SPECIAL ADVERTISING SECTION
Contract Services
Subcontractors invest in new technologies and optimize processes to meet a growing demand from Europe's medical device OEMs.
Leslie Laine
More device OEMs than ever before are relying on suppliers of contract services to provide complete, seamless partnering for all types of business functions. In a recent survey, reported in the May/June issue of European Medical Device Manufacturer, 71% of OEMs polled reported that their use of contract services had increased between 6 and 15% in the past two years. A significant 35% of companies responding to the survey expected outsourcing to grow within their firms by more than 10% in the next two years.
According to Jan Vermeulen, commercial director of AP Technologies (Le Brassus, Switzerland), "Industry in Europe is opening up to outsourcing and using contract manufacturers for the production of complete devices. More and more small companies are looking for existing infrastructures to develop and manufacture their ideas."
Contract manufacturing makes a lot of sense for a process that requires very specialized equipment or expertise but which does not generate the sort of production volumes that would justify substantial capital expenditures or the addition of well-qualified personnel, adds Karen Kline, vice president of sales and marketing at Acutek (Brussels). While Europe historically has lagged behind the United States in the move toward outsourcing, the benefits of this business paradigm are increasingly being recognized by European manufacturers, she adds. "It takes a real leap of faith for a medical device company to accept from the start that it will be dependent on another company's ability to support it for the long term," says Kline. "But as more and more contract manufacturers develop track records for reliability and quality, the trend will continue to gain momentum."
Medical OEMs seeking outsourcing partners will find numerous excellent opportunities in the marketplace, as contract service providers expand services, invest in leading-edge technologies, and shorten delivery times. In interviews with EMDM, several subcontractors specializing in device-related services reveal some of their strategies for adding value to their partnerships with OEMs.
It's never too early
Ask any supplier, and he will tell you that the sooner the client involves him on a project, the more effective he can be.
"When clients come to us with an idea or a prototype at an early stage," says James Whitbourne, president of STS duoTEK Inc. (Farmington, NY, USA), "we are able to assist them by identifying the manufacturing, assembly, packaging, sterilization, testing, and regulatory requirements that they can anticipate in bringing their product to market."
Getting involved early in the process can allow the subcontractor to suggest necessary changes to the product design before manufacturing begins. Ensuring that a product still in the design stage can be manufactured efficiently is one of the core strengths at Donegal HealthCare Ltd. (Letterkenny, Co. Donegal, Ireland), according to director of business development Brian Redmond. "We were recently introduced to a device that was considered ready for manufacturing," he recalls. "On closer examination, we found cause to recommend more than 20 modifications before the product would be capable of functioning."
Suppliers focus on fast turnarounds
Helping companies to do it right the first time is one way in which subcontractors add value; doing it faster is another.
"Customers are demanding more and more flexibility from their suppliers," says Heinz Ackermann, general manager of Décolletage AG (Grenchen, Switzerland). "They place orders on shorter notice and vary the quantities." Décolletage responds to this demand by negotiating so-called frame contracts with customers. "These agreements are based on a guaranteed annual purchase quantity that can then be ordered by the customer in flexible lots with short lead times," says Ackermann.
"Speed and responsiveness to all customer needs is the key to success," agrees James Keith, president of FBK Medical Tubing Inc. (Birmingham, AL, USA). "Customers demand immediate gratification for all of their needs, and they will do business with the supplier who is most responsive."
Keith reports that speed was the determining factor in the successful outcome of a recent FBK project. "Market entry of [a client's] new catheter was being held up because the tubing supplier was not performing," says Keith. "FBK quoted, designed, tooled up, and produced tight-tolerance tubing, sent it to the customer for approval, and manufactured it in production quantities in four weeks."
Fast turnarounds are also a calling card at Precision Extrusion Inc. (South Glens Falls, NY). "A customer who came to us had been waiting for a custom profile extrusion from another supplier for more than 12 weeks," says president Michael Badera, "although he had been quoted a six-week lead time. We quoted the item in two days, he placed the order the next day, we made the tooling, did the extrusion, QC'd the lot, shipped the product overnight, and he had it in hand—and in spec—nine days from first contact."
