NEW YORK - Start-up medical component firms in the United States, hoping to narrow development costs and widen profit margins, have found the key to survival in selling their products to eager customers in Europe. But critics of the trend note that as research and development capabilities follow manufacturing offshore, the end result could be the loss of the United States' leadership in the development of innovative medical technologies.
The manufacturing exodus - which includes many plastics manufacturers - is not necessarily new. Clinton, Mass.-based Nypro Inc., for example, has had clean room molding operations in Ireland for years. But now, smaller manufacturers are moving.
``Small, start-up companies need cash,'' said a plastics manufacturer's representative and former co-owner of an original equipment manufacturer, who specializes in start-ups.
``They can go to Europe and wait out the Food and Drug Admini-stration's 510(K) premarket notification application pro-cess and make some money in the meantime,'' he noted at Medical Design & Manufacturing East, held June 4-6 in New York.
FDA premarket notification, required in the United States of high-risk, implantable devices as well as lower-risk plastic disposables, entails a complicated review process for safety and efficacy reasons.
``Multiple applications in Europe are possible more expeditiously than they are in the United States, where the FDA restricts applications to a specifically approved procedure,'' he said.
Also, ``Larger companies don't need the [research and development] recovery as fast. They can wait out the FDA if need be, but they like growing the market share that comes with selling in Europe first'' before marketing in the United States.
Once in Europe, a medical molder that has R&D capabilities may have a tough decision whether to return to its native land.
``I can see people not returning to the United States because of the market size,'' said Nancy J. Hermanson, Dow Chemical Co. medical market technical leader in Midland, Mich.
The trend will continue, said Washington lobbyists for FDA reform.
``There isn't a week that goes by when I don't get a call from companies who are considering moving overseas their manufacturing and their R&D,'' said Jeffrey Kimbell, executive director of the Medical Device Manu-facturers Association in Washing-ton, whose members are largely start-up firms.
Kimbell said 80 percent of the firms in the medical device industry have less than 50 employees. MDMA's creation two years ago arose from this fact, he said.
``Congress bears some fault for letting the approval process run amok. FDA has no mission statement - which should include medical technology and getting it on the market,'' he said.
Critics blame FDA's intransigence. A Health Industry Manu-facturers Association study re-leased in February contends ``higher-risk, breakthrough medical devices were usually ap-proved in 240 days or less in Europe; similar devices take an avera e of 773 days to obtain FDA approval.''
In another study, Washington-based HIMA also notes that 87 percent of start-up companies and 76 percent of firms with sales greater than $100 million reported they have increased or plan to increase clinical trials conducted in Europe. If the trend abroad continues, the same study said, the number of U.S. medical device firms - pegged in 1995 at 7,700 - could decline by 1,500 in five years. Wilkerson Group, a New York consulting firm, conducted the survey.
But the government also has helped open the European door by lifting export restrictions on U.S.-made devices. President Clinton signed legislation in April saying medical devices need not be approved by the FDA to be marketed in Canada, European Union nations, Australia, South Africa, Japan and Israel.
Health maintenance organizations in the United States also are blamed for virtually eliminating some plastics-instrument-intensive surgical procedures through cost containment or even refusing to pay for procedures they once covered.
Even small and midsize plastics processors have Europe somewhere in their thinking.
Linda D. Richardson, health-care industry manager for Bethel, Vt., custom molder GW Plastics Inc., predicts her firm will have a European manufacturing presence within three to five years.
Why? ``Because from an export point of view, we've been encouraged by customers.''
Not everyone sees the value of Europe to Americans. Bibby Steri-lin Ltd., a Staffordshire, England, sterile plastics molder, has accepted ``four or five'' projects from the United States that could have been performed in the United States, a manager at the MD&M show noted.
``We're a bit bemused,'' John Watts, development manager, said at the company's booth June 6. ``We can't understand why [these customers] came to us. Their cost profile is no different from what it would be in the U.S.''
He said the type of molding he performed for U.S. customers, for U.S.-designated products, would make more sense in volumes of 10 million, ``enough to justify the cost of shipment back to the U.S.''
With HMOs drawing tighter reins on what procedures they will cover, small firms are looking to Europe as U.S. markets dry up.
An MD&M booth worker for the Carbolon Custom Molding Di-vision of Sterling, Mass.-based Anderson Carbolon Group, related a case in which that firm had filled at least two orders for 10,000 polycarbonate-handled surgical knives used in a procedure to correct carpal tunnel syndrome. But because of HMO reimbursement limits, the procedure is used less in the United States. Orders, the employee said, disappeared.