Invacare 2009 Annual Report Download - page 32

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recall the modified device until the company obtains FDA clearance and the company may be subject to
significant regulatory fines or penalties. In addition, the FDA may not clear these submissions in a timely
manner, if at all. The FDA also may change its policies, adopt additional regulations or revise existing
regulations, each of which could prevent or delay pre-market clearance of the company’s devices, or could
impact the company’s ability to market a device that was previously cleared. Any of the foregoing could
adversely affect the company’s business.
The company’s failure to comply with the regulatory requirements of the FDA and other applicable
U.S. regulatory requirements may subject the company to administrative or judicially imposed sanctions. These
sanctions include warning letters, civil penalties, criminal penalties, injunctions, product seizure or detention,
product recalls and total or partial suspension of production.
In many of the foreign countries in which the company markets its products, the company is subject to
extensive regulations that are similar to those of the FDA, including those in Europe. The regulation of the
company’s products in Europe falls primarily within the European Economic Area, which consists of the
27 member states of the European Union, as well as Iceland, Liechtenstein and Norway. Only medical devices
that comply with certain conformity requirements of the Medical Device Directive are allowed to be marketed
within the European Economic Area. In addition, the national health or social security organizations of certain
foreign countries, including those outside Europe, require the company’s products to be qualified before they can
be marketed in those countries. Failure to receive or delays in the receipt of, relevant foreign qualifications in the
European Economic Area or other foreign countries could have a material adverse effect on the company’s
business.
The company’s business strategy relies on certain assumptions concerning demographic trends that impact
the market for its products. If these assumptions prove to be incorrect, demand for the company’s products
may be lower than expected.
The company’s ability to achieve its business objectives is subject to a variety of factors, including the
relative increase in the aging of the general population. The company believes that these trends will increase the
need for its products. The projected demand for the company’s products could materially differ from actual
demand if the company’s assumptions regarding these trends and acceptance of its products by health care
professionals and patients prove to be incorrect or do not materialize. If the company’s assumptions regarding
these factors prove to be incorrect, the company may not be able to successfully implement the company’s
business strategy, which could adversely affect the company’s results of operations. In addition, the perceived
benefits of these trends may be offset by competitive or business factors, such as the introduction of new
products by the company’s competitors or the emergence of other countervailing trends, including lower
reimbursement and pricing.
Decreased availability or increased costs of raw materials could increase the company’s costs of producing
its products.
The company purchases raw materials, fabricated components, some finished goods and services from a
variety of suppliers. Raw materials such as plastics, steel, and aluminum are considered key raw materials.
Where appropriate, the company employs contracts with its suppliers, both domestic and international. In those
situations in which contracts are not advantageous, the company believes that its relationships with its suppliers
are satisfactory and that alternative sources of supply are readily available. From time to time, however, the
prices and availability of these raw materials fluctuate due to global market demands, which could impair the
company’s ability to procure necessary materials, or increase the cost of these materials. Inflationary and other
increases in costs of these raw materials have occurred in the past and may recur from time to time. In addition,
freight costs associated with shipping and receiving product and sales are impacted by fluctuations in the cost of
oil and gas. A reduction in the supply or increase in the cost of those raw materials could impact the company’s
ability to manufacture its products and could increase the cost of production. As an example, inflation in China
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