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November 5, 2019

Roundtable: choosing a contract device manufacturer

Medical device contract manufacturing is a rapidly growing sector, with the market expected to reach a value of more than $91bn by 2024 from just $55bn in 2019. But for medical device firms considering outsourcing the manufacturing of their devices to a contract operator, what are the biggest risks and rewards? In this roundtable feature, we find out the industry’s perspective.

By Chloe Kent

We’ve heard from:

  • Imperial College London professor of cardiology and medtech expert Martin Cowie
  • WeHealth director general David Guez
  • GlobalData director of therapy research and analysis Andrew Thompson
  • Plexus EMEA market sector vice president Kurt Wanless

What are the biggest risks when outsourcing device manufacturing?

Martin Cowie: Large medical device companies often lack a senior understanding of ‘digital’ and outsource in fear of missing out on cutting-edge techniques and approaches. But they are usually sold a ‘pig in a poke’, as they cannot really do due diligence on this due to lack of familiarity and even understanding of the lexicon. This often leads to overspending and under-delivering.

Andrew Thompson: Regulation presents the biggest risk. Manufacture of medical devices is highly regulated, but it differs depending on jurisdiction. US uses licenced facilities, Europe looks to ISO-13485 accreditation, and others. This is the biggest risk; if the original equipment manufacturer (OEM) is inexperienced in medical devices, issues can arise that can drastically affect whether devices are marketed. If the OEM operates in multiple industries like electronics or metal fabrication, then generally a separate workforce is needed for that specific product.

It requires manufacturers to establish good communications with their outsourcing partners, usually through dedicated personnel. Sometimes involving them during development helps; many of the bigger ones have development and prototyping facilities of their own. This helps integration of the production line.

Kurt Wanless: For any medical device developer, protecting their brand and reputation is paramount. An outsourcing partner is, in many respects, a direct extension of the developer’s brand. As a result, it is important to select a partner that matches the developer’s values. The selection should extend beyond simple financial criteria. The partner must be capable of delivering products to the highest standard of quality and regulatory compliance within the required timeframe.

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Another part of the decision-making process should be the outsourcing partner’s ability to provide services needed for success. In selecting an outsourcing partner, it’s a good idea to visit the partner’s locations to get a more detailed perspective on how they will support your business and the depth of their capabilities.

How can companies spot a good business fit when they’re looking into outsourcing?

David Guez: I think it depends on the deeper conversations we have. The most important thing is to have someone we want to speak with who understands that we are going to take a decision together, whether that’s someone inside a bigger organisation or a start-up.

AT: Good OEMs will only do medical devices, and will have a highly developed understanding of medical devices from a regulatory viewpoint. It’s making sure these companies have personnel already in place with the appropriate competencies and the managerial level.

KW: Finding the right fit in both company culture and business profile is vital as manufacturers vary in levels of experience, capacity and ability to understand product complexity.

The partner should be able to demonstrate strength and in-depth knowledge in the OEM’s field of expertise. If a company is designing a renal denervation system or a surgical robotic device it would be sensible to partner with an outsourcing provider with similar experience. Is the partner experienced in manufacturing to FDA Class II or III standards? Does the partner have experience managing related regulatory standards such as cyber security and business continuity planning?

A good partner has the foresight to predict and eliminate potential obstacles before they arise. At the same time, when unexpected issues arise a good partner will also have the resources and expertise to turn around projects in a short space of time and rethink or revise processes during the manufacturing cycle to solve problems and avoid time-to-market delays.

What are the benefits of outsourcing?

MC: Without outsourcing, small digital tech start-ups cannot afford to have staff for many functions as they move from one stage of development to another.

DG: Faster innovation. It means that you’re going to accelerate the product, building an outsourced portfolio. It’s in parallel in fact. We can compare solutions and choose the best one, that’s the essence of what we’re doing.

AT: Medical device manufacture is often done on a batch basis. This might mean assembly lines that are only used for part of a year, and then switched or repurposed to something else. For small medical device companies, this might mean equipment lying fallow or staff furloughed. OEMs can offer flexibility in deploying staff and flexible assembly lines.

Counterfeiting can be a problem in some countries. A solution one manufacturer came up with was to have small assemblies made at different locations by different manufacturers, but to the same high precision engineering standard (in this case, plastic mouldings used in a molecular diagnostic test consumable), and assembling these at another location. Counterfeiting components could not have resulted in the product being copied.

KW: The medical device market is evolving at a rapid pace and becoming more complex and challenging. Medical device developers have to ensure that their products can be manufactured efficiently to avoid additional costs and, more critically, they have to achieve faster time-to-market. Put simply, working with the right partner can add value, reduce overheads, and speed up time-to-market to ensure that a company remains competitive.

In a perfect world, the manufacturer gets involved at the concept stage to ensure the best possible manufacturability and help support meeting target price criteria. Without this early collaboration, the developer raises the risk of delayed time to market, missed target price criteria, and operational challenges in volume production.

Parameters for success need to be established early on. Don’t underestimate a partner’s ability to communicate and interact with its customers as anything less than fundamental to a project’s success. Design and manufacturing partners work extremely closely with customers to ensure the end product exactly matches what is required and should, therefore, have a sound structure in place for collaboration.

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