MD+DI Online is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Articles from 2005 In February

Products from the MPMN Mailbox

Originally Published MPMN February 2005


Products from the MPMN Mailbox

Contract Disposables Manufacturing

A specialist in syringe manufacture offers complete contract manufacturing services for marketers of Class I and Class II disposable medical devices. Integrated BioSciences Inc. (Harrisburg, PA; can handle a complete outsourcing program, from product design support and prototyping through assembly, packaging, and sterilization. Value-added services such as inventory maintenance, distribution, and marketing support are offered to help OEMs get their products to market quickly, on schedule, and at a competitive cost. In addition, the manufacturer is able to design, build, and operate the automated equipment necessary to produce the devices.

Medical Monomers and Polymers

Specialty monomers and polymers are available for use in medical device formulations. The chemical additives from Polysciences Inc. (Warrington, PA; allow medical device manufacturers to give products desired attributes, such as hardness, water permeability, biodegradability, or UV-light absorbency. The high-purity substances are produced in bulk and batch quantities to suit the requirement. In addition to offering a broad line of off-the-shelf monomers and polymers, the manufacturer can develop custom products to meet specific formulation needs.

Air Bubble Detector

A clamp-on ultrasonic air bubble–detection system senses bubbles or breaks in the flow of liquids, including blood, through various types of flexible and rigid tubing. Detecting bubbles 250 µm and larger as standard, the self-contained Model AD-101 from Cosense Inc. (Hauppauge, NY; performs noninvasively, that is, without coming into contact with the liquid, so that there is no possibility of contamination and no concern about compatibility. Installation is simple and fast; flexible tubing snaps into place, and hard tubing is clamped. Tubing measuring 0.04 to 1.0 in. diam can be accommodated. The system operates at 5–24 V dc, and TTL, CMOS, open collector, optically isolated, or relay outputs are available for connection to audible/visual alarms or a data-acquisition system. Custom versions can be built to detect smaller bubbles.

Stainless-Steel Shaft Collars

A standard line of shaft collars made from Type 316 stainless steel is available for use in applications involving harsh chemicals, corrosive materials, or frequent wash-downs. Supplied off the shelf in set-screw, one-piece, and two-piece styles in sizes of 1/2–1 in. ID, the collars from Stafford Manufacturing Corp. (Woburn, MA; suitable for drive systems, mixing equipment, flow control instrumentation, and similar machinery. Special versions with threaded bores, mounting holes, and other custom features such as hinges can be provided in sizes up to 10 in. ID. The shaft collars come with standard 18-8 or with optional Type 316 stainless-steel fasteners.

Laser Sensor

A high-speed position sensitive device-based laser triangulation sensor tracks object displacement or running profile changes at analog outputs up to a 100-kHz response. LMI Technologies Inc. (Southfield, MI; offers its laser distance sensor for measuring vibration, alignment, distance, thickness, and positioning. Its small laser spot size, ranging from 0.20 to 0.25 mm, enables the device to measure small targets, and the sensor’s variable laser power control circuit automatically compensates for the target area’s color and texture variations. Available in two models, the standard continuous power version is used for applications requiring a high-frequency response, while the optional modulated power version is for ambient-light applications. The standoff distance is from 80 to 90 mm and the offset from 65 to 75 mm for both versions. The sensor’s accuracy is better than 0.5% at 10 kHz, and the resolution is less than 0.1% of the measuring range. These compact, rugged sensors are rated to IP-65 NEMA-4 standards and can be custom designed.

Copyright ©2005 Medical Product Manufacturing News

Sneak Peek: Emerging Technologies

Originally Published MPMN February 2005


Sneak Peek: Emerging Technologies

Implantable Devices May Soon Be Able to Transmit Body Data to External Receivers

Currently, implantable medical devices can perform wondrous tasks. They can regulate your heartbeat, detect an abnormal heart rhythm and shock your heart back into normal range, or ease movement by acting almost like a natural hip joint.

But what if these devices could also report back to your doctor information about what is happening inside your body? One company, Zarlink Semiconductor, is working to make that a possibility. As a partner in the Healthy Aims European Union Framework VI project, Zarlink is researching in-body antenna designs for something called Body Area Networks.

Body Area Networks enable wireless communication from implanted medical devices to a base station up to three meters away. The company will focus its attention on antenna and ultralow power communication systems for devices such as hearing aids and muscle stimulators.

There are distinct challenges in transmitting signals from an in-body device to an external power receiver. Power consumption, frequency, size, and biocompatibility are all concerns. Different body tissues such as muscle, bone, and fat offer varying resistance to electrical signals. And antennas for wireless implanted devices must be very small in size and highly efficient to ensure that signal loss through the human body is kept to a minimum.

