Michael Barbella, Managing Editor06.06.23
It was an explosive 12 months, both literally and figuratively.
As war raged in Iraq, governments in Liberia, Georgia, and Serbia underwent regime changes, either forced or voluntary, while terrorist bombings rocked the Mideast and Russia, killing 152 people and injuring more than 1,050. NASA lost seven astronauts to a disintegrating space shuttle, Iran lost more than 20,000 citizens to a powerful earthquake, and California lost one million acres and over 4,800 structures to wind-stoked wildfires.
Explosive, indeed.
Healthcare was no less volatile in the third year of the new millennium, with Severe Acute Respiratory Syndrome (SARS) catching the world off-guard, spongiform encephalopathy—a.k.a., Mad Cow Disease—catching up to North America, hormone replacement therapy catching a bad break, and Monkeypox catching out the American Midwest.
Eclipsed amid all the tumult was a growing movement among healthcare practitioners to outsource parts of the product development and/or manufacturing process. With its ability to lower manufacturing costs, increase efficiency and market reach, and accelerate time to market, outsourcing among medical device providers has grown into a $117.5 billion industry over the last 20 years.
Despite its many benefits, however, the healthcare sector was slow to embrace outsourcing. Some industry professionals actually opposed it at first. “There are eerie emulations of outsourcing and unionization,” Nick Cram, now CEO at Dominion Biomedical International, wrote in the Fall 2002 issue of Journal of Clinical Engineering. “As a member of the outsourcing company, your allegiance is to the company that provides your paycheck.
Outsourcing may be the future for CEs [clinical engineers] and biomeds, but is it good for healthcare? Will the intangible non-ownership issue eventually compromise clinical outcomes?”
Valid questions, but hardly the kind to derail a proven business strategy for reducing expenses and improving outcomes. In the two-plus decades since Cram’s documented skepticism, outsourcing has become a central tenet of medical device manufacturing, though the practice has evolved with healthcare’s digitization and shift to a value-based care model.
To better understand medtech outsourcing’s transformation over the last 20 years, MPO reached out to its Editorial Advisory Board members for perspective. Their responses (and memories) provide for quite a nostalgic anniversary trip.
Michael Barbella: What has been the most significant change in the medical device outsourcing market in the last 20 years?
Donna Bibber, CEO, Isometric Micro Molding
With the internet just starting to mature in the early 2000s, the medical device outsourcing market (and the world) became global. Prior to that, and it feels Flintstone-ish to admit it, to find a supplier we used Thomas registries, the phone to call a colleague for a reference, and communicated more face-to-face.
In addition to the internet boom, the mobile phone added another facet to finding suppliers and outsourcing globally. Not only could we contact suppliers on an office phone, but we also now had instant access to global suppliers and engineering answers immediately that solved potential problems in development and production.
This increased our global technical know-how significantly and created a competitive spirit that still exists today. All suppliers strive to be at the very top of the value pyramid, which is intellectual property such as trade secrets, patents, and platform-type products that are challenging to replicate.
Tom Black, Medical Product Sales, 889 Global Solutions
The most significant change is the focus of medical device development going from better bells and whistles to reducing price/costs each year. This changed all the responsibilities within the medical device disciplines. It changed engineering the most by having them go from developing new products, or at least to add extra conveniences to the mousetrap, to having them focus on making the trap less costly while reducing SKUs. Engineers went from building devices to cutting down trees. The amount of paperwork engineers must complete takes up the largest piece of their daily work pie timetable. Medical device companies now must develop systems “they” believe follow the FDA’s unwritten guidelines to managing product development documentation from start to beyond finish. Quality people work on the same type of paperwork as a “cover your buttocks” system for companies to be able to sleep at night. This “fill up Iron Mountain” mentality has been a good way to assure everyone in the industry follow the doctor’s oath of “First do no harm,” but it also has led to, “I didn’t go to school for this” as you pass by R&D cubicles. I would be curious to see the numbers of actual new products launched versus redeveloped existing products relaunched before and after this change. Sales professionals have gone from looking for additional products to supplement their customers’ current offering to spending time on their own manufacturing floor trying to get their operations people to reduce the cost of every process from injection molding to shipping.
