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Advance Medical Technology Case

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CASE CONTEXT

Advanced Medical Technology Corporation (AMT) developed, manufactured, and sold scientific medical instruments, needles and catheters that allowed rapid and less invasive access to a number of different organs and vessels. These products represented an alternative to a traditional surgical procedures and allowed analysis or corrective treatment with less risk and trauma and at a lower cost. An example of the products was catheters that could be introduced into a blood vessel and then manipulated through partially closed arteries or into the heart itself.

Despite this good trend of sales volume, the company undergone history of operating losses as a result of various factors. This condition conveyed doubt on its ability to meet obligations hindering it to acquire credit line from banks.

AMT had experienced extraordinary growth fuelled by heavy spending on research and development and a rapid expansion of its sales force having sales growth in excess of 30 % per year. Sales volume, which had grown continuously from the start, was always large in relation to the capital.

On June 2 1983, it established a connection with Biological Labs Inc., which had fallen in catheter and instrumentation technology and abandoned its internal efforts. AMT sold 5% of its outstanding stock for 7 million and the right to purchase additional 13% over 5-year period ending June 1988 for 12 million.

Arrangement of a new line credit with Western National Bank was taken as replacement for its current line with the Sunnyvale Bank. But after a tight background check by Mr. Winter of WNB, it was refused.

Mr. Haskins believes that sales will continue to grow at the same rate. His goal is to maintain its current position and to aggressively enter new markets. In addition, he want to maintain its competitive position by utilizing the

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