Using the Medical Implantable Communication Service (MICS) band, a dedicated frequency band between 402 and 405 MHz for device communications, a healthcare provider can establish a high-speed, short-range wireless link between and implanted device and a base station. With a two-way RF link, doctors can remotely monitor the health of patients and wirelessly adjust the performance of the implanted device.

“The rapidly growing area of in-body electronics requires power-conserving designs to extend product life and support increased functionality,” says Martin McHugh, Zarlink’s business development manager. “Our work as part of the Healthy Aims project will help realize exciting new medical products and deepen our knowledge in ultra-low-power design and wireless technology.”

Copyright ©2005 Medical Product Manufacturing News

Suit and Countersuit: Angiotech Trades Barbs with Conor Medsystems

Another skirmish is brewing in the coronary stent patent-infringement wars. The combatants this time are Angiotech Pharmaceuticals Inc. (Vancouver, BC, Canada), a specialty pharmaceutical company with an interest in drug-eluting medical devices, and Conor Medsystems Inc. (Menlo Park, CA), a development-stage company focusing on drug-eluting stents to treat coronary artery disease.

Angiotech initiated joint legal proceedings in The Netherlands in February with its partner, Boston Scientific Corp. (Natick, MA), which licenses Angiotech's paclitaxel drug and polymer carrier as core components of its market-leading Taxus drug-eluting coronary stent. The action followed a ruling of the European Patent Office (Munich, Germany) that upheld the validity of Angiotech's patent.

Conor Medsystems uses paclitaxel in its CoStar cobalt chromium drug-eluting coronary stent. The company recently completed a six-month clinical study of the CoStar device in Europe, the results of which were described by the company as “favorable.” Conor describes the CoStar as “completely different from conventional surface-coated stents” like Taxus, since it incorporates hundreds of small holes that act as reservoirs for drug-polymer compositions. The company asserts that this “unique design” enables a wider range of drug therapies and provides greater control over the direction and rate of release of the drug's therapeutic qualities.

Two weeks after the announcement of the Angiotech-Boston Scientific suit, Conor Medsystems countersued, seeking to have Angiotech's patent revoked by the United Kingdom's High Court of Justice.

Commenting on his company's defensive move, Conor's chief financial officer, Michael Boenninghausen, described Angiotech's patent as lacking “novelty,” and claimed that information about the technology is widely available and is “general common knowledge.”

Anticipating the action, Angiotech advised investors and industry analysts that it “will pursue and defend against, to the fullest, any and all actions of Conor Medsystems respecting Angiotech's extensive patent portfolio and pioneering technology.”

Best: Dismissing Conor's dream.

Boston Scientific weighed in too, letting it be known that it will vigorously defend the market-leading position of Taxus. In a recent conference call with investors and industry analysts, Boston Scientific CFO Lawrence Best dismissed Conor's plans for CoStar as “dreaming in Technicolor.”

Conor plans to continue with its European studies, and hopes to begin U.S. clinical trials with CoStar later this year. FDA approval of the product is currently targeted for 2007.

Angiotech, with 50 employees, reported 2004 revenues of $130.8 million—$98.4 million, or 75%, attributed to royalties from Taxus sales. Overall revenue increased six-fold from 2003's $21.5 million. (Canada-based Angiotech reports in U.S. dollars.)

Conor Medsystems has 68 employees and did not report any income for 2004. The company went public in December 2004, with its IPO generating proceeds of $78 million.

© 2005 Canon Communications LLC

Return to main menu.

MX: Issues Update is a monthly
e-supplement prepared by the editors of MX: Business Strategies for Medical Technology Executives.

To become a regular subscriber to this monthly medtech business update, click here.

Want a Quick PMA Process? Be Ready for Inspection

Originally Published MDDI February 2005


Want a Quick PMA Process? Be Ready for Inspection

Erik Swain

By law, the CDRH Office of Compliance is supposed to conduct PMA-related inspections speedily. But it can only do so, the office's director said last November, if the company to be inspected is prepared.

Under MDUFMA, the Office of Compliance has 30 days to review a PMA application's manufacturing section (20 days for an expedited PMA) and 45 days to conduct an inspection (60 if at a foreign site). It then has 30 days to complete an inspection report and 30 days to review that report (20 for an expedited PMA), Timothy

Ulatowski, CDRH compliance director, told attendees at the MDUFMA stakeholders meeting.

