Most medical device manufacturers outsource some or all manufacturing projects, limiting internal capabilities and capacity to focus on strategic products and initiatives. Firms that do not yet outsource may consider the value proposition that contract manufacturers deliver.
Competitive advantage
Companies are taking advantage of the technology and speed that outsourcing offers, and external product development manufacturing contractors are increasing these capabilities. Suppliers concentrate on mastering and building a core set of competencies to handle tough challenges within their domain and offer a broad scope of services.
As technology advances, outsourcing becomes more advantageous by eliminating the medical device manufacturer’s need to invest in all the latest equipment. Even if companies could keep up with changes, it’s not cost-effective to invest in countless cutting-edge systems. With ever shortening time-to-market requirements and product life cycles measured in months, not years, speed is a defining competitive advantage.
Reduce costs
With outsourcing, organizations could change the competitive landscape, repositioning themselves to renovate how they do business. Engaging a partner with the expertise and capacity to rapidly commercialize new innovations enables producers to beat the competition to market.
An experienced development manufacturing partner also supports firms as they swiftly enter and execute in new markets. Reducing investments in non-critical functions increases flexibility by reducing financial burdens, allowing companies to respond opportunistically in other commercial efforts. Manufacturers that outsource can focus on core competencies, building those skills that directly add value for customers.
PHOTO COURTESY OF RBC MEDICAL INNOVATION
When to outsource
Outsourcing only makes sense once a company builds effective management systems. Companies often outsource prematurely and end with a negative experience. Therefore, ensure that management systems include:
Capabilities to find, evaluate, hire the outsourcing firm
Methods, protocols, communication resources to manage the outsourcing firm
Tools, resources, plans for knowledge transfer
Outsourcing benefits
As the benefits of outsourcing amass, firms frequently extend business relationships and look for more powerful ways to leverage the contracted company. These relationships support greater innovation, fundamentally changing the status quo by allowing the contractor and recipient to focus on exactly what they do best.
In the near term, most companies will maintain some level of product development and manufacturing expertise to help evaluate new product ideas, manage product development, and maintain and support existing product offerings. Longer term, outsourcing provides a powerful way to improve business focus, improve asset use, and generate greater corporate value.
Yoav Zeif, Stratasys’ chief executive officer effective Feb. 18, 2020, replaces interim CEO Elchanan (Elan) Jaglom who will continue in his role as chairman.
Zeif brings broad, global experience in industry transformation to Stratasys, having served in senior leadership roles for public and private multi-billion-dollar corporations, leading worldwide operations across industries and professional domains.
“Stratasys has led the expansion of the 3D printing industry for more than three decades, but the potential impact of this transformative technology across all industries is just beginning,” Jaglom says. “Yoav brings the strong combination of leadership and global operational experience to fuel our next stage of growth. We are confident that as CEO he will advance our offering and further our vision to reshape the world of design, prototyping, and manufacturing.”
The Virtual Foundry names first certified sintering partner
Sapphire 3D is The Virtual Foundry’s first certified sintering partner for its plastic- infused metal filaments, having improved heat-treating of green parts made from The Virtual Foundry’s open-architecture Filamets.
“In addition to their proficiency with our materials, the team at Sapphire 3D also shares our vision, which is to make metal 3D printing attainable to everyone,” says The Virtual Foundry President Tricia Suess.
Sintering 3D-printed metal parts is an art and a science, with sintering cycle temperature and duration often requiring tweaks based on shape, structure, and material.
“Successfully sintering a metal part involves some trial and error,” explains Sapphire 3D Founder David Lawson. “The decisions you make during part design and printing affect the outcome of the process.”
The firm has maintained a database of every sintering cycle performed with Filamets, enabling 100% success with copper and bronze, and approaching that level of proficiency with stainless steel 316L.
Straighter deep-hole drilling
Features - Gundrilling
Counter-rotation gundrilling delivers required concentricity for deep hole applications in precision medical devices.
Manufacturers achieve concentricity tolerances when the hole follows the desired axis of the part, eliminating drift from the point of entry to the exit. In a round part with on-center drilling, this is easily illustrated; some applications may include off-center deep holes or holes in non-round parts that still have tight concentricity requirements.
Low concentricity in some applications can weaken sidewalls, lead to mismatched holes, or force producers to scrap parts. Adding a counter-rotating process on deep-hole drilling equipment allows manufacturers to economically achieve critical tolerances.
With the right equipment and setup, counter-rotation is possible for smaller gun-drilled holes or larger, longer, Boring Trepanning Association-drilled (BTA) components.