Most new purchasing contracts require a reduction in price year-over-year, even if the customer’s volumes do not increase. Product “bundling” has become the sales strategy for being able to reduce costs by increasing the aggregate number of widgets shipped per year. With all of that said, it remains the best industry to be working in because of the end result—helping someone live a better life—and because of the professionals that have made this industry in the U.S. the best in the world. It is nice to see new companies developing better products to help those in need have better outcomes from their respective medical challenges. That is why we are so passionate about what we do. This industry will never let any significant change take that away from us.
Sara E. Dyson, Esq., Vice President – Underwriting Operations & Risk Management, Medmarc Insurance Group
My answer is coming from the perspective of someone who underwrites and manages products liability risk for contract manufacturers. The most significant change in outsourcing over the last 20 years has been the evolution of CMOs offering just manufacturing services to offering manufacturing services in addition to an array of services related to product design, project management, quality and regulatory, and aftermarket logistics. Many contract manufacturers believed they could be more competitive and capture a greater market share by offering their customers more, so they expanded their offerings into these “ancillary” areas. They went from manufacturing products to their customer’s “specs,” which meant their own liability was limited to manufacturing defects, to offering services that opened them up to liability arising from design and even warning defects. From a products liability risk management standpoint, many of these CMOs completely changed their risk profiles, which in turn complicated their risk management strategies. The companies that did it well recognized and managed the additional risks that came with the additional services.
Tony Freeman, President, A.S. Freeman Advisors LLC
Consolidation of the supply chain, resulting in billions of dollars plus CMs. Over the last 20 years OEMs have learned that virtually all aspects of product design, development, and manufacture can be reliably and safely outsourced at a lower cost than doing the work in their own facilities. As they moved from outsourcing simple components to outsourcing assemblies and complete devices, their preference grew for financially large (strong) contract manufacturers who offered a spectrum of design, regulatory, and manufacturing disciplines under one roof (one neck to choke).
Dave Mabie, President, CincyMED
Twenty years ago, Howard Revitch (group publisher, MPO), who at the time was working for a competing publication, sat in my office and told me he had an idea to start a new magazine. He was noticing a trend within the medical device industry where the larger OEMs were starting to outsource their manufacturing to third-party companies. Howard had pitched the idea of covering this topic with his current publication but they turned a deaf ear. Sources indicate the value of global medical device outsourcing in 2020 was approximately $102 billion. Today global medical device outsourcing is growing at a CAGR over 11% and is expected to reach $232 billion by 2030. Also today, the publication that turned a deaf ear on Howard is no longer in business while MPO continues to grow and thrive.
Steve Maylish, Co-Founder and CCO, Fusion Biotec
The most significant change is the amount of outsourcing services used and available. Twenty years ago, many companies were reluctant to outsource engineering. Intellectual property was mostly developed in-house and controlled in-house. It was considered the OEM’s core competency. Now, not only is outsourced engineering commonplace, as most OEMs realize the limitations of their internal teams, but also quality, regulatory, reimbursement, pre-clinical and clinical trials are commonplace along with outsourcing reagent and chemistry services on the biotech side.
John Nino, CEO, Life Science Outsourcing
The most significant change has been the dramatic shift toward end-to-end service providers. In the past, medical device manufacturers typically outsourced only specific aspects of production, such as component manufacturing or packaging. However, as the industry has evolved and become more complex, the demand for full-service outsourcing partners has grown exponentially. This shift has been driven by several factors. One of the major drivers is the increasing complexity of medical devices themselves. With advancements in technology, devices have become more intricate, requiring specialized knowledge and equipment to produce. By partnering with end-to-end service providers, manufacturers can leverage their expertise and infrastructure, rather than investing heavily in their own.
Additionally, heightened regulatory scrutiny and quality requirements have put pressure on manufacturers to ensure their devices meet stringent safety and efficacy standards. Full-service outsourcing partners are able to provide robust quality assurance processes and regulatory compliance support, reducing the risk for manufacturers.