The biggest obstacle to meeting those goals, he said, comes when a firm is not ready for inspection. “We do biweekly reviews of each activity carried out by our office,” he said. “There, we review what PMA inspections and manufacturing section reviews we have to do. In some months, 100% of the inspections in the queue are of firms that are not ready for inspection. In some cases, it takes months before they are ready. This is an issue we have to deal with.”

The office can sign off on the manufacturing section of a PMA application before an inspection by making an “approvable pending GMP” decision. However, the office is struggling with “how and when to apply [this sign-off process],” Ulatowski said. “We want to apply it in a way that [ensures] there is no gamesmanship.”

The office takes the issue very seriously, he noted. “This is the key priority of the office. As an example of our commitment, we set up district PMA coordinators to monitor the PMA inspection process in the individual districts and identify people that we need to shepherd.” A number of hours have been spent training inspectors on the law, he said.

“The agency will put a lot of effort into bringing together the review process and the compliance process more effectively,” he said.

Copyright ©2005 Medical Device & Diagnostic Industry

Cardiac Science and Quinton Cardiology to Merge

Cardiac Science Inc. (Irvine, CA), a manufacturer of automatic public-access defibrillators, and Quinton Cardiology Systems Inc. (Bothell, WA), which makes cardiovascular monitoring equipment, have announced their intention to merge and form a new holding company to be called Cardiac Science Corp.

In a joint statement, the companies cited their “similar missions, business models, technology expertise, and operational processes.” The companies said the merger will “combine their respective strengths in development, manufacturing, and marketing of cardiology devices, services, and supplies and create a diversified, well-capitalized medical technology growth company with a broad portfolio of cardiology-related products.”

The merger is expected to reduce annual operating expenses by $10 million, eliminate $9 million in annual interest expense, and generate tax savings of at least $4 million.

Under the terms of the agreement, each share of Cardiac Science will be worth 0.10 of a share in the new company, while each Quinton share will be valued at 0.77. The company will be 51% owned by current Cardiac Science shareholders and 49% owned by holders of Quinton Cardiology.

Hinson: Leading a new entity.
Management of the new company will represent a blend of the merging entities. John R. Hinson, Quinton's current president and CEO, and Michael K. Matysik, the company's chief financial officer, will continue in those positions for the new company. Raymond W. Cohen, Cardiac Science's current chairman, will serve as chairman of the new firm.

“Cardiac Science has demonstrated excellent growth during the past several years by leveraging its intellectual property position to achieve leadership in the fast-growing public-access defibrillation market,” observed Quinton's Hinson. “We believe the combination of Quinton and Cardiac Science will yield significant operational, product development, and marketing synergies. With a well-established global presence, millions in cost savings, and a balance sheet free of long-term debt, we expect the new company to be well-positioned to achieve significantly greater size and scale.”

Cohen: Continuing as chairman.

Design for R&R: A Product Quality Methodology

Originally Published MDDI February 2005

Product Development Insight

Design for R&R: A Product Quality Methodology

Design engineers need a quality system that enables them to develop a systematic development process to meet increasing product requirements.

Scott Heneveld
Arrows Design

Scott Heneveld

Today's mechanical design engineers are tasked with much more than conceiving and designing a functional product with structural integrity. Well-designed products are a culmination of many integrated factors, including nonengineering disciplines such as industrial design and human factors. Methodologies and techniques have evolved to guide engineers through the development process in pursuit of designing the perfect product.

One emerging methodology is design for repeatability and reproducibility (DFRR). Using DFRR, product quality and production yields can be optimized and product development cycles minimized. But perhaps more importantly, when used correctly, DFRR can enlighten engineers about the principles behind achieving a true quality mind-set.

In the late 1980s, a small medical device manufacturer instilled a mind-set into its employees that formed the basis for DFRR. The manufacturer also implemented practices that resulted in dramatic dividends. At the time, the selling price for a skin stapler (a handheld wound closure device) was about $36 per unit. But this innovative company focused on quality, driving the price down significantly and capturing 20% of the market share. Today, the selling price for a skin stapler hovers near $6 per unit. How did this happen? DFRR evolved from the fertile environment that produced these results. This article discusses the methodology and its potential implications for the design process.


DFRR is a methodology that aids in establishing a systematic development process. However, DFRR holds greater implications and benefits than initially meet the eye. The basic goal of DFRR is to understand and establish process control on the component level before moving on to the assembly level. This is done using statistically proven, accurate inspection data to calculate process capability.

Establishing Process Control. Process capability and process control are the backbone of product quality. This is especially true for the development and production of complex medical instrumentation, such as handheld surgical instruments with multiple mechanisms (see the sidebar, “Multiple Mechanisms”).

