When you consider the lead time, cost and resource pressures medical device manufacturers are currently under to get products off the drawing board and to market, generating revenue, it is not surprising that demand for contractors that can provide electronic manufacturing services (EMS) is growing rapidly.
After all, rather than having to reinvent the wheel, if a medical device manufacturer can leverage someone else’s expertise and capacity, especially in an area as complex as electronic manufacturing, and thus turn a device into reality, it is something of an economic no-brainer.
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"There is a huge interest in EMS within the medical device arena right now, especially against the backdrop of the Obama administration’s healthcare reforms and the expansion of healthcare coverage," explains Mike Tendick, market sector vice-president, medical, for Plexus Corp, a leader within the EMS industry.
"Within this there is the challenge of the proposed 2.3% tax on medical device sales that will be used in part to fund the healthcare reforms and, of course, simply the ongoing pressure for cost containment when it comes to the development of increasingly complicated and sensitive medical devices.
"The European market is also very much focused on driving costs down, while the Asian market is looking at inexpensive products. There is a real emphasis for device companies to focus on their core competencies, while outsourcing additional items that complement those core competencies – this is where EMS companies come into play," he adds.
End-to-end solutions
Moreover, EMS contractors have in recent years been increasing the scale and extent of what they can offer device manufacturers, with many now able to provide a wider array of services, ranging from anything from system assembly to shipping devices to the end user.
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By GlobalDataOn top of this, as medical technology gets increasingly complex and the number of devices using electronics grows, medical device original equipment manufacturers (OEMs) are increasingly looking to EMS providers for end-to-end electronic manufacturing support, as Tendick recognises "The EMS market has truly matured over the past 30 years, and especially in the past 12 years. Today OEMs are looking for EMS partners that complement their core competencies and can provide end-to-end solutions," he explains.
"EMS companies are being asked to do more and more over time. Younger start-up companies are, naturally, keen to maximise their value. They may be very good at being, say, product companies, or surgical or diagnostic companies.
But they may not have the skills or specialties in place to engineer or manufacture products themselves.
"Device companies often look for EMS companies that have electronic engineering capabilities and quality systems in place. Furthermore, they may also want to hire an EMS company for product design and conceptualisation expertise. EMS specialists can often make the device development process easier by providing vast product development knowledge and experience.
"Some firms want to do the product design themselves, which is fine of course. But others want us to do almost everything. Many OEMs look to us to design the product and to do the testing of the design, while ensuring the product meets the quality standards of the market into which it is going to be sold. We also assist companies with the commercialisation of their design to ensure that we provide the total lowest cost solution with a focus on design for excellence (DfX), which includes design for supply chain," Tendick adds.
A question of collaboration
With the R&D costs of various medical devices now running into many millions of dollars, choosing the right EMS partner is an absolutely critical decision. The first thing, curiously, is for device manufacturers to audit and assess what they are already doing, where their core competencies lie, argues Tendick. Only when they have done this will they be able to look outside and properly gauge what EMS competencies they require.
"A medical OEM needs to understand what their core competencies are and, therefore, what they need to be looking for when it comes to identifying a partner who has the competencies to complement their needs. There also, of course, needs to be the right level of’mind share’ and the right business model to support the OEM’s type of product," he asserts.
"Part of it, inevitably, will be about the personnel and the leadership of the EMS partner. At Plexus we know, for example, that our products work; that when it comes to mid-to-low volume, higher complexity products and areas, such as large pieces of diagnostic equipment or monitors, we have a lot of expertise and experience. But for something like a high-volume video gaming system, it will make more sense to go to a firm that specialises in that area. Or, alternatively, if your product is super high-volume, then you are obviously going to need an EMS partner who is comfortable in that arena.
"On top of this, it is important to make certain that you have an EMS partner who is going to make the design precisely to the manufacturer’s specification. This will ensure price points are met. It is also a good idea to gauge what their supply chain is like to ensure there are not going to be delays or hold-ups. Are they going to be able to get all the supplies for the different components and do they have a robust supply chain model?"
EMS: central to success
As for the future, the role of the EMS contractor, and the reliance OEMs will have upon them, is likely to grow even further over the next decade, he predicts. As the medical device market becomes, first, more global; second, more complex and specialised; and, third, ever more regulated, the OEM may simply become the’hub’ around which all the work revolves, rather than necessarily doing the work itself.
"I think we will see these trends continuing for at least the next five or six years. The outsourcing of medical device development is increasing. Yet, at the same time, every device manufacturer is going to need to keep a core engineering team or lead team to lead the development of the device, while the EMS partner will simply complement," says Tendick.
"It is, very simply, all about fulfilling customers’ needs. EMS is being utilised more and more and is also offering a much wider range of after-marketing services, including repairs, refurbishments and logistics," he adds.
Another area of interest among OEMs is the capability of EMS contractors to offer whole-life support for a product and ongoing fulfilment, even the option of shipping and delivery to the consumer.
"EMS providers are increasingly shipping direct to the hub and then to the end consumer," explains Tendick. "Being able to meet regulatory requirements is becoming much more important. EMS suppliers are now shipping products that keep patients alive. Therefore they need to have the trust of the Food and Drug Administration (FDA).
"The ability to support regulatory needs is becoming more important. This requires an even greater level of understanding and partnership between EMS providers and OEMs," he stresses.
