Christopher Delporte09.10.07
Design's Role in Outsourcing
Design and Engineering Firms Are Playing a Larger Part in Product Development, and Startup Firms Are Benefiting
Christopher Delporte
Group Editor
There’s no escaping design. Most of us take it for granted. From the jeans we wear to the cell phone or iPod we put in the pockets, we’re surrounded by it. Beginning with the germ of an idea for a product, design follows close behind.
And while many equate design with an item’s aesthetic, it goes far beyond pure looks—particularly when the subject is lifesaving medical technology. It’s much more about function than form. A solidly engineered and researched design makes safety and efficacy possible, and from there—companies hope—sales and success will follow.
“While I would take a product that included industrial design over one that didn’t any day of the week, there's a big difference between medical devices and New York fashion. Design adds a lot of value, but hospitals don't buy interventional devices based on the latest trend in style,” explained Doug Hiemstra, founder and president of San Francisco, CA-based Hiemstra Product Development. “Consumer healthcare products are different. A glucose meter, for example, will have a consumer product look and feel—much more so than a cardiology catheter might have. But aesthetics are not as highly valued in interventional and diagnostic products as other criteria are. Medical companies are more interested in usability, safety and efficacy and reducing user error than sheer aesthetics.”
Product development and design firms are able to offer OEM clients a variety of services including market and user research, mechanical engineering, prototype design and design for manufacturability, just to name a few. According to the design professionals who spoke with Medical Product Outsourcing, they’re increasingly being called upon to provide start-to-finish support, from taking a sketch scribbled on a napkin, for example, all the way through to the finished product.
Design and the Outsourcing Model
This should come as no surprise as most contract manufacturers along the value chain increasingly are experiencing this type of full-service request from OEMs. While most design and development houses used to hand off a design to another contract manufacturer or the OEM client to handle the manufacturing component of a project, many now offer varying degrees of in-house assembly and manufacturing capabilities.
“Our core competency is design services—which is how the company started, and we’d like to keep it that way. I am usually not looking for a contract manufacturing contract by itself. I’m looking for a design and development contract that will lead to contract manufacturing later,” explained Steve Maylish, director of business development for the Aubrey Group in Irvine, CA. “So I tell people that we’re development first, but that we can take them all the way through to commercialization because we have a manufacturing group within our facility.”
Hiemstra said his company, which was founded in 1991, recently expanded to a new 9,000-square-foot facility and will begin offering manufacturing services for clients, including a clean room and assembly capabilities. He added that many of the large contract manufacturers don’t like to or aren’t set up to do small production runs, and his company’s recent expansion gives clients the opportunity to quickly move to the next phase with the designers and engineers who know the product from the ground up. “We’ve become vertically integrated in the sense that we’re not only doing industrial design and mechanical engineering, but we’re also expanding into contract manufacturing. We can now take our customers from preliminary sketches all the way to human clinical trials under one roof,” he said. “Rather than hand off at design sketches, CAD files, concept models or prototypes, we’re handing off with ramp-up. So once a product hits the big time, we’ll pass off full-scale manufacturing to someone else.”
Ximedica in Providence, RI was formed about two years ago specifically to respond to increased demands for a “soup-to-nuts” (a.k.a. full service or turnkey) approach to design and manufacturing. David Robson, vice president of development, said it makes more sense for an OEM to outsource design than to maintain those resources in house. Design is an intermittent need for most companies, he explained, and, therefore, most OEMs will need that sort of expertise for six months to a year and a half at most.
“Of course the big outsourcing craze has been to create a core competency within the client company,” Robson said. “They have the key doctors or scientists on staff or they have a key bit of intellectual property, but the design and development folks are used less frequently; it’s a temporary need.”
Ben Clawson, CEO of Santa Cruz, CA-based BC Tech, described the need for design and research and development firms as rapidly growing. Companies of all sizes have a need for their services, but larger companies, in particular, have developed internal processes that can slow down the product development process.
“You’ve got a $200 billion industry and all the companies need to—or should— reinvest 10% of their income in R&D,” he said. “So you’ve got $20 billion of R&D work they have to do, and they’re growing at 6% to 8% per year. To meet the demand, companies can’t hire staff fast enough, which is where we come in.”
According to Robert Andrews, medical division manager for Foster-Miller Inc.’s Commercial Equipment Group in Waltham, MA, the more advanced medical devices become, the more support OEMs need.
“Design firms that turn projects over to manufacturers after prototyping often will end up making major design adjustments later on,” he said. “It becomes more important to work with one partner for an entire process and know them well. This way, you avoid recalls, there is less redesign it and a more successful product launch. If it fails, from a sales and marketing standpoint, you don’t want to have a re-launch. It’s the old story of doing it right the first time.”