DFRR enables design engineers to focus on optimizing process capability and maintaining process control. Every process inherently has some degree of variation. For example, the design-for-manufacturability methodology emphasizes that the design engineer's role is to produce component designs that enhance process stabilization.

Capability Index. The process capability index is a statistical means to numerically quantify process stabilization. An inspection procedure is needed to generate the data used to calculate the index. The procedure will involve inspectors, measurement equipment, and a measurement method. DFRR takes the designer a step back, prior to the inspection, by emphasizing design elements to enhance the stability of the inspection procedure. As the adage goes, misleading data are worse than no data at all. Process capability studies done using inaccurate data will lead engineers down a trail of frustration and result in an extended development cycle.

Gauge R&R

The foundation of DFRR is the Gauge Repeatability and Reproducibility study (Gauge R&R). The term gauge refers to any device or equipment used to make a measurement. Quality engineers routinely use Gauge R&R studies to determine process capability. However, design engineers can aid quality engineers by gaining practical experience performing such studies. Facing the challenges of obtaining an acceptable Gauge R&R outcome will influence designers to be aware of the inspection process when designing individual components. Many good articles and manuals have been written to detail the intricacies of performing and using Gauge R&R studies. In addition, sophisticated software is available to aid in the analysis of the interrelationships among dimensional tolerancing, process capability, and Gauge R&R.

Process Variation. Gauge R&R studies analyze the measurement process variation by separating it into two specific areas:

• Repeatability, or the variation of measurement of a gauge.
• Reproducibility, or the variation of measurements by operators.

Every set of inspection data for a particular process contains both actual production process variation and measurement process variation. Separating out the measurement variation is the purpose of conducting a Gauge R&R study.

Figure 1. A Gauge R&R of 60% means that the results from two different inspections could vary as much as 60% of the tolerance (click to enlarge).

A study may involve either two or three operators who inspect one feature dimension on each of 10 individual sample parts. The sample parts are identified before the inspection process starts. The operator must be unaware of the identity of the randomly chosen sample at the time of each inspection. Inspection data are recorded on a worksheet for later statistical analysis. The output of the statistical analysis is typically reported as a percentage of measurement variation in relation to the total dimension tolerance. Thus, a Gauge R&R study result of 60% means the process used to measure the particular feature dimension had a variation of 5.15 s (5.15 s equals 99.0% of the bell curve), which encompassed 60% of the total tolerance range (see Figure 1).

Therefore, if the exact same part were inspected and then reinspected, the measurements from the first inspection and the second inspection could vary as much as 60% of the tolerance. It would be unwise for an engineer to make decisions concerning acceptance or rejection of component lots if the inspection method could vary as much as 60% of the tolerance range.

Misleading Data. A high percentage Gauge R&R result can lead to misleading data. If the same part is inspected twice, the first data point may be within specification and the second data point outside of specification. For example, imagine Part A has a feature dimension of 0.350, ±0.005. The tolerance range is 0.010, meaning that the acceptable tolerance falls between 0.345 and 0.355. A Gauge R&R study result of 60% means that the variation due to the inspection method is 0.006. Using these numbers, the following inspection scenarios are possible (see Figure 2):

Figure 2. An inspection process with a Gauge R&R of 60% can result in misleading data, enabling one measurement to be within specification while another is outside specification (click to enlarge).

• The first inspection of Part A finds a measurement of 0.348, which is within the part's specification.
• The second inspection of Part A finds a measurement of 0.342, which is outside the part's specification range.

As a general rule of thumb, an acceptable Gauge R&R result should be less than 20%. However, this is only a guideline. Each individual dimension should be evaluated on its own merits. Engineers who have an intimate understanding of the components they design will be extremely helpful in determining an acceptable Gauge R&R result. In addition, it will quickly become apparent that as the dimension tolerance becomes tighter, achieving an acceptable result becomes more difficult. Plus, with a tighter tolerance, the measurement equipment must possess higher resolution. The common recommendation for equipment resolution is that it should be at least 10 times finer than the tolerance range. So, for a tolerance range of 0.010, the equipment resolution should be at 0.001 or finer.

The results of a design engineer's first Gauge R&R study are usually quite revealing. Many design engineers are routinely involved in deciding the disposition of component lots that have been rejected at incoming inspection. How reliable are those data? It is not uncommon for a novice to obtain a Gauge R&R result higher than 100%, which would mean the measurement variation is greater than the tolerance range. It's a chilling experience to realize that decisions concerning rejected incoming materials were predicated in faulty data. It's no wonder that some organizations operate at process yields of about 80%. How many times have engineers reviewed so-called out-of-spec data from a first-article inspection report, only to track down the inspection technician and get different results upon reinspection? Actual component parts don't have straight or perpendicular edges like a CAD model's portrait does. The inspector's interpretation largely affects a first-article inspection.

