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

RPC Group buying Iceland's Promens

November 27, 2014 8:46 am ET

In a major acquisition that combines two rigid packaging companies with international footprints, RPC Group plc has signed a 399 million euro ($497...    More

Image

Market growing, but compounders say customers remain 'cautious'

November 27, 2014 6:00 am ET

Everywhere they've looked, North American compounders and concentrate makers have seen numbers on the rise in 2014.    More

Image

Large part molder EnviroTech in 'growth mode,' adds space, equipment

November 26, 2014 9:54 am ET

Salt Lake City-based EnviroTech Molded Products Inc. is adding new equipment and expanding its factory as it gains business in some of its...    More

Image

Plastics News Now: Recycling machine dispenses food for stray dogs, cats

November 26, 2014 6:00 am ET

A PET bottle recycling vending machine is providing food and water for stray dogs and cats, a plastic tire is looking to replace rubber pneumatic...    More

Image

Globalization brings sizable growth, primarily in Asia

November 25, 2014 1:40 pm ET

In 1990, the year after Plastics News published our first issue, there were 33,000 injection molding machines sold worldwide. Fast forward to 2013, an...    More

Market Reports

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 billion plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

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

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events