Strategic partnerships among OEMs, outsourcing firms, and suppliers are playing an increasingly important role in medical device innovation.

August 6, 2014

8 Min Read
Strategic Outsourcing Partnerships Fuel Medtech Innovation

By Crystal Humphreys, Deepak Prakash, and Barbara Van Rymenam 

With market demands more intense than ever, medical device businesses across the supply chain have much to gain by engaging in strategic partnerships. Alliances, licensing agreements, and other partnerships can enable new market entry, faster commercialization, and product differentiation— all toward the goal of improving patient care.

Get more advice on best practices for medtech outsourcing at MD&M Minneapolis, October 29 & 30, 2014.

It is more important than ever for medical device businesses to forge strategic alliances with outsourcing firms, suppliers, and other parties to help solidify their standing and ensure they are well positioned to meet market needs. This need for collaboration is particularly pressing given the industry’s high quality and performance goals.

The Role of the Informed Healthcare Consumer

When medical device firms reach outside of their four walls to collaborate with partners, the resulting product innovation can be more scalable and differentiated. In other words, the sum of a collective solution has the potential to be greater than one a lone entity might feasibly be able to deliver. But why is this need for alliances more important than ever right now? Why should medical device makers consider complicated relationships with others when they might be confident they can go it alone?

A powerful driver of the path to partnerships is the empowered consumer. Medical device manufacturers, as well as their suppliers and customers, must meet the expectations of consumers who are more informed about their healthcare options than members of any prior generation. 

Through the Internet, patients, their friends, and their families have relatively easy access to data about hospital quality, infection rates, service levels, and technology. This new level of transparency challenges the healthcare industry to raise the bar in care delivery. Hospitals are held more accountable for their care metrics and, in turn, look to their suppliers for products that empower them to provide better care.

By partnering with other companies, medical device developers enhance their ability to invent creative new solutions to help healthcare institutions meet consumers’ elevated expectations. When they go it alone, it can be much more difficult to break free of tried-and-true product development patterns. 

Digital Health Demands New Alliances

The digital health revolution is a prime example of how new technology is prompting fresh partnerships in the industry. Digital health solutions often enable remote monitoring and diagnosis of patient physiology. Product development requires specialization and expertise in wide-ranging fields, such as cloud computing, adhesives, smartphones and mobile devices, pharmaceuticals, server hardware, software application development, and device manufacturing. Rarely, if ever, does a single enterprise master all of these capabilities in-house.

Beyond design and development of digital health products, there also can be a need for strategic alliances to commercialize and bring the solutions to market. For example, some digital health devices are sold directly to the consumer—a commercialization path unfamiliar to many medical device OEMs, which are accustomed to selling to distributors or healthcare institutions.

Consider the different types of businesses that must forge alliances to bring a “smart” body-sensing technology to market. There is the supplier of the sensor itself. There is the provider of skin-friendly adhesive for attaching the sensor to the body. Another firm typically provides expertise in digital health feedback systems for transmitting and interpreting patient data collected by the sensor, and yet another business, usually one with a core competency in lifestyle management, might work with the other players to devise a way to communicate meaningful information to the patient.

By building these types of alliances, businesses in the digital health space are successfully filling knowledge gaps on the road to innovation.

Urgent Patient Care Issues Require Cooperation

Another prevailing force behind strategic partnerships in the medical device industry is the urgency to solve important patient safety problems. Hospital-acquired infections (HAIs), for example, pose a serious dilemma for healthcare institutions globally.

As healthcare institutions intensify efforts to address the problem of HAIs, they are seeking solutions from the medical device industry, among other sources. The medical device industry has responded with innovations designed to reduce surgical site infections, catheter-related bloodstream infections, respiratory infections, urinary tract infections, and other major causes of HAIs.

Because of the tremendous sense of urgency to reduce HAIs, the medical device supply chain must employ efficient communication and collaboration among strategic partners to ensure timely commercialization of solutions.

For instance, the development of a new type of antimicrobial dressing requires carefully orchestrated hand-offs between the maker of the proprietary antimicrobial technology, third-party laboratories performing efficacy tests, and ultimately, the clinical trial locations.