Gauge R&R brings a new perspective to the validity of first-article inspection reports as reflections of meaningful data. In fact, there is a good case to be made for design engineers to perform the first-article inspections. Firsthand inspections made by witnessing the true part on a comparator or under a toolmaker's scope are helpful in understanding the actual condition of part features and, ultimately, guiding a product successfully through the development process.

Tips and Tools. Hands-on experience in performing Gauge R&R studies will enhance a design engineer's understanding of the inspection techniques and skills required to implement the DFRR methodology. For DFRR to work, it is also important to understand the components' manufacturing processes and typical physical feature attributes. For example, an edge on an injection-molded part where a shut-off is located would not be a good candidate for an inspection edge. As a tool wears, inconsequential flash can occur at such an edge, producing an unreliable inspection point. Another design trick is to add bosses or ribs specifically to help in providing datums to repeatably position parts for inspection. Adding reference marks or features is another handy design element used in DFRR.

Quality Is Key

The immediate and tangible advantages of implementing DFRR are apparent. But the major advantage to DFRR is hidden below the surface. Integrating quality into the fabric of an organization has become a major focus of American industry in recent decades. In the 1970s and 1980s, Japan surprised the automotive world by capturing a market share never imagined by American automakers. Japan again overtook other American-stronghold markets by supplying superior quality at lower cost. In response, total quality management and the six-sigma initiative arose. These systems are intended to be more than methodologies and emphasize more than just a strong quality manual backed by a quality department. Rather, they aim to instill a philosophy of quality that permeates the entire organization and involves all aspects of the business.

This has often been a difficult undertaking for American manufacturers to implement. The rewards of quality are not easily quantifiable, especially in the near term when many management decisions are made. Quality has been paid much lip service in the form of adherence to the quality manual to obtain ISO certification. But true quality encompasses more than adherence to a book of rules. It involves cultivating the values, attitudes, and character that come with an intimate understanding and tangible experience of what actually provides quality. A major key to quality is optimizing a process for minimal variation. This is achieved by the simple, yet extremely powerful, principle of the standardized process. The standardized process defines and executes a process to where it can be repeated and reproduced. This sounds simple, but it is most profound.


A working knowledge of inspection procedures and equipment, a good understanding of component manufacturing processes, and creativity in design are all major contributors to successfully implementing DFRR. The advantages of DFRR are maximized when the methodology is implemented early in the development cycle. Engineers with the awareness of DFRR, even in the conceptual stages, can assist their development teams in minimizing the development cycle, ensuring product quality, affecting the bottom line, and most importantly, bringing a quality mind-set to the organizations they serve.

Copyright ©2005 Medical Device & Diagnostic Industry

Crawford Nominated as FDA Chief

FDA's Crawford: Confirmation expected.

President Bush has nominated Lester M. Crawford, DVM, PhD, to take over as FDA commissioner. Crawford has held the title of acting FDA commissioner since March 2004, when the former head of the agency, Mark B. McClellan, MD, PhD, left to head up the Centers for Medicare and Medicaid Services (CMS; Baltimore). Crawford was named deputy commissioner in February 2002 and also served as acting commissioner prior to McClellan's appointment in November 2002.

Michael Leavitt, who was confirmed in January as the new secretary of the Department of Health and Human Services (HHS; Washington, DC), described Crawford as an outstanding choice who has “dedicated his career to advancing the nation's public health and will lead the way as we enter a new era of individualized medicine and rapidly developing science.”

Medical technology industry associations were generally pleased with Crawford's nomination.

Pamela G. Bailey, president of AdvaMed (Washington, DC) said, “We look forward to continuing to work with Dr. Crawford, who understands the unique characteristics of the medical technology industry.” Citing Crawford's role in key negotiations that led to the landmark Medical Device User Fee and Modernization Act of 2002, Bailey added, “His experience will be invaluable as Congress and FDA craft legislation this year that will add predictability and stability to the medical device user-fee program and allow for the program's continuation beyond the current fiscal year.”

Multiple Mechanisms

Originally Published MDDI February 2005

Product Development Insight

Click to enlarge.

