Medical Devices Now Have PRIDE

After a year and a half of work to win certification and licensing, PRIDE Industries Inc. has started a medical-device manufacturing and distribution effort, opening the door for more jobs and revenue.

Stringent requirements for quality mean there are fewer manufacturers that can take on such work, so making medical devices yields higher profit margins than electronics manufacturing, said Steve Twitchell, vice president of manufacturing and logistics at Pride in Roseville, CA.

The move might also help local medical-device startups. Pride can handle large- and small-volume manufacturing, and a willingness to handle small jobs is helpful for companies looking to make prototypes or conduct pre-clinical and clinical trials, said Cary Adams, a retired Sacramento, CA health care attorney. Adams this year established MedStart, a program of the Sacramento Area Regional Technology Alliance that’s working to expand the region’s medical technology industry.

“We were delighted to hear they’d gotten the … certification to assemble medical devices,” Adams said. Pride has since become a member of MedStart’s advisory committee, joining venture capitalists and legislative and university representatives working to focus and expand the region’s medical device and diagnostics sector.

“It represents another resource in this region for our medical-device companies to take a product idea and get it developed into a prototype,” SARTA chief executive officer J.D. Stack said.

Pride built the medical-device unit, part of a 60-employee electronics contract manufacturing division, after a Bay Area customer asked the nonprofit to expand into that sector. So far, Pride has trained 15 people to work on medical devices. Pride executives wouldn’t identify the customer.

Some fledgling companies make the investment needed to produce large volumes of products, but often they want to conserve cash, producing and testing small numbers before they scale up. Adams said he knew of a startup that spent a lot of money raised from investors to manufacture its product only to run out of financing and go out of business.

“We’re thrilled that Pride is having this capability,” said Vikram Janardhan, founder and chief executive officer for Insera Therapeutics LLC. “It’s the beginning of something very important.”

The Sacramento startup is developing a device to improve stroke treatment. Janardhan said his company would have “without a doubt” used Pride to manufacture its prototype if the service had been available.

“These types of manufacturers are concentrated in a few regions,” he said.

Insera used manufacturers in Silicon Valley and Minneapolis, MN to create its first 10 prototypes, then 25 more, then 50 third-generation prototypes.

“It’s a no-brainer,” he said of Pride. “They do terrific work. Their quality standards can hold up to any other company out there. We’ll take a closer look at this for our fourth-generation device after we close our VC financing round.”

Insera is expected to close a venture financing round by the end of the year. Then, the company would start clinical trials in hospitals around the world, Janardhan said.

Pride’s new business unit marks the beginning of “self-sufficiency” for the region’s med-tech sector, Janardhan said.

“Every city, in my opinion, has plenty of people with ideas. There’s no shortage of that,” he said. “The key is that support system and infrastructure that enables someone to go beyond that idea.”

When manufacturing is outsourced to other regions, he said, those regions accumulate people who become trained and skilled in the medical-device industry. “Entrepreneurs like myself will welcome having local talent,” Janardhan said, adding that Sacramento could use a “dozen more Prides.”

Pride, a nonprofit, employs about 2,500 in the Sacramento region — and more than 4,100 people across the United States. The company has annual revenue of about $145 million, $7 million of which is produced by the electronics manufacturing division. Its workers perform electronics assembly for technology companies such as  Hewlett-Packard Co. and SynapSense, a Folsom company that develops wireless energy-efficiency systems.

Seventy-five percent of Pride’s employees have some sort of disability—developmental or physical, from autism to cerebral palsy. It’s an integrated work force model that mixes employees with disabilities and those without, generally at a ratio of 4-to-1.

The addition of medical-device manufacturing represents a “significant investment” in time, energy and resources, Twitchell said. Pride on July 27 received an International Standards Organization (ISO) certification that demonstrates the company has a quality program in place to proceed with medical-device manufacturing.

Pride also had to be licensed by the state to proceed, and received its license in September. The company has started developing a strategy to market services to medical-device makers.