Lastly, the drive for cost efficiency and the need to bring products to market faster have also played a role. End-to-end outsourcing allows manufacturers to streamline their supply chain, reduce lead times, and achieve economies of scale, all of which can result in significant cost savings and quicker time to market.
Overall, the shift toward end-to-end service providers in the medical device outsourcing market represents a significant change in how manufacturers approach production. It reflects the increased complexity and demands of the industry, as well as the ongoing need for efficiency and speed in bringing life-changing medical devices to patients.
Paul Orlando, VP of External Operations, Olympus Surgical Technologies America
The number of mergers and acquisitions in the device outsourcing market with significant involvement with private equity entities.
David C. Robson, Chief Operating Officer, Iantrek Inc.
I started at Ximedica in 2000. Back then, outsourcing product design and development to a consulting firm was unusual. My jobs in medical device manufacturing companies used only—or mostly only—internal resources to handle everything. Now, using external third-party resources is broadly acceptable, even for large medical device companies. Rather than hire and maintain a permanent employee base for numerous development programs, OEMs seem more inclined to use consultancies or part time design or engineering resources to handle intermittent needs, etc. In many cases, the external resources are specialized and bring expertise with them that the team of the OEM may not possess. When executed well, this ends up as a symbiotic relationship where both parties benefit and, hopefully, the product solution is better too.
Dr. Bryce G. Rutter, Founder and CEO, Metaphase Design Group Inc.
There are three significant changes in medical device outsourcing that come to mind. The new context for medical device outsourcing is the increasing complexity and highly specialized skills and capabilities needed to develop a new medical device. Development programs are increasingly denser and more interdisciplinary as connected products are the norm, wireless is pervasive, the potency of AI is on our doorstep, materials and manufacturing processes are more sophisticated, and time to market is being crushed into to unbelievable timelines.
A second significant change has been the outsourcing of specialized skills needed along the entire product development pathway. Right now, we are in outsourcing mode, where companies try to run as lean as possible with fixed headcounts using consultants who provide integrated UX and VOC research, human factors engineering, digital health solutions, industrial design, and DFMA services, staffed by experts. This model allows these companies to run fast and when the expertise is not needed, to turn the faucet off. No doubt, sometime over the next decade we will once again see companies take these specialized skills back in-house, as we have seen happen over the past 40 years.
In pharma, outsourcing has changed dramatically and may be a bellwether for what to expect for medical device outsourcing. Today, as several global blockbuster drugs come off patent, several smaller and more agile biosimilar companies are jockeying for position in a race to grab market share. They are doing this by outsourcing, from formulation through to patient. An outsourced global integrated solution provider model is faster to market, streamlines regulatory pathways, and allows smaller companies to have a sophisticated, expert level, development partner.
Thad Wroblewski, Sterilization Consultant
Pertaining to sterilization outsourcing, the most significant changes are 1) ethylene oxide regulatory evolution prompted by litigation, pushing all players in-house and outsourcing toward major changes in cycle development, validations, facility capital expenditures to re-engineer equipment, and systems to protect employees and significantly reduce external emissions. 2) Within radiation processing, the volume shifts from gamma radiation to electron beam radiation and the emergence of X-ray processing at significant levels into the future all due to concerns pertaining to the supply chain of cobalt-60 and available future capacity.
Barbella: How will the medical device outsourcing market evolve over the next two decades?
Patrick Lynch, Supply Chain & Quality Systems Consultant, chain LEANk
Geopolicital and logistical risks will force a greater portion of production nearshore, as we learned following COVID-19 and the war in Europe.
Tony Mulone, President, Winstable Group LLC
In the past two decades we have experienced many changes. The OEM once self-manufactured all their components, assemblies, and finished goods but with cost pressures, they needed to lower costs by outsourcing these simple components and assembly to low-cost countries. This led to the CM learning the process and then going to market with a competitive product. Then the OEM focused on innovation of higher-end margins products with IP to allow them to work with the CM as the cost benefit has been established.
With COVID-19, the supply chain got hit hard, and there were longer lead times, higher shipping costs, etc. The OEM lost control of the supply chain. This loss of control has been simplified with what is going on worldwide with migration and the threat of war. With new technology on the horizon such as AI and robotics, I envision the OEM bringing some of the supply chain home and under their control. The companies that can see this shift happening and building a supply chain closer to home to support the OEM will be successful.
