MedicalDeviceNow talked with industry experts to discover how the medical device industry has responded to the economic slide, the kinds of requests OEMs are receiving from customers, current marketplace demands and the types of new products on the horizon. Those conversations follow.


Participants included:

Kirk Barker, electronics product manager of Maxon Precision Motors in Foster City, Calif. Maxon Precision Motors is a supplier of high-precision drive systems. Its product range includes direct current (DC) motors with ironless winding and flat motors with iron core; planetary gears, spur gears and special gears; sensors; servo amplifiers and position controllers; high-tech ceramic injection molding (CIM) and metal injection molding (MIM) components; and customer-specific drive solutions.
Tim Hassett, managing director of LEMO USA Inc. in Rohnert Park, Calif. LEMO designs and manufactures circular connectors.
Paula Papineau, director of sales and marketing of Cirtronics Corporation in Milford, N.H. Cirtronics is an electronics contract manufacturer that specializes in material procurement, printed circuit board (PCB) assembly, mechanical assembly, box build, final integration, testing and direct shipping services.
Dirk Smith, vice president of business development of Minnetronix Inc. in Saint Paul, Minn. Minnetronix provides design, engineering and manufacturing services to medical device companies with software and electronics-based products.

Paula Papineau: We continue to see smaller devices such as 0402s and 0201s, high-output ball grid arrays and more recently quad flat no leads (QFNs) and land grid arrays (LGAs). Board real estate is still a concern as products continue to be designed to smaller footprints. Right now, the supply chain is fine because demand is still relatively soft. We have been warned by all of our major distributors that as soon as market demand starts to pick up, component lead times will begin to push out. Inventories have been depleted, and factories will need time to ramp up production to match increasing demand.

Dirk Smith: We have seen a continually increasing influence of consumer electronics on medical devices, and this impacts the types of electronic components in demand. As computer-based user interfaces become more advanced and prevalent in consumers' hands (cell phones, iPods, etc.), there is a demand for medical devices to incorporate more sophisticated interfaces as well, driving demand for graphical displays, touch screens and graphics processors. We're also seeing increased demand for wireless communications, low-power electronics and high-capacity batteries as more and more medical devices go mobile. Processing power and memory expectations are also increasing, as customers seek faster microcontrollers and digital signal processors and PC-like microprocessor and memory performance and functionality in their medical devices.

Barker: Maxon has long been recognized a high-quality provider of precision drives and motion control components. The medical market represents a significant portion of our global business. Our products cover the gamut of applications from drug delivery, diagnostic, oncology, cardiovascular, endoscopic and prosthetics to surgical robotics.

Hassett: LEMO serves multiple market segments of medical including: minimally invasive surgical (monitoring and visualization, robotics, electrosurgical, endoscopic and surgical devices), specialized patient monitoring (MRI, anesthesia), medical imaging equipment (X-ray, magnetic resonance imaging, ultrasound) and the cardiac defibrillator market (implantable and external). Medical is the No. 2 market we serve worldwide. We have developed new product platforms such as our R Series (rectangular plastic), XP Series (next generation of our Redel plastic connectors), high-pin density disposable with integrated electronics, as well as many hybrid fiber solutions. LEMO is a company that is very flexible in design, and we constantly are innovating new solutions to customer specifications. To keep up with the demand, we have added global engineering resources to accomplish this.

Papineau: Cardiovascular, drug delivery systems, lasers and medical imaging equipment. In fiscal year 2008, 20 percent of our sales were in the medical market. In fiscal year 2009, 36 percent of sales are estimated to be medical.

Smith: Minnetronix has always been 100 percent focused on the medical device market, and we have worked for customers in many different sectors, including cardiovascular, vascular, interventional radiology, point-of-care diagnostics, neurology, pulmonology, general hospital equipment, diabetes, oncology, urology, wound care and home healthcare.