Big Business, Small Companies
Notably, most of the design firms that spoke with MPO said that the majority of their business doesn’t come from large OEMs—though they all do business with divisions of the big companies—but from small companies and startup firms.
Current market figures seem to bode well for that trend to continue.
Statistics from the National Venture Capital Association show that investors are bypassing traditional favorites such as computer-related and drug-development startups in favor of medical device companies. For the first two quarters of the 2007 fiscal year, venture capitalists invested a little more than $2 billion in the medical device sector, according to the Arlington, VA-based industry group.
“We’re a team of over 40 engineers. There’s no way a startup company could bring 40 brains of past experiences into a problem-solving process and then keep them on staff after the problem is solved,” Robson said. “They can use us for six or 12 or 18 months, and we get the hard stuff figured out. Companies can then go and make the product, have it made or, more and more, they’re asking us to manufacture it, too. So the lowest risk and quickest way to get a product to market is to never hand off the product.”
BC Tech’s Clawson told MPO that a growing number of startup companies seek out his company’s services even before they are funded. More early stage companies are turning to design companies to help them establish feasibility of their products in order for them to raise their Series A funding, he said.
“Many venture capitalists are requiring proof of concept before they’ll even talk about funding,” Clawson said. “So rather than build an organization with seed money, they’re trying to create value first and get prototypes built for animal studies. We’re seeing an increase in the number of these ‘virtual’ startup companies.”
Hiemstra’s experience with startups has been a little different. He explained that most of the startup companies he works with are well into their Series A or B round of funding.
“They’ve gotten through their bench model, are into animal studies and are looking to go into human clinical trials,” he explained. “They’ve got an in-house R&D staff, one or two R&D engineers working on the project, and they look to us to take the device they’ve built one of and start to think about it in terms of improving product usability and moving to higher production volumes.”
According to Ron Sully, marketing director for Omnica Corp., a product development firm based in Irvine, CA, startups and small companies, in many ways, are easier to work with than billion-dollar device firms. He said startup firms “are run by people who can make decisions and work fast.” More important, perhaps, Sully added, is that there’s a true team mentality that comes from working with small companies. “Big companies, while dynamic to work with, often get bogged down in politics and bureaucracy and it’s hard to get answers,” he added.
Clawson agreed, adding that when BC Tech works with large companies, it most often is to help with specific pieces of the design and development process, such as doing limited industrial design work or software development on a device or to obtain input from “a fresh set of eyes.” He said the approach versus working with a nascent device firm is very different.
“A large percentage of their products comes to end of life every year, so the demand for new products is just huge,” Clawson explained. “The reason we’re able to speed things up for them is we’re not fettered by the approval processes they have within their company. Using our streamlined FDA-compliant quality system, we can just do, while they do by committee. They come in with something they’ve been working on for awhile, we can put four or five engineers on a project and our staff will come up with new ideas right and left, because we not only have experience, but we’re also offering them extra horsepower and a fresh perspective. We can help them get to market faster.”
Maylish said the type of products his group is contracted to design also follows the investment community. Cardiovascular products are in demand (the Aubrey Group recently has worked on implantable heart pumps, for example). He also cited orthopedics, neurostimulation and obesity devices as popular categories.
Scully pointed to miniaturization as another trend.
“People are asking us to design complex niche products and that’s what we’re best at. We’re working on a smaller and smaller scale than what we did in the past,” he said. “Now we’re spending a lot more time looking through microscopes.”
Foster-Miller’s designers have experienced similar trends, according to Andrews. “We do a lot of cardiovascular, neurology and endoscopy products. Right now we’re working on a stent coating process and we’re always doing products in the diabetes management area,” he said. “We see activity in all sectors, and there is a trend toward less-invasive procedures.”
According to Andrews, along the lines of minimally invasive procedures, there’s also been a push to design devices for use in natural orifice transluminal endoscopic surgery, or NOTES. During NOTES, physicians insert a device through a natural orifice (eg, the mouth, anus or vagina) to reduce trauma, particularly during inter-abdominal procedures. The challenge becomes designing agile devices that are easily manipulated and safe for the patients.
Andrews said often, to help with design challenges, he’ll gather engineers from other disciplines within the company—such as aerospace—to see if there are other techniques or technologies that can be brought to bear to solve medical device engineering problems.
Setting Expectations
Before a design firm can offer a single CAD drawing in the quest to help customers get products to market faster, they need one very important element—the client itself. But even before ink is applied to a contract’s signature line, device professionals caution that expectations on both sides must be carefully outlined and discussed.
“I battle this every day,” said Omnica’s Sully. “It’s really tough to prove to the world that you’re unique, that you’re different than other design and engineering firms. We keep piling the services on. And we continually invest in our technology. Medical devices are getting more complex. In order to build those devices, you need people that have extensive experience and they have to look at device development from a systems point of view—not just from an industrial design point of view. It’s not a matter of just a pretty design; it’s a matter of taking a core technology and making a saleable product from it.”