Chris Oleksy, CEO and Founder, Oleksy Enterprises LLC
Constantly reconfigured supply/care chains! In the next 20 years, we’ll move toward a more “centralized approach” to healthcare and healthcare needs will increase to more than 20% of our nation’s GDP. Additionally, these needs will become more of a national security interest than ever before to ensure access to healthcare. How we centralize the approach to healthcare will be extremely critical and difficult. This approach to reconfiguring our supply and care chains will either drive more outsourcing due to cost compression requirements from Washington or drive OEMs to insource as an effort to maintain control and protect security. One thing is for sure, the next 20 years will drive supply and care chain configurations like never before, requiring everyone from the C-suite to the shop floor to understand supply chain theology in order to survive.
Thor S. Rollins, B.S., Director of Toxicology and E&L Consulting, Nelson Laboratories
The medical device outsourcing market is expected to continue to grow over the next two decades, driven by factors such as increasing demand for medical devices, the need for cost-effective manufacturing solutions, and the trend toward specialization in the industry. As the market evolves, it is likely that there will be an increased focus on value-based pricing and greater collaboration between medical device companies, consultants, and contract manufacturers.
Dennis Rubenacker, Senior Partner, Noblitt & Rueland
Medical device outsourcing to meet the needs of assisting medical device manufacturers with new technologies including AI/ML and molecular based testing, along with migrating to other new technologies implemented during product development and manufacturing of medical devices including electronic based Quality Management Systems (QMS) with Enterprise Resource Planning (ERP) and Manufacturing Execution Systems (MES) systems.
Dan Sands, Managing Partner, Factor 7 Medical LLC
More consolidation and more software-enabled providers.
Dave Sheppard, COO and Principal, MedWorld Advisors
Unfortunately, geopolitical concerns are going to have a lot to do with one aspect of medical device outsourcing. This is already starting and will lead to global manufacturers making geographical supplier choices based on increasing country political risks and less on simply price. The other interesting aspect to watch will be the continued consumerization of medical devices. This will lead (for many solutions) for patients to simply “download” their latest product software upgrade (versus buying new hardware). The good news for our industry is the adoption of consumer-style devices (wearables) for personal healthcare will increase the overall utilization of our medical devices, which will continue to expand the market opportunities.
Thomas Taylor, President and CEO, Foxx Life Sciences
Contract manufacturers will need to target and establish facilities in new low-cost countries like India and regions like Southeast Asia. India, for example, has a strong and bright young workforce with many engineers equipped to be effective in manufacturing.
Barbella: What medtech advancement/innovation developed since 2003 has most surprised you (something perhaps you never would have thought would exist in 2023)?
Randy Clark, President – Health Solutions, Flex
As a former collegiate and professional athlete, I never could have dreamed of the life-changing and performance-enhancing innovation that we see today in the wearables space. Healthcare wearables have driven a massive shift in the site of care and how people monitor their health. At their inception, wearables were used to simply count steps; now, thanks to advances in materials and connected technology innovation, wearables can alert users to early signs of illness, help manage chronic conditions, and personalize treatments. Athletes also have access to wearables that help them measure, track and improve their performance, as well as better manage and prevent injuries—amazing benefits that I wish I could have tapped into during my athletic career! As people get more comfortable with remote healthcare, we have a great opportunity to deepen our collaboration across the ecosystem to innovate next-generation wearables and improve speed to market at scale to transform patient care and improve lives.
Nam Trinh, COO, Securisyn Medical
Artificial Intelligence (AI) has been a major topic lately and I'm interested in seeing how it can impact medtech advancement and the healthcare sector in different ways. The pandemic has certainly shed light on an acute deficit in nurses and clinicians, not to mention staff burnout in many healthcare facilities, which has only contributed to the need for medtech advancements and innovation that further improve the standard of care. Whether it’s AI-driven machine learning to aid drug research and the rapid diagnosis of various patient conditions, or AI-driven software used in robotics to help automate routine tasks so that hospital staff can focus on more critical areas, AI in medtech is sure to produce many exciting and innovative advancements for years to come.
