An independent analysis of recent surveys and market research reveals several key factors that can hinder innovation in the medical device industry. Major challenges to medical device development center on the overall regulatory environment, including the approval process and product validation. Additional factors that contribute to a medical device manufacturer’s struggles include the inexperience of company leaders and investors, market changes that derail expectations, and delays in product development. These and other barriers put a financial strain on many device manufacturers’ ability to succeed.

Eric Marks

The insights are derived from extensive research, surveys, and perception studies conducted by the American Society for Quality (ASQ), ARC Advisory Group, and Zacks Equity Research (ZER) into the critical obstacles facing device manufacturers today. From this research, it is possible to pinpoint the practices and processes that device manufacturers are using to overcome the compliance and engineering obstacles that impede product innovation. Foremost among these practices is a concept called “product life cycle management,” or PLM.

Engineering and Compliance Challenges
 

ZER reports that the global medical devices industry is fairly large, with projected annual worldwide sales in 2010 of more than $220 billion. The U.S. accounts for approximately 41% of this market. In terms of industry growth, the market will be worth $256 billion by 2011.

Medical device manufacturers have a positive outlook about economic growth in 2010 in terms of increased revenues. Fifty-seven percent of ASQ survey respondents believe their companies will experience more economic growth than in 2009. Twenty-seven percent believe they will experience about the same growth as in 2009, and only 11% believe there will be less growth than last year. Five percent are unsure what the future outlook holds. However, that growth will come with engineering and compliance challenges.

ASQ recently conducted a 2010 survey that polled 2000 medical device manufacturers for the biggest industry trends and challenges they face today. Medical device manufacturers believe the most challenging obstacles for 2010 and 2011 will be the impact of healthcare reform, the proposed medical device tax, and the dire need to manage cost reduction while maintaining quality. According to the survey, 64.7% of the respondents said healthcare legislation would have a negative impact on the industry in the year ahead due to the increased FDA mandates concerning compliance.

In today’s newly regulated economic climate, therefore, medical device manufacturers are looking for solutions that address these challenges—with added emphasis on reducing costs. For example, companies that embrace solutions for managing the life cycles of their medical manufacturing processes are better poised for growth in a weak economy. ZER states that life cycle management for sustaining the life of products will show the most growth of all in the medical devices market.

Dick Slansky, the principal author of ARC’s Product Lifecycle Management Worldwide Outlook study, states: "The medical device manufacturing sector is refocusing the strategic direction of their companies toward innovation and new product development to gain critical market share and grow top line revenues. While innovation, new product concepts, and design are necessary to a company in order to maintain its competitive edge, getting the right product, at the right time, to the right market sectors will often determine a company’s profitability."

Growing Demand for Productivity
 

Omnify Software, a company specializing in PLM, says many of the medical device companies it works with use product life cycle management to streamline project management, increase quality control, and improve training. Omnify reports it has seen an increase in inquiries about using PLM to help mitigate such problems and, specifically, to manage training and quality programs that impact FDA compliance. ASQ supports Omnify’s findings, reporting that 54% of survey respondents believe that they could benefit from more training and a better understanding of requirements like 21 CFR Part 11 compliance.

A recent medical device study by ARC Advisory Group explains that there are several reasons for the growing use of PLM. Among them are the demand for increased efficiency and productivity, a continuing need for collaboration across a global manufacturing life cycle, and the rapidly growing need for product reinvention and innovation. The study exposed the growing use of a comprehensive, PLM solution that ARC expects will contribute to growth of the worldwide PLM market.

Various PLM solutions target the medical device industry. The ideal solution should reach across departmental barriers and allow information sharing and process automation across the enterprise. The development and manufacturing of a medical device is an increasingly difficult endeavor as competition grows stronger and regulatory constraints broaden. Device companies must look for ways to increase efficiency in their processes in order to remain competitive and in compliance with the various regulatory bodies governing world markets. Medical device manufacturers often use PLM functionality to fill in gaps, such as taking a closed-loop corrective action and automating data capture and routing related to product issues and defects. In addition to the much-needed documentation for FDA-required audit trails, a PLM system can greatly simplify the capture and routing process.

Faster Time-to-Market
 

Typically, a PLM system that embraces an open platform and leveraging Web services can help achieve an open infrastructure for easier data sharing and customization. Web services enhance a PLM system’s existing open platform for third-party integration. They also enable easy customization of user interfaces and reports. The ability to tailor interfaces creates a familiar environment for users, assuring a simple transition from legacy practices. Custom reporting offers high-level views of key development data to identify trends and issues early in the development cycle.

Most PLM systems offer medical device manufacturers project-management capabilities. Capturing all product and program data in a PLM system creates executive views, which are used to more easily recognize common problems. Ultimately, this leads to better resource allocation and streamlined processes that impact deadline-sensitive development activities. Managers can look at a dashboard that displays project-management metrics such as status, completion percentage, and completed milestones to determine project status at a glance.

Software programs such as PLM that tie together the information-sharing requirements of the various departments within a device company have been shown to reduce development costs by as much as 25%, reduce time-to-market by a staggering 40%, and foster innovation. Medical device manufacturers that use such software to gain a competitive advantage over slower manufacturers will get a jump on the future.

Eric Marks is a medical device industry practice leader for PricewaterhouseCoopers. He is the author of four books, including SOA: Planning and Implementation Guide for Business and Technology (Wiley, 2006) and Business Darwinism—Evolve or Dissolve (Wiley, 2003). Marks may be reached at 1-617-800-5576.