Contract Medical Device Manufacturers Are on the Rise to Keep Costs Low

Hardware startups know that keeping costs down is essential. It’s also essential to move as fast as possible from concept to prototype to market -- while also accommodating design change iterations such as beta user input, certification requirements and test findings.

Easy, right?

Well, one way that many hardware startups are achieving this tricky-to-impossible trifecta of “faster, cheaper and better” is by turning to third party manufacturers, also known as Contract Manufacturing Organizations (CMOs). One area in particular includes medical devices.

New Trends in Medical Device Manufacturing

According to a Duff & Phelps’ report, "The global medical devices contract manufacturing market generated annual revenues of $70 billion in 2017, and is forecasted to increase to $115 billion in 2022, a compound annual growth rate (CAGR) of 9.5%."

In the report, Duff & Phelps segments the medical device contract manufacturing industry by the following:

  • Device type:Class I, II and III devices
  • Application: orthopedic and spine, cardiovascular, radiology and general medical devices
  • Service: prototype development, finished device manufacturing, assembly and packaging, and testing and regulatory support services

Thomasnet.com defines the medical device market as, "extremely broad, encompassing items as simple as bandages all the way through to ultra high-tech pacemakers."

The report explains that factors contributing to the growing number of high-tech medical devices, include:

  • Industry 4.0 manufacturing methods and service providers
  • IoMT (Internet of medical Things)
  • Growing aging population that requires more health care
  • Overall global access to medical care is expanding

The Thomas Index Report data also reveals that, "over the past six months, sourcing activity for [medical device manufacturing] is up 30% over its historical average."

What To Be Aware Of When Contracting

In a follow-up interview between myself and Tony Uphoff, President & CEO of Thomas, he shares a few insights on how to safely source medical manufacturing.

Q: What manufacturing sourcing trends should startups be aware of?

Re-shoring. U.S.-based entrepreneurs need to think about bringing manufacturing back to the United States.

"While overseas suppliers have seen the lion's share of the work for the past 50 years, the benefits of re-shoring are becoming too much to ignore for a growing number of medical device manufacturers. Innovations in automation and loosened regulatory barriers are making it more viable to bring manufacturing back to the US, where greater control over the process and a shorter time-to-market are helping startups and entrepreneurs get a foothold in the industry."

Q: Any advice for medical hardware startups in terms of sourcing decisions?

Protect your IP (Intellectual Property). "If you have any kind of intellectual property in your new products, be very careful about sourcing production overseas, particularly in China, where IP theft by manufacturers is an ongoing concern."

Uphoff also advises startups to check your proposed manufacturing partners for regulatory expertise:

"While any supplier's ISO 13485 certification is a must, when sourcing a contract medical device manufacturer, a startup would do well to look for a company that has a great deal of regulatory expertise, and can take a product from design and development to testing, validation, manufacturing, and ultimately delivery to market. Medical device industry expertise and a proven track record are vital when choosing a Contract Manufacturer – it can make or break the success of the new product."

Remember, do your research. When the success of your new product and company are at stake, it's not just a good idea, it's essential.