Outsourcing processes also allows companies to work concurrently on a project, which can accelerate time to market, adds Kline. "Designers can turn over to Acutek a good part of the design work on their pressure-sensitive components, thus freeing up their time to work concurrently on other aspects of the project," she notes. "Once in production, we can support the customer's needs with the same converting services on multiple production lines either in the United States or Europe." Acutek recently opened a manufacturing facility in Ireland.
Being responsive to customer needs entails not only quick turnarounds, but also being able to implement rapid midstream changes when necessary, adds Redmond. He recounts how coping with last-minute changes allowed Donegal HealthCare to provide the best service for a client.
"The specification for a pharmaceutical product changed suddenly," says Redmond. "We were asked to modify our manufacturing process but also to keep the market supplied. We were already at full capacity on this product and were required to further validate the capability of our manufacturing process. This was a considerable challenge. Our process improvement team operated 24 hours a day, seven days a week, to ensure the customer received the improved product without any ill effect on continuity of supply."
The one-stop shop
For many outsourcing firms, expanding their range of services is a crucial step in the transition from a traditional client-vendor relationship to a true partnership. That is a goal at AP Technologies.
"We can provide complete service from development to manufacturing and even after-sales follow-up to our customers," says Vermeulen. "The customer can use our existing infrastructure rather than investing in one of his own."
Recognizing the demand for one-stop services, MedSource Technologies Inc. (Minneapolis, MN, USA) has grouped seven US suppliers within its multifacility manufacturing network. CEO John Hertig notes that a successful supplier must offer a full range of services to device OEMs if he is to thrive in the years ahead. MedSource puts that philosophy into practice by offering integrated design, manufacturing, and assembly services.
Acutek's multicolour printing, multilevel die-cutting, and multilayer laminating capabilities in one press pass enable the company to eliminate some assembly operations to save its customers time, says Kline. "The enhanced design possibilities we can offer often result in more user-friendly features and a more marketable product," she adds.
Meeting evolving needs
Changes in technology and in regulatory requirements are a constant in medical manufacturing. Making both a philosophical and financial commitment to stay at the forefront of these changes is a critical service that many contract firms provide.
Andreas Schüssler of Euroflex GmbH (Pforzheim, Germany) says that his company satisfies the demand for smaller and more multifunctional devices by focusing on the "continuous improvement of our micromachining technology to produce smaller dimensions with tighter tolerances."
Schüssler adds that Euroflex "has built up a modern quality management system, a strong engineering staff, and significant in-house development capacity" to demonstrate its commitment to the device industry. "We also cooperate with renowned research institutions to maintain a leading role in the contract manufacture of smart components for medical devices," says Schüssler.
For Larry Noble, president of Norman Noble Inc. (Cleveland, OH, USA), investing in communications technology is an essential part of maintaining a technological edge. "Continuously changing technology affects the way we transfer information," says Noble. "Efficiency is key. We just added an advanced programming system that allows us to transfer customer details, as well as blueprints, CAD drawings, and other product specifications throughout the development process in the most efficient way possible."
Quality standards and regulatory requirements are also subject to change, and many contract services firms report that compliance issues are a major focus of their efforts and can, indeed, be critical to their company's credibility.
Judi Gorski, vice president of marketing at NAMSA (Irvine, CA, USA) says changes in regulatory requirements have precipitated investments not only in new testing technology, but also in the continuing education of its staff. "Our technical staff plays an active role in establishing testing guidelines for such organizations as the Association for the Advancement of Medical Instrumentation and the International Organization for Standardization," says Gorski. "Many of them also lecture and write articles about medical devices for a variety of industry publications. The staff's expertise allows us to better serve the medical device manufacturer."
The increasing reliance on standards and quality systems has played a significant role in the growth of outsourcing, adds Kline. "Companies need to be sure that their product will not be compromised if all or part of the manufacturing is contracted out," she says. "I think the implementation of ISO standards and the medical device directives has helped device companies to feel more confident in entrusting their processes to subcontractors who can demonstrate compliance to international standards."
Perfect partnerships
In a rapidly changing and growing market, firms that offer contract services are finding numerous ways to add value to their partnerships and to remain competitive. For medical OEMs, this means faster turnarounds, greater flexibility, more-complete service packages, and focused expertise. Ultimately, it means getting a better product to market faster.