As war raged in Iraq, governments in Liberia, Georgia, and Serbia underwent regime changes, either forced or voluntary, while terrorist bombings rocked the Mideast and Russia, killing 152 people and injuring more than 1,050. NASA lost seven astronauts to a disintegrating space shuttle, Iran lost more than 20,000 citizens to a powerful earthquake, and California lost one million acres and over 4,800 structures to wind-stoked wildfires.
Explosive, indeed.
Healthcare was no less volatile in the third year of the new millennium, with Severe Acute Respiratory Syndrome (SARS) catching the world off-guard, spongiform encephalopathy—a.k.a., Mad Cow Disease—catching up to North America, hormone replacement therapy catching a bad break, and Monkeypox catching out the American Midwest.
Eclipsed amid all the tumult was a growing movement among healthcare practitioners to outsource parts of the product development and/or manufacturing process. With its ability to lower manufacturing costs, increase efficiency and market reach, and accelerate time to market, outsourcing among medical device providers has grown into a $117.5 billion industry over the last 20 years.
Despite its many benefits, however, the healthcare sector was slow to embrace outsourcing. Some industry professionals actually opposed it at first. “There are eerie emulations of outsourcing and unionization,” Nick Cram, now CEO at Dominion Biomedical International, wrote in the Fall 2002 issue of Journal of Clinical Engineering. “As a member of the outsourcing company, your allegiance is to the company that provides your paycheck.
Outsourcing may be the future for CEs [clinical engineers] and biomeds, but is it good for healthcare? Will the intangible non-ownership issue eventually compromise clinical outcomes?”
Valid questions, but hardly the kind to derail a proven business strategy for reducing expenses and improving outcomes. In the two-plus decades since Cram’s documented skepticism, outsourcing has become a central tenet of medical device manufacturing, though the practice has evolved with healthcare’s digitization and shift to a value-based care model.
To better understand medtech outsourcing’s transformation over the last 20 years, MPO reached out to its Editorial Advisory Board members for perspective. Their responses (and memories) provide for quite a nostalgic anniversary trip.
Michael Barbella: What has been the most significant change in the medical device outsourcing market in the last 20 years?
Donna Bibber, CEO, Isometric Micro Molding
With the internet just starting to mature in the early 2000s, the medical device outsourcing market (and the world) became global. Prior to that, and it feels Flintstone-ish to admit it, to find a supplier we used Thomas registries, the phone to call a colleague for a reference, and communicated more face-to-face.
In addition to the internet boom, the mobile phone added another facet to finding suppliers and outsourcing globally. Not only could we contact suppliers on an office phone, but we also now had instant access to global suppliers and engineering answers immediately that solved potential problems in development and production.
This increased our global technical know-how significantly and created a competitive spirit that still exists today. All suppliers strive to be at the very top of the value pyramid, which is intellectual property such as trade secrets, patents, and platform-type products that are challenging to replicate.
Tom Black, Medical Product Sales, 889 Global Solutions
The most significant change is the focus of medical device development going from better bells and whistles to reducing price/costs each year. This changed all the responsibilities within the medical device disciplines. It changed engineering the most by having them go from developing new products, or at least to add extra conveniences to the mousetrap, to having them focus on making the trap less costly while reducing SKUs. Engineers went from building devices to cutting down trees. The amount of paperwork engineers must complete takes up the largest piece of their daily work pie timetable. Medical device companies now must develop systems “they” believe follow the FDA’s unwritten guidelines to managing product development documentation from start to beyond finish. Quality people work on the same type of paperwork as a “cover your buttocks” system for companies to be able to sleep at night. This “fill up Iron Mountain” mentality has been a good way to assure everyone in the industry follow the doctor’s oath of “First do no harm,” but it also has led to, “I didn’t go to school for this” as you pass by R&D cubicles. I would be curious to see the numbers of actual new products launched versus redeveloped existing products relaunched before and after this change. Sales professionals have gone from looking for additional products to supplement their customers’ current offering to spending time on their own manufacturing floor trying to get their operations people to reduce the cost of every process from injection molding to shipping.
