area of keyhole surgery has most notably benefited fully listed Gyrus, but AIM tiddler Surgical Innovations, based near The Medical House in Yorkshire, is also worth a look. The group produces tools assisting in this area, including disposable scissors typically used in abdominal procedures such as removing gall bladders.

Interim sales rose 23 per cent to £1.4 million, producing a small £41,000 pre-tax profit. Finance director Graham Bowland foresees great growth in performing stomach operations to reduce capacity and combat obesity. At its current market value of £5.8 million, Surgical Innovations looks ready to grow as well.