Improving Outcomes With Extrusion
Tighter Tolerances and Increased Use of Customized Materials and Processes Are Combining to Create Better Products and Outcomes
Stacey L. Bell, Editor at Large
Photo courtesy of Helix Medical.
OEMs are relying on their outsourcing partners for help like never before.
“It’s an exciting time. There’s a lot of opportunity out there,” said Mike Badera, president of Precision Extrusion Inc. in Glens Falls, NY, fresh from attending a recent industry trade show and expo. “It became very evident at the show that everyone is looking to outsource more work.”
In fact, companies that help OEMs with their tubing and extrusion needs report that year-over-year sales in this area were up from 10% to 30% in 2007, and they expect similar gains this year. While the cardiovascular sector—in particular, stent delivery systems— always has been a large part of this market, the 30% drop in US sales of drug-coated stents in 2007 didn’t affect contract manufacturers as much as one might think. Demand for IV tubing, delivery systems for fluids and radioactive agents, neuroelectric devices and other products remained strong.
It’s All in the Details
“The medical sector is a great market to be in. It is not as cyclical as some other businesses; unfortunately, people continue to need medical attention regardless of the economic cycle,” said Rich Gallagher, global director of engineering for Teleflex Medical OEM in Research Triangle Park, NC. In 2007, Teleflex Medical grew its business as it acquired several companies, including Arrow International, a manufacturer of disposable medical products for critical care and surgical applications.
Last year witnessed record-breaking venture capitalist investments in the medical market. “Automotive used to be a sexy technology, but medical devices have become a niche for new investments,” reported Brad Rabitor, vice president of business development for Putnam Plastics Co. LLC in Dayville, CT. “With all of the exciting developments in miniaturization, minimally invasive techniques and other medical advances, more money is coming into the sector, which in turn fuels even more growth and development.”
Bob Poirier, vice president of sales for Dunn Industries Inc., headquartered in Manchester, NH, agreed with this assessment, noting, “The greatest strength in the extrusion market is all of the new product development going on.”
Indeed, research and development are the very lifeblood of the industry, and more outsourcing partners are helping customers achieve gains more quickly in this area. “New product development work has been an increasing portion of our business,” said Joe Pignotti, vice president of sales and marketing for Easton, PA–based Fluortek Inc. Pignotti added that new product development efforts currently account for about 25% of sales.
“New products tend to create new challenges and opportunities,” Gallagher said. “For example, processing techniques have improved to deliver smaller diameters, thinner walls and tighter tolerances for a range of materials,” delivering greater comfort to the patients.
In such cases, Gallagher noted, it is crucial for OEMs to work closely with their chosen outsourcing partner. “Customers want to tell you about their product, but sometimes they won’t divulge the disease state it is for, and so we can’t use all of our expertise to create the best product,” he explained. “If we knew the intended use, we could recommend [for example] perhaps moving a seam that would otherwise interfere during a particular procedure. We have different engineers who have different disease expertise to help our customers with the best solutions. The more information the customer shares with us, the better and quicker the product can be brought to market.
“Having a partnership mentality is crucial,” Gallagher continued. “Sometimes it’s necessary to have legal, marketing, sales, quality and engineering professionals from both sides involved to create the best product possible.”
Photo courtesy of Precision Extrusion.
Outsourcing partners have geared up to meet or beat customers’ capability expectations. “Tubing customers come to us and ask if we can hold +/- .001 inch, and we respond that we can hold +/- .0002 inch,” said Krissi Heard, who works in technical sales, customer service and marketing for MicroLumen Inc. in Tampa, FL.
Sean McPherson, vice president of marketing for Helix Medical in Carpinteria, CA, reported that both the number and complexity of product designs coming into Helix Medical facilities have grown. “We’re seeing more and more complex extrusions,” he said. “The trend toward miniaturization means more pathways are in a single tube to deliver more wires and liquids, and this means the manufacturing equipment becomes more complex as well. Even larger companies no longer have the capability to do as much internally because of extrusion equipment changes, so more detailed, complex extrusions are becoming a larger part of our business.”
Talk about detailed, complex extrusions—Precision Extrusion currently is working on a project that fits 48 lumens into a .25-inch part. “There are requirements on each of the lumens and all of the walls between the lumens—it’s a very complex job, with critical spacing and drilling requirements,” Badera noted.