Getting started
Deep-hole drilling machines, designed to manage accurate counter-rotation in gundrilling and BTA processes, must include suitable components, machined and assembled to maintain superior alignment.
From the machine base to rotating bearing groups and spindles, to tool and workpiece support, the machine must maintain accuracy while moving and hold concentricity tolerances throughout the hole’s depth. For deep-hole machine builders, alignment considerations begin with the base. Counter-rotation may be possible on machines retrofitted with a second rotating group, but they will often need an alignment improvement process which creates additional challenges.
A general starting point for counter-rotation is to allow one-third of the total speed to come from the workpiece and two-thirds of the speed to come from the tool, which can be adjusted for the specific application.
PHOTO COURTESY OF UNISIG
Considerations
Deep holes are typically classified as anything with a depth-to-diameter (D:d) ratio of 10:1 or greater, and can even reach extreme ratios of 100:1. As deep holes approach ratios of 20:1 or greater, drilling with specialty tooling on dedicated equipment is optimal. Modern deep-hole drilling machines maximize the potential of tools such as gundrill and BTA processes.
PHOTO COURTESY OF UNISIG
The ability to hold improved concentricity tolerances with counter-rotation, which consistently produces a more concentric drilled hole and typically allows higher surface cutting speeds, offers clear benefits in accuracy and efficiency. Manufacturers can increase capability, improve hole tolerances, and optimize productivity while cutting costs and gaining a competitive manufacturing advantage.
The CIM clamping system provides high precision, accuracy, and repeatability through an internal tool indexing mechanism that locates the tool in the correct orientation. The collet holds the tool securely for high stability, and tool change does not require holder removal. Designed to fit standard and special Carmex Tiny Tools, the CIM system eliminates retaining screws and features three clamping flats on the shank for maximum flexibility. The system’s internal coolant feature allows flow through the CIM holder and Tiny Tool for delivery to the cutting edge. Carmex Precision Tools LLC
Four-slide metal forming machine
High-performance processing modules and a controller enable 4-slide process monitoring and sensors to synchronize accurate operation. A configurable VC1 touchscreen controller facilitates programmable cam changes and fast machine setup.
The VC1 central machine controller’s integrated recording and data measurement support operator performance to ensure production reliability. Machine safety standards include door safety switches to prevent exposure to shafts.
The latest FMB Turbo 3-38 automatic bar-loading magazine feeds round, square, and hexagonal bar material into CNC lathes. The headstock synchronization device for rapid backward and forward movement on fast-moving sliding-headstock lathes eliminates forward feed pressure from the bar pusher, ensuring no bar distortion. With irregular shaped bar stock, the feed mechanism automatically pulses to ensure profiled material is located in the lathe collet/chuck.
Quick-change polyurethane guide channels simplify multiple bar stock diameter use. A roller steady rest guides bar stock between the bar feeder and lathe, with rollers or blocks feeding round or profiled material. Rollers can be continuously adjusted to the bar diameter and quickly replaced with blocks to support profiled material.
The storage table at the side of the guide channel features an 11" loading capacity. The new bar automatically positions in the lathe, ready for facing before the first component is produced. Part-to-part feed out can be controlled without a dead stop. Loading time for a 12ft bar is 24 seconds. Maximum adjustable forward feed rate is 1,000mm per second and maximum adjustable return speed is 2,000mm per second.
Bar remnants are withdrawn to the back end of the magazine and a gripper extracts them from the collet and deposits them in a remnant basket. An air-operated gripping device inserts the new bar into the bar stock collet and extracts the remnant.
Healthcare spending will grow to $6 trillion annually, an average of 5.5% compound annual growth rate (CAGR) to 2027, according to The Centers for Medicare and Medicaid Services. That growth continues boosting demand for medical devices. Valued at $425.5 billion in 2018, the global medical device market is forecast to reach $612.7 billion by 2025, registering a 5.4% CAGR. A growing global medical device market leads to expanded medical device outsourcing, with Reports and Data indicating that the global medical device outsourcing market, valued at $96.6 billion in 2018 will reach $208.4 billion by 2026, a CAGR of 10.1%.
Beyond these strong forecasted numbers, 2020 also began with the permanent repeal of the medical device tax (see Regulatory, pg. 16) and the growing, aging population where globally, there are more centenarians than at any point in history and average life expectancy has increased from 67 to 72 in the past 20 years. And, while connected technology has been quickly adapted by younger generations, 76% of those 65 and older report that connected care technology is important to enable them to age at home; the market is projected to grow at a CAGR of 30.27% through 2025, reaching $232.9 billion.
