* Accused of using product without approval
* Synthes, U.S. unit could face fines of up to $35 million
* Shares down 3.2 percent
* Analysts say financial impact likely to be small
ZURICH, June 17 (Reuters) - Swiss medical device maker Synthes Inc's shares fell on Wednesday after the company was charged in a lawsuit brought by U.S. prosecutors for marketing a spinal cement without regulatory approval.
U.S. unit Norian could face a fine of up to $26 million, and Synthes could be hit with a further penalty of up to $8.8 million in connection with the product, Norian XR, which the company withdrew after three patients died in surgery, said U.S. Attorney Michael Levy.
"The company intends to vigorously defend itself against the charges," Synthes said in a statement.
The maker of nails, screws and plates to fix broken bones said it had cooperated fully with the government's investigation, which began in 2006, and its marketing practices in connection with Norian XR were proper.
Synthes shares were 3.2 percent lower by 1006 GMT, against a 0.3 percent fall in the European health care sector index.
"Synthes faces a lawsuit in the USA, which is very bad for sentiment towards the stock," a trader said. Synthes said it sold around 200 units of Norian XR from 2002 to 2004, with total net sales of around $400,000.
"We believe even if Synthes is held liable for off-label promotion, it would probably only apply to a small number of these patients which would make the potential economic exposure quite manageable for a company with $1 billion in cash on its balance sheet," said Kepler Capital Markets analyst Florian Gaiser.
Synthes and the attorney might settle the case for between $1 million and $10 million, or 0.1 to 1.0 percent of estimated 2010 group profit, said Vontobel analyst Christoph Gubler.
"The realised sales are extremely small. The court case will probably take several years to conclude," he said. (Reporting by Jason Rhodes; Editing by Rupert Winchester)