Medical-device OEMs look to the long run

By Gayle S. Putrich
Staff Reporter

Published: May 21, 2013 1:02 pm ET
Updated: May 21, 2013 1:09 pm ET

Image By: Plastics News photo by David M. Barron/oxygengroup Matt Jennings, left, president and CEO of Phillips-Medisize, with Dave Daum, senior director of global sourcing for Philips Respironics' Home Healthcare Solutions business.

Related to this story

Topics Medical, Injection Molding, Plastics in Medical Devices

BOSTON — As the global health-care market continues to grow by nearly exponential rates, industry leaders are looking to move the U.S. medical-device business forward by redefining the relationships of original equipment manufacturers and their suppliers.

Although economies around the world stalled in the last few years, it has not stopped their populations from getting older. The aging baby boomer generation in the U.S. and Europe, and the burgeoning middle class in developing countries like Brazil, India and China, are causing not just a general increase in demand for medical devices, but demand for innovative devices at the lowest possible cost, said industry leaders at the Plastics in Medical Devices conference, held May 13-15 in Boston.

"Innovation today has a new definition," said Randy Barko, president and CEO of Ximedica LLC, which provides product development services to medical-device makers and health-care companies. "It has to be something that's reducing costs out of the health-care delivery system. It doesn't necessarily mean it's the device." Innovation could come in the way the device is used, rather than a redesign, he said, or even in the way it is made.

The push for bottom-line cost reduction has been made even more difficult and more imperative by the advent of the 2.3 percent tax on total sales of medical devices — part of the 2010 Affordable Care Act potentially. That tax is driving up per-unit prices. With materials costs bottoming out now, on average at 40 percent of the total cost, the old-fashioned way of driving down material prices with negotiation is not sustainable, said Mike Kelly vice president of operations for Boston Scientific Corp. So supplier help on the design side is emerging as the new way to drive down total costs while coming up with ever-smarter devices and building new, long-term OEM-supplier relationships, he said.

"The suppliers that are going to be with us for the long run are going be very innovative and help us with the design chain, not just the supply chain," Kelly said.

Earlier and earlier involvement of suppliers in the design effort, whether designing a new device or making changes to an existing one, is going from a trend to a permanent way of doing business, said Matt Jennings, president and CEO of Phillips-Medisize Corp., based in Hudson, Wis.

The trend makes for a more holistic start-to-finish approach for the OEM, Jennings said, while giving suppliers a new look at a manufacturing process and a better understanding of their products' place in it. "It's a real opportunity for the supply base to understand where the bottlenecks are and where they can help," he said.

Closer OEM-supplier partnerships that result in a nimble business process and flexible product will help U.S.-based companies compete in the shifting global health-care market, said Dave Daum, senior director of global health-care solutions for Philips Respironics of Murrysville, Pa., just outside Pittsburgh. The Philips Electronics NV division makes innovative sleep and respiratory-care devices.

"We're really seeing we're in a global environment now," Daum said. "Other countries are developing devices U.S. companies thought they had a lock on, and we're seeing slow infiltration into U.S. market."

OEMs, some for the first time, are finding they have to compete in the local and global market, Barko said. And in a global economy, "local" means Boston, Ireland, Costa Rica and China, even for a U.S.-based company.

"You have to be local to service the customers locally," Barko said. His Providence, R.I.-based firm, Ximedica, is moving its Hong Kong headquarters to the Hong Kong Science and Technology Park, in part to be closer to collaborators and partners — making it easier to involve them in Ximedica's design and production process from start to finish.

"A lot of 'good enough' product is about to be coming out of China," he said. "It's up to us to take on that challenge and deliver."


Comments

Medical-device OEMs look to the long run

By Gayle S. Putrich
Staff Reporter

Published: May 21, 2013 1:02 pm ET
Updated: May 21, 2013 1:09 pm ET

Post Your Comments


Back to story


More stories

Image

Molder provides quality parts and quality work for disabled adults

July 23, 2014 2:40 pm ET

Coarc Manufacturing Inc. does injection molding, assembly and all of the work of traditional manufacturer, but it also serves as part of Coarc Inc. a ...    More

Image

RxFiber developing new generation of medical fibers

July 23, 2014 1:38 pm ET

Increased concern about patient safety is creating a business opportunity for biomaterial fibers maker RxFiber LLC.    More

Image

Plastics help designers bring home the gold

July 22, 2014 2:15 pm ET

Products with polymer content received multiple gold recognitions in the 2014 International Design Excellence Awards.    More

Image

Illinois injection molder expands

July 21, 2014 1:23 pm ET

Automotive supplier All-Rite Industries Inc. has added two new injection molding machines to its operations.    More

Image

Material Insights: PE makers declare force majeure

July 21, 2014 1:53 pm ET

Plus, changes in PET bottle resin price, PolyOne closing facilities and CCP Composites gets bought.    More

Market Reports

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Plastics Recycling Market Review & Outlook 2014

This special report from Plastics News examines the North American plastics recycling industry and provides insight into indicators that impact market viability, including Resin pricing trends for virgin and recycled market material and historical Resin production trends for post- consumer and industrial waste.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events