Mr. Randall: The company is about 20 years old. It has been distributing its product for approaching 11 years. The product was initially approved by the US FDA for distribution in 1992. The company manufactures and distributes a portable, hand-held blood testing system which is intended for use with time-sensitive blood tests in hospitals. The product is distributed worldwide. Presently, the company has an exclusive distribution arrangement with Abbott Laboratories and that arrangement comes to an end at the end of this year, after which we will be initiating independent distribution of our product. Once again, we did that until 1999 when the Abbott agreement started and we will be initiating independent distribution in January.
TWST: What will be the advantage for you of making this change?
Mr. Randall: There is a rather significant financial advantage to the
company. The original arrangement with Abbott Laboratories anticipated
an increase in sales volume of the single use disposable cartridge
portion of our product system which, quite frankly, did not materialize.
As a consequence, the reductions in the product cost and therefore
improvement in margins to the company never really materialized. The
whole arrangement turned out to be one that was attractive and
profitable for Abbott but really not so attractive for the company. So
we are going to no longer have the distribution discount that Abbott is
earning today and instead we will have some increase in our sales and
marketing costs. That increase will be less than the discount that we
will be foregoing.
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