360 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
uncertainty would adversely affect the ability of Gish to attract and
retain key management, sales, marketing, and technical personnel. In
addition, in connection with the merger, certain employees are entitled
to acceleration of vesting of stock options, which would adversely affect
the ability of CardioTech to retain such employees following the acquisi-
tion. Any failure to attract and retain key personnel would have a mate-
rial adverse effect on the combined businesses of Gish and CardioTech.
15.8.4.3 Opportunities
◾ The manufacture and sale of medical devices, including products cur-
rently sold by Gish and Gish’s other potential products, are subject to
extensive regulation by numerous governmental authorities in the U.S.,
principally the FDA, and corresponding state agencies, such as the
California Department of Health Services (CDHS). In order for Gish to
market its products for clinical use in the U.S., Gish must obtain clearance
from the FDA of a 510(k) pre-market notication or approval of a more
extensive submission known as a pre-market approval (PMA) application.
CardioTech had experience in obtaining 510(k) approvals from FDA.
◾ Gish did not have heparin coatings for its product line. By 2003, the
industry required all blood-contacting surfaces to be coated with an
antithrombotic surface. CardioTech had expertise in this area, and could
be of great assistance in developing and introducing coated products.
◾ CardioTech planned a subsequent acquisition of an established and
highly protable medical device company in China, thus opening the
Chinese market to Gish’s products.
15.8.4.4 Threats
◾ Introduction of substitute products. The entry of minimally invasive
stents as a disruptive new procedure resulted in cataclysmic reductions in
coronary-bypass open heart surgeries. The industry was suddenly faced
with a supply overcapacity that became more produced year after year.
◾ Downward pricing pressures. Gish was facing increasing down-
ward pricing pressures from domestic and international competi-
tors, especially from competitors specializing in the cardiovascular
surgery products market. Governmental reimbursements were being
steadily eroded, as cardiopulmonary products were becoming more
“commoditized.”