Creating the tooling for such projects can be very complicated itself. “With multi-lumen extrusions, the tools are quite intricate, and there’s only so much science you can apply and then it becomes a bit like black magic,” Badera explained. “You can determine flow characteristics, but you still have to test it. With multi-lumen projects, you hardly ever get the tooling right the first time. Sometimes it takes five or more tries.”
Small wonder OEMs are outsourcing the development of the necessary tooling and machining to experts that work with such challenges on a daily basis.
‘Plastics on Steroids’
It’s also no small wonder that an increasing number of OEMs are striving to provide product differentiation and improved properties by customizing the material blends they use.
Nearly one-quarter of Precision Extrusion’s customers have “put plastics on steroids,” according to Badera. “We’re seeing more requests for unusual combinations of materials. Customers are using more exotic materials and custom blends to squeeze a little more performance from plastics by blending them with other materials to change the tensile strength or elongation of the tube, or by putting in an additive to increase lubricity. Most of these are custom blends that we’ve developed with the customer and compounder.”
Mike Faust, extrusion plant manager for Coeur Medical in Sheboygan, WI, agreed. “We are doing more material blending,” he reported.
In fact, more outsourcing partners have expanded their supply chains to work closely with materials compounders and coatings specialists as more customers seek to use custom material blends and coatings.
Customers also have shifted some of their material requests over the past few years. Three to five years ago, OEMs typically used fluorinated ethylene propylene (FEP) for cardiovascular sheaths and dilator sets, Pignotti said. The market now has moved instead toward using polytetrafluoroethylene (PTFE) because it is slightly more lubricious, and the material is inert, so it can be in the body for longer periods. In addition, during placement, FEP required mechanically applied slits on either side so the material could be peeled back like a banana, whereas PTFE tears away without slits—speeding both the manufacturing process and the surgical procedure.
“We’ve seen more interest in high-temperature materials, bioabsorbable materials and heavily engineered plastics that will perform well in the body,” Poirier added. “The performance of materials is customers’ top concern. Some materials were previously molded—they’d never been extruded before—so we’re developing new processes and ways to make it easier to do.”
McPherson additionally noted, “As devices become more complex, customers hone in on acceptable properties, which drives material specialization.” He said that while larger companies tend to have extensive materials libraries, most startup companies require research assistance from their outsourcing partners in this area.
A Greater Focus on the Secondary
Another area in which nearly all customers are seeking more help is in the performance of secondary operations. Outsourcing partners have responded, and some offer turnkey performance. “We offer everything from regulatory services to quality to prototype to full production, including design control, packaging, sterilization, labeling, subassembly and distribution,” Gallagher noted.
Putnam Plastics recently started its PPC Plus Program, which focuses on secondary operations. “It’s a natural progression from offering extrusion services,” Rabitor said. OEMs would like to have all secondary operations—whether that includes printing, hubbing, welding/tipping, molding, flaring, hole drilling, custom grinding or assembly—performed to the tube. “We’re looking at adding even more capabilities, and we’re aggressively pursuing this market,” Rabitor said.
“A big focus is enhancing tubing with other services,” Heard agreed. MicroLumen has developed processes to incorporate value-added properties into tubing. “We can increase lubricity and torque (with braid reinforcement), add marker bands and tips, vary the durometer within the actual tube length and perform laser work for custom shapes or holes for specific liquid or gas delivery,” she added. “We’re seeing increased demand for braid reinforcement, customer laser work and co-extrusions.”
In addition to providing more value-added operations, outsourcing partners are increasing their capabilities in other areas. “We continue to invest in additional capacity and better equipment to hold tighter tolerances and push size limits,” said Geary Havran, president of St. Petersburg, FL’s NDH Medical. “We also continue to invest further in IT systems to automate activities previously done manually and to offer direct access to additional information for outside sales staff.”
NDH Medical has automated its material handling steps as well as invoicing and communications functions to minimize or eliminate as much paperwork as possible. The company also plans to provide 24/7 customer access to work order status and other details in real time starting in 2009.
With such tiny components being made for medical devices today, the ability to achieve extremely tight tolerances is more important than ever for suppliers. Photo courtesy of MicroLumen.
Fluortek’s new engineering department has been integrally involved in all three projects. “We’re trying to add another engineer each year into our new product development group, and we’re putting a lot more emphasis on this area,” Pignotti explained.
Putnam Plastics is expanding its work in coils and braiding technologies—particularly in large-diameter coil tubings of up to .75 inch. “We’re developing areas for niche products,” Rabitor explained.