An example of complex medical instrumentation with multiple mechanisms is an automatic clip applier, a surgical instrument that occludes vessels and ducts. A magazine of clips is automatically fed into a forming mechanism after each subsequent closure. Four separate mechanisms function simultaneously during the firing stroke. The functional position of the pusher in relation to the escapement window for proper clip advancement is ±0.030 in. However, a traditional tolerance stack-up study revealed that the integrated relationship of the four mechanisms created problems. The calculated tolerance for the escapement window was a function of 11 components with more than 40 critical feature dimensions. Even after applying tight tolerances to all critical dimensions, the traditional tolerance stack-up analysis for the escapement window revealed a range of ±0.153 in. When compared with the functional requirement of ±0.030 in., the design engineers found themselves faced with a dilemma. The DFRR methodology can help engineers find solutions to such problems.

Copyright ©2005 Medical Device & Diagnostic Industry

Medical Systems Interoperability Demonstrated at HIMSS

Medical Systems Interoperability Demonstrated at HIMSS

With an increasing national focus on the need to bring medical information into the digital age as backdrop, the Healthcare Information and Management Systems Society (HIMSS; Chicago) once again devoted a major portion of its recently held conference and exhibition to the organization's connectivity and interoperability initiative known as Integrating the Healthcare Enterprise (IHE).

IHE was launched in 1998 by HIMSS and the Radiological Society of North America (RSNA; Oak Brook, IL). The effort has since been joined by the American College of Cardiology (ACC; Bethesda, MD), which is now a sponsor. Since its formation, IHE has sought to facilitate the introduction and improvement of computer systems that enable the collection, transfer, and storage of vital clinical information. The initiative emphasizes the adoption of industrywide standards that can be systematically implemented across the many local- and wide-area networks that make up the healthcare enterprise.


Making the Right Call on Contract Machining

Originally Published MDDI February 2005

Cover Story

Making the Right Call on Contract Machining

A number of factors can help you decide whether or not to outsource machining work.

William Leventon

OEMs may prefer to outsource complex machined parts like this biopsy jaw from Microgroup Inc..

When it comes to machining, there's a lot to be said for outsourcing. Then again, there's also a lot to be said for not outsourcing. So what's a medical device manufacturer to do? Of course, there's no single right answer. It depends on the particulars of the job, the type of machining, and the concerns and capabilities of the OEM itself.

But good calls on outsourcing are likely to come after OEMs carefully consider both sides of the issue, take advantage of help offered in making the decision, and answer some fundamental questions about themselves.

The Case for Outsourcing

When OEMs don't have an in-house machining operation, they have to incur substantial costs to set one up. These costs include the price of purchasing machines, hiring people to run them, and allocating facility space for the work, says Steve Kappers, president of American Micro Products Inc. (Batavia, OH), which does contract machining work for medical device companies.

A single machine and the tooling it requires can cost half a million dollars, notes David Drechsler, vice president of sales and marketing for Huffman Corp. (Clover, SC), which sells machining equipment. An expenditure of that magnitude may be particularly unwise if the OEM is making a new product that could “bomb in the marketplace,” explains Drechsler. “So smaller companies will usually outsource machining work until they have enough volume to justify investing in the equipment and infrastructure to do it themselves.”

Tech-Etch Inc. uses chemicals to machine titanium implant mesh (top) and medical screen filters. Many contract
manufacturers possess the necessary permits and equipment for treating hazardous by-products of chemical machining.

At the outset of their ventures, the heads of many start-up companies decide against large capital expenditures for equipment. These companies are designed to outsource machining and other manufacturing processes, according to Jack Fulton, vice president of sales and marketing for Specialized Medical Devices Inc. (Lancaster, PA), a contract manufacturer for the medical industry.

Besides eliminating the costs of an in-house machining operation, OEMs that outsource machining work don't have to worry about hiring skilled equipment operators. Even finding such people can be difficult, Kappers says. “We try to recruit from Switzerland and other countries that have a pool of talented labor. But it's difficult to get people [into the United States] with today's tightened immigration laws.”

Outsourcing can also help companies get products to market faster than they would if they had to set up a machining operation first, notes Bob Lamson, vice president of business development for Microgroup Inc. (Medway, MA), a firm that machines medical parts. “If you're looking for speed to market, you've got companies out there that already have the core competencies and the proper equipment to make complex components,” he says.

What's more, he adds, companies that choose to outsource machining “save on the knowledge base, which we've invested in here so you don't have to invest in it.” That knowledge base, built up during many different machining projects, allows contract firms to bring “extra value” to a job, Kappers says. With their experience, he notes, contractors may be able to alter a part design slightly to make it easier and less expensive to manufacture, without affecting the functionality of the component.

Experience with a wide variety of machining jobs gives contract machining firms another important edge over OEMs, Kappers maintains: “Say an OEM trains guys to run machines to make a certain part. And that's all those guys know. Then the part design changes. That would mean the OEM would have to retrain those guys or find new ones to run a whole different setup. But contract manufacturing firms run dozens of different parts all day long, which gives them the ability to adapt to change more quickly in the rapidly changing medical device industry.”

