A recent study aims get beyond the key problems that companies face when developing medical devices in a quality- and regulatory-driven environment. A big challenge these companies face is improving financial performance, product innovation, and quality while growing at a significant speed. Research from Camabashi explores how medtech companies are meeting that challenge. A webcast will be held on July 17 to explain the data and provide the report.

Julie Fraser, principal industry analyst and president of Cambashi Inc., designed and developed the study. She says that the biggest surprise was that many companies are simply doing too many quality control checks to be profitable. “Medtech companies are used to having to choose between high quality, cost performance, and speed. But the quality controls in place are often far more than the regulatory structure requires,” she says.

For example, Fraser describes one respondent’s dilemma with bar codes. His company decided that it wanted to automate a by-hand process using bar codes. The reasoning was that the barcodes would cut down on errors, improve efficiencies, and increase accuracy. However, the project was stymied when the regulatory affairs department stepped in. The department said that in order to validate the bar code readers, each reader would have to be tested 100 times per product. Fraser says she is sure that the bar code reader required validation, but suggests perhaps 100 times per product was excessive. But, she admits, that is what happens in a very risk-averse environment.

The example is not an isolated incident. Almost 2/3 of respondents said they thought the quality control systems in place at their company were more than required. Even more revealing, 40% of the regulatory affairs respondents said they thought they did more than necessary. “There is something about this industry,” she says. “It goes way overboard.”

And such tendencies have a direct effect on the bottom line. However, there are some companies that have been able to show both growth and profit. About 2/3 of the survey takers were able to show 10% organic growth (through volume of shipments). Among that group, however, only ¼ of the respondents also improved in basic business metrics. That is, they were able to demonstrate major improvement in four or more of these business metrics: net operating profit, market share, EBITDA, ROA/RONA, cost of quality, and cost of regulatory compliance.

Fraser terms this quarter of respondents who were able to show growth and business success “advancers.” Advancers, she says, “are companies that are doing a lot to cope with growth and improve their performance.” Fraser says advancers are better able to use information effectively. For example, she notes that advancers are more likely to use plant software and were more than twice as likely to analyze information across sites. “They are set up in a way to compare performance and have sites learn from each other— these are basic tenants of continuous improvement,” she says.

Fraser also points to quality by design as a method to improve product innovation, create growth, and avoid costs. “Really, this is establishing reliability in the face of change,” she says. Companies categorized as “advancers” were far more likely to improve process capability, and showed an aggressive program to innovate their system through a multitude of tools.

The comprehensive report of the study, as well as a detailed discussion of tools that can help companies establish quality by design, will be available for free to attendees of the Webcast “Beyond Tradeoffs: Profitable Paths to Overcome the Conflict Between Innovation, Regulatory Shifts and Quality” on July 17, 2012.