The U.S. Census Bureau puts the global population at 7.6 billion, with the U.S. accounting for about 330 million people:
2 million: Greatest Generation (born before 1928)
24 million: Silent Generation (1929 – 1945)
72 million: Baby Boomers (1946-1964)
65 million: Gen X (1965 – 1980)
79 million: Millennials (1981-1996)
90 million: Gen Z (1997 and later)
Baby Boomers has long been medtech’s favorite demographic group, but other groups are aging (GenXers are already getting orthopedic joint replacements) and advances in medical technology – connected technologies for drug delivery ($4.1 billion by 2026), wearable devices ($139.3 billion by 2026), medical robotic systems ($10.71 billion by 2026) – show a market set to grow faster than ever.
Demand for personalized devices is pushing through the supply chain. Value-based care for best health outcomes initiatives from insurers are pressuring hospitals and original equipment manufacturers (OEMs) to reduce costs. OEMs are responding by outsourcing more; contract manufacturers, in turn, are consolidating supply chains for better quality and traceability while investing in advanced technologies as they become smart factories.
INDUSTRY’S PULSE
Ernst & Young’s 2019 Pulse of the Industry: Medtech revenues increased 7% to $407.2 billion; third consecutive year of growth; highest revenues recorded to date
“Medtechs have a unique opportunity to capitalize on digital transformation. As devices become increasingly connected, medtech companies have a built-in advantage,” says Jim Welch, EY global medtech leader. “What they don’t have are broad, in-house capabilities to develop personalized healthcare offerings. Increased investment in digital collaborations that expand customer experience as well as data and analytics capabilities will continue to move medtech closer to the patients.”
KPMG’s2020 Healthcare and Life Sciences Investment Outlook: More diseases are cured; treatments are personalized; patient/consumer preferences at the center of decision-making
Medical device manufacturers are converging with other subsectors to improve outcomes, with diagnostic and device makers working with pharma companies to provide full patient customization.
Noting that innovation in medtech remains robust, KPMG predicts the industry to grow at a pace of more than 5% per year, with annual worldwide sales reaching $800 billion by 2030. Much of that will come in the area of health IT and revenue cycle management, where 30% in a KPMG survey said they are targeting those areas for investment in 2020.
Digimind Digital health trends report at CES 2020: Internet of Medical Things (IoMT) market to exceed $136.8 billion by 2021; propelled by convenient, patient-oriented medical device, applications that gather, analyze, transmit data to healthcare IT systems in real-time, supporting the aging population – 1.2 billion people worldwide by 2025 who want to age at home.
Deloitte’s 2020 Manufacturing Industry Outlook: 67.9% of manufacturers optimistic for 2020, down from 2019 survey
Vice Chairman, U.S. Industrial Products & Construction Leader Paul Wellener says manufacturers should increase resilience in their operations and double-down on the core of their portfolios. Companies should build digital muscle across the supply chain and mobilize partnerships within their ecosystem. Start by examining current supply networks and consider how to build additional agility, including additional digital technologies to increase visibility and transparency in order to flex production and resources as necessary.
McKinsey & Co.’sGlobal AI Survey: Manufacturing, supply chain management reporting significant cost decreases via individual artificial intelligence (AI)
In manufacturing, some of the most significant savings come from optimizing yield, energy, and throughput. In supply chain management, savings come from spend analytics and logistics-network optimization.
Mercer Capital’sShifting care from in-patient: "The transition to the healthcare delivery paradigm from fee-for-service (FFS) to value models is expected to lead to fewer hospital admissions and procedures, given the focus on cost-cutting and efficiency. …Ultimately, lower reimbursement rates and reduced procedure volume will likely limit pricing gains for medical devices and equipment," notes Sujan Rajbhandary, vice president, Mercer Capital’s Financial Reporting Valuation Group and Daniel McLeod, senior financial analyst with Mercer Capital.
In addition, Rajbhandary says, "pricing pressures will be felt by many incumbent and older devices, which further underscores the need for manufacturers to keep on top of innovation to continually pursue new products and technologies."
Critical new technologies such as additive manufacturing (AM), streamline early stages of product design and development and design for manufacturability (DFM).
ADVANCED MANUFACTURING
While the first half of 2020 is likely to start slower than some anticipated, now’s the time for manufacturers to invest in advanced technologies. With connected shop floors, common software platforms working across a company, real-time machine monitoring, and automation, manufacturers can enter the decade with a plan to be more data-driven so they can troubleshoot problems sooner, improve product quality, and excel in a sector where labor shortages remain.
About the author: Elizabeth Engler Modic is the editor of Today’s Medical Developments magazine. She can be reached at emodic@gie.net or 216.303.0264.
Elizabeth Engler Modic