In addition to doing machining work for customers, some contract firms will assume responsibility for related secondary operations, as well as such tasks as inspection, packaging, and transportation. Contractors will perform some of these tasks in-house, while outsourcing others. But from the OEM's standpoint, Kappers says, the important thing is that “an outfit like ours will manage the whole process for you, so you don't have to coordinate and track all that activity.”

The result: Instead of writing a number of purchase orders, OEMs that farm out machining work and related tasks to a single firm “can send out one purchase order and get back one shipment of components,” Lamson says. Besides being more convenient for OEMs, this arrangement can save them hundreds of thousands of dollars that they would otherwise spend to manage multiple suppliers, Kappers claims.

The Other Side of the Story

Despite the advantages of outsourcing machining work, many OEMs opt to do machining in-house. In some cases, Fulton says, these companies will still outsource machining work when it exceeds their in-house capacity, either because of tight deadlines or growing demand for their products.

OEMs may want to outsource machining work that uses expensive equipment, such as this piece from Huffman Corp., until they have a large enough volume to invest in the machines.

In other cases, though, medical device companies do all of their own machining. According to Kappers, it often comes down to one word: control.

When OEMs control their machining process, they can be fairly sure about the security of proprietary product information. On the other hand, Kappers says, some medical device companies worry that secret product data could leak out of a contract manufacturing operation—particularly if they use a manufacturer that's also doing work for one of their competitors.

So most of American Micro's customers require the firm to sign confidentiality agreements. In addition, Kappers says, contract manufacturers can allay customer concerns about intellectual property by providing adequate security on the plant floor. This can include housing some jobs in cells that are segregated from the rest of the facility.

But this won't satisfy companies that want to maintain the tightest possible control over product quality and delivery times. Many of these companies were launched by “entrepreneurs who are staking their entire business on a product,” Kappers says. “So they're legitimately concerned that everything goes well.”

One company that fits this description is Atlantis Components Inc. (Cambridge, MA), which sells metal abutments used in dental procedures. “We make custom products with very short cycle times,” explains Tom Cole, cofounder and president of Atlantis. “We get an order for an abutment, and within a couple of days we ship out the finished product to a dentist or dental laboratory.”

Cole and his colleagues started their company with the intention of outsourcing the abutment machining. Since their business was based on meeting tight deadlines, the contract machining firm they used “would have to dedicate a group of people and machines to us and always be willing to work when orders came through,” Cole says.

But it didn't work out that way. Instead, Atlantis found that its contract manufacturer was unable to reliably meet deadlines due to the demands of jobs from other clients. From this experience, Cole drew a lesson about relying on an outsourcing partner: “A vendor will have a spike in demand when everyone needs everything. And then he just can't support you. So when delivery is your competitive advantage, you should keep machining in-house, where you have absolute control over when a part gets done and the resources applied to producing it.”

So now Atlantis makes its own abutments, forming them from blocks of titanium using four CNC milling machines. The company turns out a couple of hundred abutments a day at a cost that nationally known contract machining companies can't even come near, Cole maintains. He knows this because he got quotes from some of the big operations back when Atlantis was shopping for a contract manufacturer. “Both their per-piece costs and their upfront development costs were prohibitive,” he reports.

Atlantis also machines its parts more cost-effectively than the smaller firm it originally hired to do the work, Cole adds. How did the company create a top-notch machining operation from scratch? “We have completely configured our system and equipment to make one product,” he says. “And now we have an incredibly efficient machining process that no one can match.”

Tech-Etch Inc. chemically machines parts like this EMI shield to avoid burrs and stresses.

Besides focusing on a particular niche, medical device companies can do cost-effective machining by turning out parts in volumes large enough to produce economies of scale, Drechsler notes. In-house machining can also make economic sense when OEMs are certain of a steady and long-flowing stream of work that would justify the costs of a machining operation. “If you know you're going to be making 500,000 parts a year for the next five years, and that there aren't going to be a lot of changes to the job, it might make sense to set it up in-house,” Kappers says.

Doing so can be preferable to outsourcing. “We could set up the same thing for the OEM in our house—buy the same machinery, staff it, and run it for five years producing those parts—but we're going to tack a little profit onto our operation,” Kappers explains.