Sully and others said that it’s often difficult to impart to new clients just how big a new product undertaking will be.
“Even for people who have been in the industry, but particularly for startups, the scope of projects is a wakeup call,” Sully added. “They want it fast and cheap, and it’s very seldom either one of those things. So you have to walk them through the process. Things don’t always go as you plan. They never do. Customers always want to add features to products.”
For example, changing a device from a tabletop to a cart-based unit on rollers could change the entire scope of a design project, he cautioned. Certain changes may seem small to a client, but they can mean a lot more time and money.
Clawson agreed. “The hardest part right now is the customer’s expectation about how fast things can be done and how much it costs. Customers generally have a limited budget and they’re expecting a lot more for their money than they have in the past. And maintaining the customer satisfaction throughout a project—because of a customer’s changing needs—certainly is a challenge. Keeping track of changes in scope of a project is one of the biggest issues.”
The process at the Aubrey Group, Maylish said, is to talk about deliverables upfront. The company provides a Microsoft project plan with all the tasks required on both sides to help illustrate and track design inputs, engineering requirements, risk analysis—among a multitude of other variables—and how they all translate from design to manufacturing.
Design for manufacturability (DFM) is a hot-button topic, particularly when companies have an eye on the clock. Hiemstra cautions that design engineers and their OEM clients shouldn’t get ahead of themselves. He said that while many firms will focus on DFM upfront, it should really come after efficacy has been proven. Not to do that risks product optimization.
“You can design so that each of the parts cost pennies a piece, but you may not have the right product,” he said. “Our focus is to make sure we have clinical efficacy, that it’s user-friendly, then we go back and look at squeezing the pennies out of the process. We’re certainly thinking about it all along, but if you think about how medical devices are designed, it doesn’t make sense to design for high volumes if you’ve never even seen an animal study. Make sure customers get clinical and regulatory success, then you can start thinking about DFM. But we’re not thinking about designing it for thin-wall injection molding until we get closer to the homerun product.”
Data Gathering
Once a client has been educated, the real work begins. And perhaps even more difficult then helping customers understand the process is understanding the clinical end use for a project and obtaining feedback from clinicians and other end-users in order to initiate and support the design and engineering process.
At its most basic, it starts (as with most projects) with asking the right questions.
“We love to do research and we’ll do it every time we can compel the customer to see that it’s money is well spent to have our team in an operating room or exam room making observations,” said Ximedica’s Robson. “So we write that into each an every proposal. Some clients have a very good handle on research and have a sense of what their customers’ need. But in almost every case we’re out there trying to observe in the early stages of the program. Design companies bring a different kind set of eyes.”
The user experience for the nurse and the doctor should be intuitive, Robson said. And it often becomes a matter of how clearly a device is able to convey information. He likened it to visiting a poorly designed Web site that users have difficulty navigating. “A lot of client companies have surgeons or doctors they confide in and show preliminary design to, and that’s invaluable,” Robson added. “Then there’s the challenge of sifting out he clinicians who are really opinionated versus those who are really insightful and can see what the potential is.”
Hiemstra described similar experiences with physicians on scientific advisory boards (SAB).
“I am a big believer in getting 3-D objects to people as quickly as possible. They don’t always have to be perfect right away, but its critical to take early input from a design phase and create something quickly to gather more reactions and inputs,” he said. Because his company specializes in handheld medical devices—such as catheters and device delivery systems—Hiemstra and his team will sculpt test units out of foam by hand to help end-users with visualization and ergonomic feedback.
“Sometimes clinicians on an SAB can be very forgiving because they’re too close to a project. They understand the need to gather clinical data and they’re forgiving in terms of usability. The danger is that you’ve got SAB members giving you advice, saying the device is fine, and then you give it to doctors who have never seen it before and you run the risk of them rejecting it. You need to find fresh sets of eyes that haven’t been involved in the process all the way through.”
Sully told a story about working on a project—an oxygen delivery system—for a client a few years ago for which Omnica’s design team bought all the major competitors’ devices and used them to carry out competitive research.
“We conducted focus groups to see what people liked and didn’t and then we took what was best of every one and incorporated what we thought was important. Any good industrial designer can address ergonomics, medical devices are complex products and require more,” he said, adding that about 20% of the projects Omnica tackles need focus groups.
But no matter how talented your staff, Hiemstra said, it often boils down to how well you know your subject or how quickly you learn.
“If there’s any trend at all, it’s that folks want to know that you’ve got experience in the clinical area they’re working in,” he said. “It’s not good enough that you’re a capable designer. You’ve got to come up that learning curve very quickly. And that’s where the medical device industry is very demanding. Medical device people won’t even talk to you unless you have some experience in their arena.”