More … and Faster

More … and Faster

Regulatory hurdles and the need to control costs is key for tubing suppliers in dealings with their customers.

Jim Stommen
Contributing Writer

In an ever-changing world where the word “stability” has become a distant memory, the relationship between suppliers of medical tubing and their device manufacturer customers has taken on a very simple construct: Give us more features, and do it faster.

Bob Jennings, vice president, sales and marketing for Zeus Inc., an Orangeburg, S.C.-based supplier of fluoropolymer tubing, used the term “value added” liberally in discussing the expectations of that company’s customer base.

“From a tubing perspective, they are looking for a product that is more ready to assemble, that has value-added steps performed with the tubing,” Jennings said. It’s not just a question, he added, of “I’m going to pick the material and I’m going to pick the size.” For device manufacturers and OEMs, it’s also a matter of saying to suppliers: “If I’m going to flare it when I get it, if I’m going to drill it when I get it, if I’m going to draw it down, if I’m going to tip it, whatever I might do to it when I get it, then I’d like you to do it.”
So the answer for Zeus is, according to Jennings, “We can do better than a one-up. We can automate some kind of a value-added step for those customers.”

Jeff Moffo, sales manager for Micro Tube Fabricators in Middlesex, N.J., a maker of precision formulated metal tubing, describes his firm as a contract manufacturer that provides multiple secondary operations, which complement the OEM’s final product. “One of our primary product lines would be small-diameter tubing for minimally invasive surgery. The type of secondary operations that we perform would assist other vendors with their operations, which may complete the finished device. In some cases our product would go to the OEM and they would source the next operation (i.e., plastic injection molding).”

Mark Miller, account manager at Tucson, Ariz.-headquartered Vante, a global maker of equipment for sealing, molding and welding plastic used in medical and other industrial applications, put it simply: “Basically, they’re looking for their vendors to do more and more.”

He noted that one particular trend among major manufacturers is their desire to replace antiquated technology with new proficiencies. Miller added that the U.S. Food and Drug Administration (FDA) is putting more pressure on companies to validate their manufacturing processes.

The bottom line, he said, is that manufacturers are looking for higher yields. “Waste is more important than in the past,” he noted.

Krissi Heard, a technical sales specialist for Tampa, Fla.-based MicroLumen Inc., a producer of polymide tubing and custom co-extrusions, sees manufacturers’ desires in basic terms as well.

“They’re simply looking for tubing that solves problems—that has multiple things going in at one time. They want a tube that can satisfy a lot of requirements.”

Frank East, marketing manager at Specialty Silicone Fabricators (SSF), a Paso Robles, Calif.-headquartered maker of custom silicone components for the device industry, said, “We’re a contract manufacturer, so the first thing they ask is, ‘can we do it?’ What typically will happen is that we get an engineer who goes surfing on the Web, looking for a supplier to produce a particular part. He sees our site and contacts us. They send their specifications with their drawings. In some cases, their idea document can be as simple as a cocktail napkin with a drawing on it— you’d be surprised how many of those you see. In this case, we get our engineering and production people together and the project gets under way.”

East noted that SSF, founded in 1982, has settled into a practice he describes as “joining with the customer, holding hands and doing this together.”

As for the faster side of the equation, Jennings chimed in quipping, “It’s always faster. It’s quality, price and fast—that is part of the vernacular. If you can’t do it fast, somebody else [will] is in this market, especially with the macroeconomic environment that we’ve been existing in over the past couple of years.”

Moffo cited the need for faster turnaround time in the prototype stages. “Speed to market is the key for the OEM and being able to meet these demands will help us get a foothold on the long-term business.”
Asked if that especially was true given the way approvals are being drawn out by the FDA, he said, “Speed is of the essence for us in such situations, but after we make prototypes, what we’re seeing is that the market for medical devices from inception of the design to all their FDA approvals, we’re probably looking at 12 to 18 months before that product hits the market. It’s one of those “hurry up and wait” scenarios for manufacturers. Meeting FDA requirements is a process of its own and can slow down the manufacturing process.”

Jennings added, “The other thing they’re looking for right now with the healthcare reform initiative is [cost]. Every one of the big customers, and even the small and mid-sized companies are all about cost-downs.”

Driving Innovation Can Go Both Ways

High-performance tubing for high-tech medical device applications. Photo courtesy of MicroLumen Inc.

Asked whether innovation in the tubing sector is manufacturer-driven, based on their product requirements, or if suppliers are doing some of the driving with their own independent product developments, Jennings said, “We’re doing both organic and inorganic. We’re listening to the voice of the customer and taking on a lot of different projects, but a lot of that is in how do we automate something that has typically been done in a manual process? We feel like we have to do both. We have hired plenty of polymer scientists on the material side to help us develop and get these lines up and robust.”

Zeus representatives also actively attend various medical device conferences, and they pay particular attention to doctors’ conversations about their challenges and the latest products.
“One of the reasons we developed our bioabsorbables lab here at Zeus is that we were out many years ago listening to the doctors saying bioabsorbables were the coming thing,” he said.

Jennings noted that he had attended this year’s Transcatheter Cardiovascular Therapeutics conference in Washington, D.C., in September, “and almost every day was full of different things about different bioabsorbable [materials] involved in medical devices.”

