Medical Device Link.

MANUFACTURING

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Contract manufacturers have always viewed themselves as filling one void or another in the medical device life cycle. Yet, they are playing an increasingly significant role in the development of new medical devices by evolving through physical expansion and by adding services and developing and adopting new technologies.

Increased opportunity has led to greater competition among contract manufacturers. The need to differentiate or expand services has become an important way of developing a competitive advantage. These expanded services can be found at both ends of the product and project lifecycles. On the product side, contract manufacturers have increased their transactional services to include supply chain management and manufacturing services. On the project side, contract manufacturers are evolving by adding design and development services. The addition of design services to contract manufacturing has become a viable option that can yield success for contract manufacturers and their customers.

Why design services

Contract manufacturers have always possessed a level of design expertise to ensure designs would minimise manufacturing problems. They have promoted design robustness to maximise overall efficiency through higher rates, uptime and yields. Although these design services have been valuable, contract manufacturers still held the view that manufacturing was their core competency and economic engine. Thus, they considered requests for design support in the context of the potential manufacturing reward. Design and development was the domain of the customer, contract design house or a combination of the two. This mindset has changed.

Medical device companies have concluded that they do not need to perform, nor do they have the resources to perform, the entire design and development cycle internally. To meet critical product launch dates, many have partnered with contract design houses and outsourced portions or, in some cases, the entire design responsibility. Device design, development and commercialisation have become a collaborative enterprise. The opportunities for a service provider that possesses design and contract manufacturing capabilities have increased and the threats of offshore competition have proliferated for many products.

The factors involved in moving into design

For contract manufacturers, the greatest investment has already been made: manufacturing technology, space and equipment. The incremental costs to expand into contract design services through internal development or acquisition, which are not to be taken lightly, are significantly fewer than they would be for a design house wanting to become a manufacturer. Furthermore, the full service contract manufacturer is an attractive partner for a device company because it reduces the number of parties involved and establishes a committed and engaged partner who realises that the sooner the development ends, the sooner manufacturing can commence.

But the move into contract design services is not as easy as merely adding an announcement line to the company’s marketing materials.

Medical device contract manufacturers need to be certified to quality management system standard ISO 13485 to be considered viable. In addition they need to be registered with the United States Food and Drug Administration (FDA). The ISO certification enables the manufacturer to provide contract design assistance, and the FDA will require compliance to Code of Federal Regulations 820.30, Design Controls, if the contract manufacturer wants to become a design developer.

So why would a contract manufacturer want to go through all this? It may not choose to do so, if the goal is simply to offer industrial, mechanical, electrical or software design services with the hope of landing a major manufacturing award or expanding service offerings. However, what if the goal is to become both a developer and a manufacturer?

Profit from intellectual property

As a developer, a contract manufacturer is positioned to create intellectual property. Whether it is through contractual services (assuming there is an intellectual property provision) or through the development of proprietary products, the contract manufacturer has the ability to realise the revenue and, more importantly, the profit margins the traditional contract manufacturer cannot achieve. Of course, the risks and liabilities greatly increase in being a developer.

Today’s contract manufacturer companies that offer design services do so because there is an increased demand for which there is no commensurate supply. In doing so, a contract manufacturing company can differentiate itself from the competition and increase its revenue streams by partnering with the medical device industry in a multifaceted capacity: manufacturer and product developer.

Eric Resnick is Vice President, Engineering, The Tech Group, 14677 N. 74th Street, Scottsdale, Arizona 85260-2403, USA, tel. +1 480 281 4500, e-mail: eric.resnick@techgroup.com, www.techgroup.com