One of the greatest advances in recent years has been in the capabilities of inspection systems, McPherson reported. “As more complex, miniaturized parts have been developed, we have invested in very high-end inspection equipment that has optical, noncontact measuring components,” he said.
Since quality is the chief customer requirement, the use of top-of-the-line inspection systems—and special statistical analyses, such as are commonly used with Six Sigma and Lean manufacturing—are critical, McPherson added.
Indeed, from coast to coast, outsourcing partners are seeing increased interest by customers in their inspection and quality systems. Back on the East Coast, MicroLumen’s Heard reported that five years ago, perhaps three to five customers a year would conduct audits. That figure is now at two or more per month, and customers even visit the facility to teach workers how to perform processes in a particular way. “It’s much more of a partnership mentality today,” she said.
That partnership mentality has spread to typical back-office activities as well. Faust noted that Coeur Medical has seen great interest from customers in developing inventory programs in conjunction with kanbans (events that trigger inventory withdrawals). “More and more of our customers are signing agreements for how many orders we’ll hold and release for them,” he added.
Causes for Concern?
As strong as growth in venture capital funding, R&D and extrusion/tubing has been, there are some signs of a possible slowdown on the horizon. With more headlines about the United States heading into a recession, tightening credit markets in the aftermath of the mortgage meltdown, rising energy prices and a declining dollar, businesspeople do have cause for concern.
“The economy in general—and whether or not enough capital is available for businesses to grow and expand—is a concern,” Havran said. “Even more critical than those factors, though, is the psychological impact all of the headlines are making on the people who make the decisions about buying new products and investing in R&D. There is lots of negative talk right now, and that could slow down the industry.”
After all, people and businesses tend to hold on to their cash when they fear a recession is imminent. With everyone from economists to talk show hosts mentioning the “R word,” spending could take a backseat to a more cautious, wait-and-see stance.
“Certainly, if the economy is not performing well, that impacts how much money is spent on R&D, which in turn affects contract manufacturers,” McPherson concurred.
Political changes also could affect R&D spending in the coming years. “My concern about the political environment is government actions that swing too far in either direction,” Havran said. “Depending on who wins, if a knee-jerk reaction to the success of the medical device industry is overregulation and over control of the industry, that could divert a lot of resources otherwise used for product development.”
Increasing energy costs are a worry as well. “Anyone in plastics knows what has happened with oil. Material price increases is our biggest concern,” Faust said. The price of oil was at $32.54 per barrel (in inflation-adjusted dollars) at the beginning of 2005. Just three years later, the price has flirted with and surpassed $100 per barrel before settling closer to $93/barrel at press time.
The declining US dollar also has had an impact—although mostly favorable—at some companies. “We are gaining more business out of Europe and other foreign countries,” Poirier said. “Customers that wouldn’t buy from us before are now because the price is right.”
Helix Medical is in a similar position. “We’re seeing much more interest from overseas companies now—especially from Europe. One big advantage right now is the exchange rate,” McPherson said.
“American companies have always been able to compete with their overseas counterparts because of our capabilities and quality, but the declining value of the dollar has helped us overseas. It’s now 15% cheaper to sell in China,” Badera said. “Of course, it also affects our material costs, since about 20% of our raw materials are sourced overseas, and when we travel internationally for customer visits or trade shows, we are looking at very big increases over last year.”
Yet Opportunities Abound
Despite a slowing economy and higher prices, opportunities still abound for extruding and tubing companies. Companies that provide turnkey outsourcing solutions should fare the best as OEMs continue to strive to streamline their supply chains, costs and timelines.
Havran noted that he expects to see more opportunities surrounding making materials and products even more environmentally friendly. Certainly, “going green” seems to be the trend of the 21st century as even international concerts and television networks climb aboard the green bandwagon. “I’m seeing a resurfacing of a strong interest among end users, especially hospitals, in replacing PVC or finding alternative, earth-friendly materials,” Havran said.
Partnerships are becoming an increasing focus as well. “The biggest opportunity I see is building partnerships with—and offering innovative solutions to—more of our major customers,” Pignotti said. “By building strategic alliances, you are committing to a two- to three-year project and guaranteeing you will have work and your customer will have product—it mitigates their risk. It’s a win-win for both parties.”
In fact, partnerships may provide the foundation for the best outcomes for everyone involved—OEMs, contract manufacturers and patients. By working together to customize material blends and tooling and equipment capabilities, OEMs and their outsourcing partners will be able to further refine the size and capabilities of the devices patients use, improving their recovery times.
In the end, both patients’ lives—and companies’ bottom lines—will benefit.