| | MANUFACTURING
We manufacture many of our products utilizing our
proprietary technology and our expertise in plastic injection and insert molding.
We contract with third parties for the tooling of molds, but we design and own
all of our molds. We utilize our experience in injection and insert molding technologies
in the manufacture of most of the custom components used in our products. We
either assemble the electronic monitors and sensors used in our IntelliSystem®
and Monarch® inflation devices from standard electronic components or we purchase
them from suppliers. In July 1994, we acquired a 73% interest in Merit Sensor
Systems, Inc., which develops and markets silicon sensors. In August 1999, we
acquired the remaining interest in that company. It is presently supplying virtually
all of the sensors we utilize in our digital inflation devices. Our
products are manufactured at several factories including our own facilities located
in South Jordan, Utah; Santa Clara, California; Galway, Ireland; Angleton, Texas;
Chester, Virginia as well as a leased expansion facility in Murray, Utah. With
the acquisition of MCTec in December 2005, our manufacturing activities expanded
to a new facility in Venlo, The Netherlands. See “Item 2. Properties.” We
believe that our variety of suppliers for raw materials and components necessary
for the manufacture of our products, as well as our long-term relationships with
such suppliers, promote stability in our manufacturing process. Historically,
we have not been materially affected by interruptions with such suppliers. Further,
we have developed contingency plans to engage back-up suppliers, materials and
components in the event of supply interruptions. COMPETITION
We compete in the domestic and international radiology
and cardiology markets, which encompass a large number of suppliers of many different
sizes. We compete with more than 30 different companies. These firms include small
firms, such as Possis Medical and Microtherapeutics; medium-sized companies like
Cook, Arrow, and Angio Dynamics; and large, international, multi-supply medical
companies, such as Johnson & Johnson, Boston Scientific, Guidant, Medtronic, and
C.R. Bard. Many of our competitors have substantially greater financial, technical,
and marketing resources than we do. The principal
competitive factors in the markets in which our products are sold are quality,
performance, service, breadth of line, and price. We believe that our products
have achieved market acceptance due, in part, to the quality of materials and
workmanship, innovative design, ease of operation, and our prompt attention to
customer inquiries. Our products are priced competitively, but generally not below
prices for competing products. One of our primary competitive strengths is a comprehensive,
broad line of ancillary products used in both cardiology and radiology. Based
on available industry data with respect to the number of procedures performed,
we believe that we are one of two market leaders in the United States for control
syringes, tubing, and manifold kits (together with NAMIC USA Corporation, a subsidiary
of Boston Scientific), and we are the world market leader for inflation devices
and hemostasis accessories. We also believe that the recent and planned additions
to our product lines will enable us to compete more effectively in both U.S. and
international markets. For example, our new IntelliSystem® II color monitor provides
considerable improvements, including visibility of pressure data in our existing,
patented digital technology. We believe that we are a leading provider of digital
inflation technology in the world. There is no assurance, however, that we will
be able to maintain our existing competitive advantages or compete successfully
in the future. We derive a substantial majority
of our revenues from sales of products used in diagnostic angiography and interventional
angioplasty procedures. Medical professionals are starting to use newer procedures,
devices, and drugs for the treatment and prevention of cardiovascular disease
such as laser angioplasty, atherectomy procedures, and drug therapies, the effect
of which may be to render some of our products obsolete or to limit the markets
for our products. However, with the advent of vascular stents and other procedures
such as discography, we have experienced continued growth in its proprietary inflation
technology. | |