Thanks to healthcare reform, there is also a trend toward a bundled approach to managing patient outcomes. Reimbursement for services promises to become more closely tied to overall patient health, whereas today the traditional fee-for-service model is prevalent, especially in the United States. Strategic partnerships between medical device makers and healthcare providers are important relative to this trend. In particular, all are challenged to improve collaboration and communication to deliver the right remedies during the vulnerable period when the patient transitions from an inpatient to an outpatient setting. Under the emerging model for reimbursement, compensation will be intricately linked to how smoothly the patient recovers and whether he or she must be readmitted to the hospital.

For example, consider a patient with diabetes who has just been released from the hospital following a surgical procedure. The diabetic condition complicates the wound healing process, so the patient’s healthcare providers will want to employ optimal postoperative wound care. The latest absorbent wound dressings promote a healthy healing environment through moisture management, odor-control, and protection against microbes. As such, this type of advanced medical material plays an important role alongside other medical devices, such as glucose monitors, wheelchairs, and medications, in the patient’s recovery. Providers of care, makers of medical devices, and everyone in between, must be in lock step to employ best practices and protocols. The healthcare team recognizes that the patient’s overall health and recovery from surgery relies on this orchestrated coordination of care and use of the latest medical device applications.

Perhaps more than ever before, it is critical for upstream medical device manufacturers to be connected with the needs of the end consumer of healthcare—the patient. OEMs who typically might not have nurtured relationships directly with patients rely on strategic partners to feed them insights vital to future product development. For instance, a home health provider, nurse, or gastroenterologist is likely to be closest to the care of a patient with an ostomy. These frontline individuals will be best able to communicate with the patient, determining how different aspects of ostomy care are progressing. Is the ostomy site free of infection and odor? Is the patient comfortable?

Returning to the example of adhesive medical materials, ostomy dressing makers rely on input from many sources to best serve the patient. In product development, they turn not only to in-house R&D experts but also to the know-how of medical device distributors and others with firsthand proximity to the patient. By combining internal expertise with input from these strategic partners, they build a keen understanding of patients’ desire for discretion when it comes to their ostomies. This insight can then drive product attributes such as pliability, quiet wearability, and antimicrobial properties for odor control.

OEMs Seek a Sophisticated Supply Chain

Yet another driver of strategic partnerships in the medical device industry is the pressure to bring new products to market more rapidly and cost-effectively. OEMs are turning to partners in their supply chains for value-added capabilities such as design services and product development prowess. This trend, in turn, puts an onus on converters and their suppliers to establish alliances to meet more complex OEM requirements.

Some suppliers, for example, offer converters special programs through which converter partners can secure complimentary sample kits. With on-demand access to these kits, converters quickly obtain materials for rapid prototyping of new products for OEMs. Through such programs, some qualified converters might also receive specialized training through their suppliers and access to marketing insights relative to trends in their medical device niches. 

Customers in every step of the supply chain are demanding more from their partners. All parties, ranging from suppliers to converters to OEMs, must offer value-added services in a world where competition is fierce and differentiation is the key to survival.


Alliances and strategic partnerships can take many shapes and forms, from exclusive licensing agreements and legal joint ventures to more informal pacts and distributorship deals. As the healthcare industry evolves, there will likely be a trend toward more collaboration between different members of the healthcare ecosystem, including raw material suppliers, converters, OEMs, distributors, care providers, institutions, participants from outside the industry, and, ultimately, end consumers. Success will be defined by those in the medical device industry who build their strategic relationships on a foundation of trust, which in turn will yield innovation.

Get more advice on best practices for medtech outsourcing at MD&M Minneapolis, October 29 & 30, 2014.

Crystal Humphreys is global market segment manager at Vancive Medical Technologies.  Reach her at [email protected].

Deepak Prakash is global director of marketing for digital health at Vancive Medical Technologies. Contact him at [email protected].

Barbara Van Rymenam is global market segment manager with Vancive Medical Technologies. E-mail her at [email protected].  


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