Our March Guide to Outsourcing (which should hit your mailbox soon) is a particularly timely supplement. We put it together on the heels of MD&M West, the world’s largest medical device and manufacturing event, which features hundreds of industry suppliers exhibiting their products and services on the show floor. For me and the rest of the MD+DI editorial staff, this annual event, held in February in Anaheim, CA, provides the perfect opportunity to mingle with device OEMs and contract manufacturers, as well as get a sense of the industry’s outsourcing landscape.
At this year’s event, outsourcing was a particularly hot topic, and it’s easy to see why. The global medical device outsourcing market is expected to more than triple in value over the next decade, reaching nearly $120 billion by 2023, according to a recent Visiongain report. In fact, the market for medical device contract manufacturing is growing faster than the device industry itself. Close to 90% of the medical device industry professionals who responded to a recent outsourcing survey conducted by MD+DI in partnership with market research firm ITG said they currently use outsourcing services, and four in 10 respondents said they plan to increase their use of contract services over the next five years.
A media event I attended at MD&M West helped put the surge in contract manufacturing among industry players in perspective. At a press briefing at the show, Phillips-Medisize CEO Matt Jennings explained that slowing markets for medtech products in North America and Europe, regulatory pressures in the United States and elsewhere, and fewer blockbuster device wins have medical device OEMs looking to cut costs in order to maximize profits. They’re also searching for new opportunities in emerging markets and designing products for high-growth market segments, such as diabetes, personalized diagnostics, and single-use devices.
Combine those factors with the increasing complexity of medical devices, which feature everything from touch screens to wireless connectivity to antimicrobial surfaces, and it’s no surprise that when it comes to medical device development, going it alone is no longer an attractive option for companies.
As a result, OEMs are turning to contract partners not just for parts, but for services including design, clinical trials, regulatory submissions, and even full-service manufacturing. Contract service providers, in turn, are rising to meet the evolving demands of medical device manufacturers.
As device makers stretch their supply chains across the world to accommodate new markets, they’re also slimming them down. Fewer cogs make for a more efficient machine, and contract manufacturers are consolidating their operations to provide a one-stop shop for the industry. Not a day goes by that I don’t receive a press release about an industry supplier adding equipment or personnel, or acquiring another service provider in an attempt to better meet the needs of their OEM customers.
But even though contractors serving the medtech industry are beefing up their service offerings, the market remains fragmented. Even the largest contract manufacturing organizations control less than one-tenth of the market, according to Jennings. The result is a lot of options for OEMs to consider when looking to outsource their operations.
The purpose of this supplement is to serve as a resource for those OEMs that understand that in today’s medtech market, doing it all yourself isn’t always an option. You need trusted contract services providers to help you design, manufacture, and deliver medical device products for markets around the world. We hope the articles you find here will help you choose your partners wisely and develop a collaborative relationship that advances not just your own company but the entire medtech industry.
Jamie Hartford is the managing editor of MD+DI