Most new purchasing contracts require a reduction in price year-over-year, even if the customer’s volumes do not increase. Product “bundling” has become the sales strategy for being able to reduce costs by increasing the aggregate number of widgets shipped per year. With all of that said, it remains the best industry to be working in because of the end result—helping someone live a better life—and because of the professionals that have made this industry in the U.S. the best in the world. It is nice to see new companies developing better products to help those in need have better outcomes from their respective medical challenges. That is why we are so passionate about what we do. This industry will never let any significant change take that away from us.
Sara E. Dyson, Esq., Vice President – Underwriting Operations & Risk Management, Medmarc Insurance Group
My answer is coming from the perspective of someone who underwrites and manages products liability risk for contract manufacturers. The most significant change in outsourcing over the last 20 years has been the evolution of CMOs offering just manufacturing services to offering manufacturing services in addition to an array of services related to product design, project management, quality and regulatory, and aftermarket logistics. Many contract manufacturers believed they could be more competitive and capture a greater market share by offering their customers more, so they expanded their offerings into these “ancillary” areas. They went from manufacturing products to their customer’s “specs,” which meant their own liability was limited to manufacturing defects, to offering services that opened them up to liability arising from design and even warning defects. From a products liability risk management standpoint, many of these CMOs completely changed their risk profiles, which in turn complicated their risk management strategies. The companies that did it well recognized and managed the additional risks that came with the additional services.
Tony Freeman, President, A.S. Freeman Advisors LLC
Consolidation of the supply chain, resulting in billions of dollars plus CMs. Over the last 20 years OEMs have learned that virtually all aspects of product design, development, and manufacture can be reliably and safely outsourced at a lower cost than doing the work in their own facilities. As they moved from outsourcing simple components to outsourcing assemblies and complete devices, their preference grew for financially large (strong) contract manufacturers who offered a spectrum of design, regulatory, and manufacturing disciplines under one roof (one neck to choke).
Dave Mabie, President, CincyMED
Twenty years ago, Howard Revitch (group publisher, MPO), who at the time was working for a competing publication, sat in my office and told me he had an idea to start a new magazine. He was noticing a trend within the medical device industry where the larger OEMs were starting to outsource their manufacturing to third-party companies. Howard had pitched the idea of covering this topic with his current publication but they turned a deaf ear. Sources indicate the value of global medical device outsourcing in 2020 was approximately $102 billion. Today global medical device outsourcing is growing at a CAGR over 11% and is expected to reach $232 billion by 2030. Also today, the publication that turned a deaf ear on Howard is no longer in business while MPO continues to grow and thrive.
Steve Maylish, Co-Founder and CCO, Fusion Biotec
The most significant change is the amount of outsourcing services used and available. Twenty years ago, many companies were reluctant to outsource engineering. Intellectual property was mostly developed in-house and controlled in-house. It was considered the OEM’s core competency. Now, not only is outsourced engineering commonplace, as most OEMs realize the limitations of their internal teams, but also quality, regulatory, reimbursement, pre-clinical and clinical trials are commonplace along with outsourcing reagent and chemistry services on the biotech side.
John Nino, CEO, Life Science Outsourcing
The most significant change has been the dramatic shift toward end-to-end service providers. In the past, medical device manufacturers typically outsourced only specific aspects of production, such as component manufacturing or packaging. However, as the industry has evolved and become more complex, the demand for full-service outsourcing partners has grown exponentially. This shift has been driven by several factors. One of the major drivers is the increasing complexity of medical devices themselves. With advancements in technology, devices have become more intricate, requiring specialized knowledge and equipment to produce. By partnering with end-to-end service providers, manufacturers can leverage their expertise and infrastructure, rather than investing heavily in their own.
Additionally, heightened regulatory scrutiny and quality requirements have put pressure on manufacturers to ensure their devices meet stringent safety and efficacy standards. Full-service outsourcing partners are able to provide robust quality assurance processes and regulatory compliance support, reducing the risk for manufacturers.
Lastly, the drive for cost efficiency and the need to bring products to market faster have also played a role. End-to-end outsourcing allows manufacturers to streamline their supply chain, reduce lead times, and achieve economies of scale, all of which can result in significant cost savings and quicker time to market.