Barker: Maxon continually looks for ways to identify and incorporate leading-edge technology into our family of motion control products. Last year was the culmination of several years of design efforts. We recently introduced our size 05 (0.50" diameter) high-speed, power-dense, brushless DC motor and gearhead combination. The size 05 is tailored toward surgical handpiece applications. This motor/gearhead combination is also supported with complementary electronics by way of our DEC module. The DEC module is a quasi-two quadrant control, which comes in an attractive 1.5-by-1.5-inch package. The module was designed with a standard 0.100 header pin arrangement to facilitate ease of implementation onto a PCB. We've also upgraded and miniaturized our EPOS (easy positioning) intelligent position controller. The new EPOS2 module features the latest 32 bit (digital signal processing) comes with an evaluation board and presents a solution for networked embedded control. The module comes standard with USB, RS- 232 or CAN communication. The defacto communication protocol, CANopen, makes it easy to design around because of the predefined medical device profiles available through CAN-CiA. Finally, we have released our MILE encoder, inductive feedback device that comes in a variety of resolutions and can be housed to mate with our smallest 6 millimeter diameter motor.

Hassett: We have released the following new products. We redesigned our REDEL 1P medical plastic connector adding aluminum outer shells for rugged applications that do not require shielding. This connector also has an alignment feature on the plug shell for low visibility applications so that you can use it in the dark. This new design is compatible with our existing REDEL 1P series. The plastic R Series is a rectangular connector with high-pin density in a flat profile and uses the LEMO push-pull latching system. An example of an application would be outpatient devices worn on the body. The M-Series (military harsh environment) is our new series. LEMO has not brought on a new full series in many years. The M series is not the traditional LEMO push-pull. M Series is a push/pull with a twist connection. Definitely for high-shock, vibration, shielded and sealed environments due to its high-strength aluminum, it is one of the lightest and most compact of any LEMO connector product to date. The hybrid fiber optics connector has fiber, low voltage and coax, and the application is for medical imaging. The fiber transmits light so the doctor can see inside. The Medical XP Line has up to 22 pins. We have not introduced this new product yet, but it will be a new REDEL plastic connector that can hold more pins in a smaller space.

Papineau: We are a contract manufacturer so we don't release technology ourselves, but we have seen our customers designing in more Bottom Termination Components such as QFNs and LGAs.

Smith: As a contract design and manufacturing company, the majority of the new technology we develop is proprietary to our customers and incorporated directly into their products. We do have a number of internal technology programs focused on developing core electronics and software-based technology, which is applicable across a broad range of medical devices and resulting in solutions which comply with medical device safety and regulatory requirements.

 

Barker: Given the trends we've seen evolving over the past several years, we made the decision to upgrade our electronic product offering and to develop a comprehensive system solution product platform. We certainly see our fair share of custom applications, but we intentionally developed our standard electronics design with flexibility in mind. The thought being that it would provide an off-the-shelf solution, which could be easily modified to meet custom requirements if necessary. Typically, a slight change in the mechanical footprint or a simple firmware modification will solve the problem without breaking the bank. By taking this approach, we have been able to significantly reduce our customers' design-to-production development time. Maxon also made the decision, as a cost of doing business, to provide our customers with a first-class electronic design and support staff. On any given day, we have a 25- to 30-man electronics department whose sole purpose is to support our customers and to push the envelope with new electronic design.

Hassett: It all depends upon the OEM and the end user. We will modify/develop and design to meet customer critical to quality [requests]. Without a global engineering team and with our local engineering and R&D, LEMO GROUP is always ready to meet speed to market on a new customer need. The way we work with our customers is multiple: We have a hybrid sales force of both direct and independent sales reps. We also have a very talented applications group that can determine up front if we can modify an existing product or if we need to develop a new solution. With over 70,000 part numbers and counting, the LEMO Group has the very best willingness and capability to serve the customer. Customers are looking for interconnect solutions. Do they purchase components? Yes. But, nine out of 10 times, they need a full solution.

Papineau: From a contract manufacturing perspective, they are looking for more value-added services such as the full product build and final test. We procure and build to customer-specified designs and requirements. In our business, manufacturing support ranges from the electronic PCB assemblies to electro-mechanical subassemblies and even final product integration.

Smith: Customers typically come to Minnetronix looking for custom solutions and generally complete devices as opposed to components. There does appear to be a continuing trend for companies to look for complete manufacturing (and development) outsource solutions, allowing them to focus on their core competencies in technology, product definition and customer management.

