The medical market is rebounding. But general economic worries, federal and state budget deficits, rising resin prices, soaring energy costs and global health-care reform still weigh heavily on the minds of contract manufacturers, materials suppliers and companies that make packaging for medical products.
Our biggest concern is still health-care reform not only here in the U.S., but around the world, said Brian Payson, vice president of business development for Nypro Healthcare, a unit of Nypro Inc., based in Clinton, Mass.
The reason: Governments worldwide want hospitals and providers to reduce costs, and that's putting pressure on suppliers to further reduce costs.
In the last 12 months, we have had more pressure on prices than we've ever had, Payson said.
Larry Bell, vice president of business development and marketing for Bethel, Vt.-based custom molder GW Plastics Inc., said customers are feeling pinched. That will force us to find better solutions and drive out costs.
The need to reduce costs is coming at a time when resin and energy prices are increasing, creating an unknown variable for contract manufacturers and materials suppliers.
We just have to balance things out when price increases occur and work it out with our customers. We try and absorb them as long as we can, said Dante Rutstrom, vice president and general manager of the specialty plastics business of Eastman Chemical Co. in Kingsport, Tenn.
Material prices are the wild card in the business, agreed Bell, in an interview at the Medical Design and Manufacturing West show in Anaheim. He pointed to the recent run-up in polypropylene prices, which he does not expect to last.
We just need to continue to work closely with customers and have agreements in place so no one is hurt too much by these price fluctuations, Bell said.
Another executive concerned with prices is Joseph Pregont, president and CEO of Prent Corp., a medical packaging thermoformer based in Janesville, Wis. At MD&M West, held Feb. 8-10, Prent introduced a new medical-grade rigid material, Medex 641, designed to cut packaging costs for medical-device companies.
Resin prices are a challenge and the volatility of plastics pricing is a challenge, but whatever happens, we will adapt and move forward, he said.
But Pregont is equally concerned about the mounting government deficits and the lagging jobs recovery in the U.S.
We just can't keep spending the way we have, Pregont said. I just think the debt in the U.S. not only on the federal level, but at the state and local level as well is not sustainable. The health-care issues in the U.S. also are unresolved, so that is a big unknown. The political direction in the U.S. still remains a challenge.
And while the medical business is doing well, he cautions that the economy in the U.S., in general, is slowly moving out of the recession and that the stagnant housing sector and rising gasoline prices continue to loom over any recovery.
We are slowly moving out of the recession, but it is not going to be a rapid, light-switch type of recovery, Pregont said.