Overall, the shift toward end-to-end service providers in the medical device outsourcing market represents a significant change in how manufacturers approach production. It reflects the increased complexity and demands of the industry, as well as the ongoing need for efficiency and speed in bringing life-changing medical devices to patients.
Paul Orlando, VP of External Operations, Olympus Surgical Technologies America
The number of mergers and acquisitions in the device outsourcing market with significant involvement with private equity entities.
David C. Robson, Chief Operating Officer, Iantrek Inc.
I started at Ximedica in 2000. Back then, outsourcing product design and development to a consulting firm was unusual. My jobs in medical device manufacturing companies used only—or mostly only—internal resources to handle everything. Now, using external third-party resources is broadly acceptable, even for large medical device companies. Rather than hire and maintain a permanent employee base for numerous development programs, OEMs seem more inclined to use consultancies or part time design or engineering resources to handle intermittent needs, etc. In many cases, the external resources are specialized and bring expertise with them that the team of the OEM may not possess. When executed well, this ends up as a symbiotic relationship where both parties benefit and, hopefully, the product solution is better too.
Dr. Bryce G. Rutter, Founder and CEO, Metaphase Design Group Inc.
There are three significant changes in medical device outsourcing that come to mind. The new context for medical device outsourcing is the increasing complexity and highly specialized skills and capabilities needed to develop a new medical device. Development programs are increasingly denser and more interdisciplinary as connected products are the norm, wireless is pervasive, the potency of AI is on our doorstep, materials and manufacturing processes are more sophisticated, and time to market is being crushed into to unbelievable timelines.
A second significant change has been the outsourcing of specialized skills needed along the entire product development pathway. Right now, we are in outsourcing mode, where companies try to run as lean as possible with fixed headcounts using consultants who provide integrated UX and VOC research, human factors engineering, digital health solutions, industrial design, and DFMA services, staffed by experts. This model allows these companies to run fast and when the expertise is not needed, to turn the faucet off. No doubt, sometime over the next decade we will once again see companies take these specialized skills back in-house, as we have seen happen over the past 40 years.
In pharma, outsourcing has changed dramatically and may be a bellwether for what to expect for medical device outsourcing. Today, as several global blockbuster drugs come off patent, several smaller and more agile biosimilar companies are jockeying for position in a race to grab market share. They are doing this by outsourcing, from formulation through to patient. An outsourced global integrated solution provider model is faster to market, streamlines regulatory pathways, and allows smaller companies to have a sophisticated, expert level, development partner.
Thad Wroblewski, Sterilization Consultant
Pertaining to sterilization outsourcing, the most significant changes are 1) ethylene oxide regulatory evolution prompted by litigation, pushing all players in-house and outsourcing toward major changes in cycle development, validations, facility capital expenditures to re-engineer equipment, and systems to protect employees and significantly reduce external emissions. 2) Within radiation processing, the volume shifts from gamma radiation to electron beam radiation and the emergence of X-ray processing at significant levels into the future all due to concerns pertaining to the supply chain of cobalt-60 and available future capacity.
Barbella: How will the medical device outsourcing market evolve over the next two decades?
Patrick Lynch, Supply Chain & Quality Systems Consultant, chain LEANk
Geopolicital and logistical risks will force a greater portion of production nearshore, as we learned following COVID-19 and the war in Europe.
Tony Mulone, President, Winstable Group LLC
In the past two decades we have experienced many changes. The OEM once self-manufactured all their components, assemblies, and finished goods but with cost pressures, they needed to lower costs by outsourcing these simple components and assembly to low-cost countries. This led to the CM learning the process and then going to market with a competitive product. Then the OEM focused on innovation of higher-end margins products with IP to allow them to work with the CM as the cost benefit has been established.
With COVID-19, the supply chain got hit hard, and there were longer lead times, higher shipping costs, etc. The OEM lost control of the supply chain. This loss of control has been simplified with what is going on worldwide with migration and the threat of war. With new technology on the horizon such as AI and robotics, I envision the OEM bringing some of the supply chain home and under their control. The companies that can see this shift happening and building a supply chain closer to home to support the OEM will be successful.