Barker: One of our biggest challenges has been acquiring enough detailed information from medical design engineers in the early stages of the design process to meet the desired performance requirements. Typical of most new projects, there is generally a learning curve, but with most medical device companies, there is also a second tier of "home-grown" knowledge, information with a track record of success that would facilitate the process and improve product performance. But as simple as this sounds, many device manufacturers are reticent to share this information. It is a mystery to me why we have to take the time to reinvent the wheel if the designer already has a history with something that works. It almost seems counterproductive that everything is so secretive. I guess it is the nature of this highly competitive business, but it does not make our job any easier. Some real opportunities present themselves to Maxon because we truly are an engineering company first, and we have been in this business for a long time. We've been to space and under the sea. We've dealt with thousands of peculiar applications requirements, and there is probably very little that we have not considered in the way of unique design requirements for our products. Our corporate management has also made it a point to remain on the cutting edge of emerging technologies.

Hassett: Speed of custom solutions and trying to get what the customer truly wants in a product correct the first time. With the trials and U.S. Food and Drug Administration, many times we have to make modifications or redesign based upon testing, so you have to have a long-term mindset and understand that the investment in capital and human capital is a big up-front cost.

Papineau: Some of the challenges are the stricter regulations, higher level manufacturing specifications, more documentation and traceability requirements. On the plus side, the medical segment is still remaining one of the stronger markets. There are diverse segments within the medical market as well, and new products are always in development. It is a growth industry for contract manufacturing, and many of the products do not lend themselves to offshore manufacturing, keeping companies, like ours, in the United States and thriving.

Smith: From day one, Minnetronix has chosen to serve the medical device market exclusively, so, from our perspective, the opportunities are significant and the challenges noteworthy but certainly worth the effort. Of course, regulatory requirements for medical devices, particularly Class II and Class III products, are significant and require a structured and diligent approach to product development and manufacturing. We also work with many customers who have lengthly new product introduction cycles (NPI), due largely to clinical trial requirements and the regulatory approval process. Managing longer NPI cycles, particularly for small companies, can offer a range of challenges. Regarding opportunities, we have always felt that technology advances in areas like electronics, software, nanotechnology, batteries, etc., provide great opportunity for making real advancements in medical devices. Technology can and often does contribute to new, smaller, more effective and less expensive devices, which in turn, improves healthcare. For example, we are currently seeing integration of wireless technology and web-based access to devices trending up and facilitating clinician-to-patient communication in a way that will improve outcomes.

Barker: I think it's safe to say that unless you are a government agency, then everyone's business has been affected, in some form or fashion, by this economy. It also hasn't helped the medical community given the uncertainty created by the current administration's desire to reform healthcare in the United States. This type of uncertainty can put a damper on the best of parties. The stronger companies, ones with a solid balance sheet, seem to be forging ahead with a business-as-usual attitude, even accelerating their R&D efforts. Some of the smaller or less fortunate medical businesses are prime targets for merger or acquisition.

Hassett: LEMO Group, like many other companies, has seen multiple markets hit by the recession. However, we have been working day and night to develop new products to meet current and customer future needs. Our leadership understands that we must innovate and be prepared for the economic change in the market. We see this happening in the United States in the third and fourth quarters [this year] and getting stronger when 2010 comes about. Barring any unforeseen global meltdown, we see 2010 rebounding strong by the end of the second quarter.

Papineau: Contract manufacturers are directly affected by the demand required by their end customers. Every market segment has shown a reduction in demand, some more severe than others. Our company is diversified into many different market segments, so that even though our business is below what we forecasted for this fiscal year, we still remain healthy and ready for the upswing.

Smith: The economy has certainly affected the overall medical device market and industry, although not to the extent that many other industries have been affected. It appears that while there are indicators that funding and new product development activities are beginning to improve relative to the fourth quarter of 2008 and the first quarter of 2009, our industry will be somewhat affected by macroeconomic changes for some time. With increased emphasis on the cost of healthcare, there will continue to be pressure to reduce capital equipment costs in hospitals and scrutinize the value of medical procedures. There appears to be increased interest in diagnostic devices and preventative medicine as well as home-care based therapeutic and diagnostics. At Minnetronix, we work with a diverse group of clients, in both product development and contract manufacturing, and this diversity has been a real benefit as we navigate the current economic conditions.