An in-house machining facility can have other advantages as well. For one thing, it allows OEMs to respond quickly to customers who want to modify a product or need an emergency shipment, notes John Memmelaar Sr., president of Royal Master Grinders Inc. (Oakland, NJ), which sells machines to medical device companies and contract manufacturers.
Machining capability also gives OEMs more flexibility in product development. “If you have your own machine shop, you can just go in on a whim and try different things,” Lamson says.

Special Cases

Besides considerations that apply to machining in general, the outsourcing decision can be affected by issues related to certain types of machining. Take laser machining, which is used to cut very small features in metal parts. OEMs might want to outsource laser machining because of the exceptionally long time it takes to learn the procedure, according to Steve Iemma, president of Accu-Met Laser Inc. (Cranston, RI), a contract laser machining firm. “It takes us at least a year to train [operators] to the point where they're beginning to get a pretty good handle on the technology and how to use it,” he says. For OEMs that don't have that much time to spare, “outsourcing is a quicker way to get the technology working for you.”
Today, however, in-house laser machining is much more common among OEMs than it was a decade or so ago, Iemma notes. Over the years, he says, laser equipment has become more accessible to users, prompting some OEMs to add lasers to their production lines. “It's much faster for them to do all the operations under their own roof than it would be if they had to ship parts out to me for one operation,” he explains.

Many of Iemma's customers have their own laser machining equipment. They send him their overflow work until it reaches an amount that justifies the purchase of an additional laser system. They also outsource to Accu-Met when the job requires laser machining expertise that they lack, Iemma says.

Another special case is chemical machining. Techniques for this type of machining employ acids and masks to form parts without leaving the burrs and stresses produced by conventional machining processes, says George Keeler, president of Tech-Etch Inc. (Plymouth, MA), which does chemical machining for medical device companies.

According to Keeler, the decision on whether or not to outsource chemical machining is usually an easy one. Since the process involves the use of dangerous chemicals, most OEMs are more than happy to turn the work over to companies like Tech-Etch that have the necessary permits and equipment for treating hazardous waste. In fact, he does not know of any medical device OEMs that do chemical machining in-house.

Obtaining Help with the Call

When it's not so easy to make the call on outsourcing, some equipment manufacturers offer help. For example, Royal Master will grind sample parts for OEMs in test production runs. These runs yield data on throughput, cycle time, and setup time, as well as other information that can help medical device companies make an informed decision on whether or not to buy a machine. Royal Master doesn't charge for test production runs, even if the potential buyer decides against making a purchase.

Like Royal Master, Huffman offers test production runs to machine shoppers. In addition, Huffman will work with potential customers to develop production processes for machines before purchase. The company uses virtual simulation and other tools in this process development work, for which it charges an upfront fee that comes to less than 10% of the machine cost.
The product is well worth the fee paid for it, according to Drechsler: “When manufacturers buy a piece of equipment, they're not buying the equipment. They're buying what the equipment does. So process development is what really has value. And you can buy a whole process from us, not just machinery.”

With a process to go with the equipment, Drechsler notes, shoppers have the information they need to make the right decision about buying a machine—whether the answer is yes or no. If the answer is yes, he says, the upfront process work will shorten the customer's project development time. And in some cases, it can even yield results that exceed the OEM's goals.

How? “OEMs manufacture their parts all day. They're very familiar with the part geometries and how the parts work,” Drechsler explains. “We're very good at making machines and developing processes. If we work together with customers on a process for their parts, that's when they can see some breakthrough productivity improvements.”

Making the Decision

Is in-house machining for you? Before you set up shop, experienced machining hands advise you to consider the following questions:

• Do you want the responsibility? Machining in-house means the buck stops with you. “We have the responsibility of making our machines run,” says Cole. “So we have to have the spare parts, the knowledge, the people, the redundancy to make sure we're always able to make parts. We wouldn't have this responsibility if we were outsourcing.”
• How much machining work will you do? Consider how many machined parts you need and how often you need them, Lamson suggests. If you have only an intermittent need for a couple of machined parts, it probably does not make sense to invest in your own machining operation. But if you need many machined parts of varying complexity, an investment in machining equipment and personnel may be justified.
• How much experience do you have? When it comes to machining, Kappers advises medical device companies to “lean toward the proven commodity.” If you have plenty of machining experience, keeping it in-house makes sense. But if you don't, he says, “why try to build the expertise in-house?”

Such a move is hard to justify, Lamson argues, given the number and variety of contract machining options available to OEMs. These options range from “mom-and-pop shops” to multimachine facilities that make everything from simple to complex components for any phase of a job from prototyping to production. “You've got good vendors out there,” he says. “Use them.”

William Leventon is a frequent contributor to MD&DI. He is based in Somers Point, NJ.

Copyright ©2005 Medical Device & Diagnostic Industry