Not Like Your Dad's MedTech Suppliers

Take a look at the typical contract manufacturing firm now versus 10 years ago, and it is likely bigger and with many more capabilities, says Mark Bonifacio, principal and owner of Bonifacio Consulting Services (Natick, MA).

The large medical device manufacturers, seeking to save money by shrinking their supply chains, simply require it. Hopefully, the shift will enable more advances, versus quality errors, in the medical device industry.

Bonifacio also suspects the need for added capabilities, along with larger geographic footprints, is fueling plenty of business partnerships and mergers among small suppliers with around $20 million-a-year in revenue.

"If you are an injection molder, what else can you do? Can you put the parts together? You have to offer more services. 'Now we can do assembly. And we also do packaging. And we do sterilization.' You have to offer more capabilities," Bonifacio says.

A supplier in the metals space might machine to tighter tolerances, or offer some platings and coating.

Most of all, the contract manufacturer will likely be involved in early-stage design of whatever the OEM needs.

Bonifacio says the relationship between contract manufacturers and OEMs has significantly changed over the past 10 years: "They would say, 'OK, XYZ supplier, can you make this?' Now it's a much more collaborative process. Or even one step further, they're going to the product manufacturer with a need and saying, 'Can you help us with the design and development of X?'"

This has happened in other industries, Bonifacio says. He recalls that Ford used to order the car seat frames, the foam, the leather and other seat parts. Now it just orders completely finished seats that arrive at an assembly plant and are bolted into vehicles.

"That's what's going to happen in our industry. Now they're just going out and saying, 'Can you deliver this whole catheter to me?'" Bonifacio says of the OEMs.

Chris Newmarker is senior editor of MPMN and Qmed. Follow him on Twitter at @newmarker and Google+.