Chris Oleksy, CEO and Founder, Oleksy Enterprises LLC
Constantly reconfigured supply/care chains! In the next 20 years, we’ll move toward a more “centralized approach” to healthcare and healthcare needs will increase to more than 20% of our nation’s GDP. Additionally, these needs will become more of a national security interest than ever before to ensure access to healthcare. How we centralize the approach to healthcare will be extremely critical and difficult. This approach to reconfiguring our supply and care chains will either drive more outsourcing due to cost compression requirements from Washington or drive OEMs to insource as an effort to maintain control and protect security. One thing is for sure, the next 20 years will drive supply and care chain configurations like never before, requiring everyone from the C-suite to the shop floor to understand supply chain theology in order to survive.
Thor S. Rollins, B.S., Director of Toxicology and E&L Consulting, Nelson Laboratories
The medical device outsourcing market is expected to continue to grow over the next two decades, driven by factors such as increasing demand for medical devices, the need for cost-effective manufacturing solutions, and the trend toward specialization in the industry. As the market evolves, it is likely that there will be an increased focus on value-based pricing and greater collaboration between medical device companies, consultants, and contract manufacturers.
Dennis Rubenacker, Senior Partner, Noblitt & Rueland
Medical device outsourcing to meet the needs of assisting medical device manufacturers with new technologies including AI/ML and molecular based testing, along with migrating to other new technologies implemented during product development and manufacturing of medical devices including electronic based Quality Management Systems (QMS) with Enterprise Resource Planning (ERP) and Manufacturing Execution Systems (MES) systems.
Dan Sands, Managing Partner, Factor 7 Medical LLC
More consolidation and more software-enabled providers.
Dave Sheppard, COO and Principal, MedWorld Advisors
Unfortunately, geopolitical concerns are going to have a lot to do with one aspect of medical device outsourcing. This is already starting and will lead to global manufacturers making geographical supplier choices based on increasing country political risks and less on simply price. The other interesting aspect to watch will be the continued consumerization of medical devices. This will lead (for many solutions) for patients to simply “download” their latest product software upgrade (versus buying new hardware). The good news for our industry is the adoption of consumer-style devices (wearables) for personal healthcare will increase the overall utilization of our medical devices, which will continue to expand the market opportunities.
Thomas Taylor, President and CEO, Foxx Life Sciences
Contract manufacturers will need to target and establish facilities in new low-cost countries like India and regions like Southeast Asia. India, for example, has a strong and bright young workforce with many engineers equipped to be effective in manufacturing.
Barbella: What medtech advancement/innovation developed since 2003 has most surprised you (something perhaps you never would have thought would exist in 2023)?
Randy Clark, President – Health Solutions, Flex
As a former collegiate and professional athlete, I never could have dreamed of the life-changing and performance-enhancing innovation that we see today in the wearables space. Healthcare wearables have driven a massive shift in the site of care and how people monitor their health. At their inception, wearables were used to simply count steps; now, thanks to advances in materials and connected technology innovation, wearables can alert users to early signs of illness, help manage chronic conditions, and personalize treatments. Athletes also have access to wearables that help them measure, track and improve their performance, as well as better manage and prevent injuries—amazing benefits that I wish I could have tapped into during my athletic career! As people get more comfortable with remote healthcare, we have a great opportunity to deepen our collaboration across the ecosystem to innovate next-generation wearables and improve speed to market at scale to transform patient care and improve lives.
Nam Trinh, COO, Securisyn Medical
Artificial Intelligence (AI) has been a major topic lately and I'm interested in seeing how it can impact medtech advancement and the healthcare sector in different ways. The pandemic has certainly shed light on an acute deficit in nurses and clinicians, not to mention staff burnout in many healthcare facilities, which has only contributed to the need for medtech advancements and innovation that further improve the standard of care. Whether it’s AI-driven machine learning to aid drug research and the rapid diagnosis of various patient conditions, or AI-driven software used in robotics to help automate routine tasks so that hospital staff can focus on more critical areas, AI in medtech is sure to produce many exciting and innovative advancements for years to come.