Medical product innovations often hinge on the responsive and adaptive engineering provided by custom manufacturers.

Mark Shortt

A scan of MedTech industry news in recent months reveals a wave of acquisitions involving companies seeking to extend their technology platforms or strengthen their capabilities to compete in previously underserved markets.

Some of the companies are seeking to expand their R&D, engineering, and design capabilities. Others are looking to bolster their manufacturing capacity, compress their product development times, expand their geographic reach, or acquire capabilities to produce new devices. Regardless of their specific aims, they’re trying to leverage complementary capabilities in ways that help both companies.

At their best, MedTech acquisitions are not just about acquiring new technical capabilities or IP. When product development is so dynamic that, as one engineer told D2P, medical devices seem to be changing “on a month-to-month basis,” the team is the thing. It’s as true of a company that you’re looking to acquire as it is of a trusted contract manufacturing partner that helps you navigate complex medical device challenges. To win in the medical device industry, you need a responsive engineering and manufacturing team that can quickly adapt to fast-changing needs and execute design and engineering changes on the fly.

“We pride ourselves on being able to accommodate those changes throughout the development process, and even into production,” an engineering quality manager at a Massachusetts-based custom contract manufacturer told D2P in an interview. His company’s ability to solve a host of development and manufacturing issues relating to a component used in spinal surgery was instrumental in a successful upgrade of its customer’s product.

In the medical device world, as in other industries, a contract manufacturer’s ability to provide design for manufacturing (DFM) assistance is an immense asset. It can help keep a manufacturing project on track and save thousands of dollars for medical device OEMs by removing costly manufacturability issues from designs. You can help this process by clearly communicating the end use of the part—as well as the role it will play in a larger subassembly—to your contract manufacturing partner.

A Growing Medical Device Outsourcing Market

Today, medical product innovators are increasingly looking to domestic suppliers for help in solving tough production challenges and delivering new products to market. As medical OEMs seek to strengthen, diversify, and shorten their supply chains, demand is growing for U.S.-based contract manufacturing services ranging from custom molding and casting to machining, sheet metal fabrication, electronics manufacturing, and 3D printing. Value-added services like materials formulation, mold design and manufacturing, design for manufacturing and assembly, surface finishing, testing, and process validation are also in demand, as are anti-microbial medical device coatings that help prevent hospital-acquired infections (HAIs).

On a broader scale, the rising demand for advanced medical products is fueling global growth of the medical device outsourcing market, according to a report released in February by Grand View Research, Inc., a U.S.-based market research and consulting firm. The report estimated the global market for medical device outsourcing will reach $227 billion by 2028, thanks to compound annual growth of 11.2 percent.

Not surprisingly, the contract manufacturing segment is expected to retain its leading position throughout the forecast period, having led the market with a revenue share of 55.4 percent of the global market in 2020. But the market segment that’s expected to grow the fastest over the forecast period is the quality assurance segment.

Currently, contract manufacturers in developed countries are more likely to comply with international standards for quality management systems (QMS) versus those in developing nations, making them a preferred option for outsourced medical device manufacturing. But regulatory changes are anticipated to take effect in developing countries, leading to increased QMS compliance by contract manufacturers while also spurring the growth of consulting services for remediation and compliance. That combination is expected to boost global growth of the medical device outsourcing market, according to the report.

The report went on to say that MedTech leaders have taken extraordinary measures to ramp up manufacturing capacity and capabilities during the pandemic, in an effort to meet soaring demand for critical medical supplies. Now, they are looking outside the boundaries of their sector to explore innovative ways of supplementing capacity, such as through partnerships with firms outside the sector and by open-sourcing designs of equipment.

Meanwhile, U.S. orders for manufacturing technology, including machine tools and related equipment, are rising as manufacturers of medical and other types of equipment continue their efforts to increase capacity and improve productivity. Douglas K. Woods, president of The Association for Manufacturing Technology (AMT), said in a release from AMT that “medical equipment manufacturers increased orders substantially in June, with orders up almost 60 percent compared with the first half of 2020.”

“While manufacturers were in a sprint to produce PPE and ventilators this time last year, we’re seeing more sales of multi-function machines as the items produced are shifting back to components required for delayed elective surgeries,” Woods noted in the release. “According to a paper published at the end of 2020, there could be as much as a 36-month backlog in knee and hip replacement surgeries alone, so manufacturers of these components will continue to be busy into the future.”

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