Resources and Experience Both Key to Outsourcing Partnerships

Maria Fontanazza

April 1, 2007

2 Min Read
Resources and Experience Both Key to Outsourcing Partnerships


“We're in the middle of a significant growth spurt,” said Keene.

As healthcare spending and the medical device industry share strong growth over the next several years, manufacturers will face increasing pressure to develop products faster and in the most cost-effective manner. These challenges will lead many companies down the path of outsourcing.

Choosing the right outsourcer isn't simple, as some manufacturers have learned the hard way. J. Randall Keene, president and CEO of Avail Medical Products (Fort Worth, TX), advised attendees at an MD&M West conference to look for certain qualities in outsourcing companies that will help them build a strong partnership. Such characteristics include the following:

  • A strong quality system.

  • Broad engineering experience.

  • Commitment to a culture of continuous process improvement within the company. This includes a methodology that is built around Six Sigma and lean manufacturing.

  • Diverse capabilities. Companies must be committed to expanding and must have relationships with industry leaders. Those with such capabilities will usually be able to handle the bumps in the road.

  • Significant financial resources. Does the outsourcer have a profit model, margin structure, or market longevity?

According to Keene, from 2004 to 2015, healthcare spending is projected to more than double, rising from $1.9 trillion to $4.4 trillion. “We're in the middle of a very significant growth spurt in the industry,” he said. In the United States, the aging population, technological advances, reimbursement, and competition are all part of the equation. Those factors also place constant pressure on companies to market innovative products.

About 180,000 U.S. device companies are currently developing, testing, packaging, and distributing products, according to Keene. Although every device company doesn't outsource the manufacturing of its products, the practice has both increased and changed over the years. The average medical device company wants to launch two new products per year. Therefore, many companies may choose to outsource to fulfill their manufacturing needs.

Copyright ©2007 Medical Device & Diagnostic Industry

Sign up for the QMED & MD+DI Daily newsletter.

You May Also Like