From Moffo’s perspective, innovation of the end-use product primarily is driven by the OEM.
“Our role is to produce a quality part that meets all specifications that are provided. Of course, innovation also must be part of our processes to enable us to meet the demands of our customers and the marketplace,” he said.

For MicroLumen, innovation is more manufacturer-driven. As Heard told Medical Product Outsourcing, “We’ve experienced large growth and have for the past 10 years, so we really don’t have time to be working on new ideas that aren’t directly related to a given contract.”

Vante’s Miller noted that innovation often comes at different stages. “You might be dealing with a company that is having less-than-desirable results with a product, or have a start-up that comes in with an idea,” he explained. “We’ll work on that and come up with several design options and identify the level of manufacturability risk and ask them which way they would like to go. A lot comes in the early stages. We’ll say, ‘when there are risks in manufacturability, we would suggest a feasibility study.’ Essentially, we’ll take projects both easy and challenging and work with them to come up with a solution.”

East said that his customers usually have “a pretty fixed idea” about what they’re looking for, and that his staff of engineers can help move those ideas forward as needed.

“We just recently began offering engineering as a service. We want to leverage our engineering experience as a benefit to our customers,” he said. “It’s doing quite well.”

Jennings added, “The medical device field is so secretive. Even when they come to the supplier, a lot of times they don’t want to tell you what they’re really trying to do. We can understand what you’re asking us to do today, but we also want to be working today on the things that are coming two or three years down the road. The only way we’re going to find that out is by [listening to] what the doctors are saying about what they don’t have.”

Jennings advised companies to listen early and often, particularly in sectors such as bioabsorbable products. “If you’re just starting in on it now, you’re too late. If we hadn’t been listening years ago we’d have missed the boat,” he noted.

Change is Constant

Asked how his company’s processes and materials may have been altered with the changes that customers are seeing in their own manufacturing processes, Jennings said, “We’ve applied more science than may have been applied to the process in the past. With all these cost-down initiatives that have been going on for several years now, we’ve had to get our processes leaned out, consistent and robust. That involves hiring highly trained statistical engineers and combining them with engineers who have lean experience. Our process is more consistent, more robust. You have got to be able to do that in the regulatory environment in which we exist.”

He added that companies similar to Zeus as component suppliers have decided to become contract manufacturers as well. Zeus, however, has not yet taken that step.

Moffo’s take on the question is that “the materials themselves have changed little over the years. We deal almost exclusively with stainless steel. We rarely manufacture implantable devices, so for our purposes, changes in materials are almost non-existent.”

The company does, however, provide change in its processes.

“Our processes are a continuous evolution,” Moffo said. “We practice Lean manufacturing; inventory control is also a key contributor to keeping costs lower. Continuous improvement is something we pride ourselves on. Working as partners with our customers will help us control our manufacturing and inventory costs, which are shared savings with our customers. It is a win-win for both sides of our partnership.”

According to MicroLumen’s Heard, there is greater emphasis on clean lines, better housekeeping practices, and streamlining manufacturing processes so there is less waste.

From East’s perspective along California’s Central Coast, “We’re pretty stable with both processes and materials.”

M&A and the ‘Little Guy’

Asked whether the swift pace of mergers and acquisition (M&A) activity in the device sector means having generally bigger customers and what impact that might have on device industry innovation and growth, Jennings said, “I’ve been at Zeus over 20 years, and I can honestly say that over that entire time I have seen the bigger guys get bigger and gobble up the smaller guys. Most of the people that we supply get acquired by the bigger companies at some point. We just see continuing consolidation.”
Moffo said his objective is to “get in” with the larger companies, but he also noted growth within the smaller companies.

“There are a lot of companies out there that are startups; they get a good device developed and then are acquired by a larger OEM,” he said. “Starting with and developing relationships with start-up companies may reap large rewards in future sales to OEMs.”

Heard added, “We’re seeing lots of M&A activity, so we’re dealing with more big companies. One thing about working with them is that there is a slower pace of getting approvals than when we work with smaller, newer companies. There is more paperwork, more contract review points, more contact people—it’s just part of the culture that it takes longer to communicate and to get approvals.”
Doing business with startup firms, said Miller, is a matter of “trying different design approaches and asking the customer which way they would like to go. A lot of great, cutting-edge ideas come from these startups. That’s part of the research and development cycle of the device sector. I do think we’re going to see more and more manufacturing going offshore, especially when the new device tax kicks in in 2013,” he said. “Going offshore won’t reduce a company’s tax, but it will reduce costs overall for companies.”

The Product Lineup

When asked to broadly describe the type of end products Zeus’s products become part of, Jennings mentioned a few noteworthy areas.

“A couple of the highlights would be liners to different stent delivery systems, these braided nylon catheters or polyurethane catheters that also have a lubricious liner. That’s pretty common among tubing suppliers in these stent delivery systems because now that [the stents are] drug-eluting, they’re tackier and they’re longer and they’re snaked through more tortuous areas of the vasculature,” he explained. “That’s a real common application. And then there are the outer jackets in the gastroenterology field and the radiologists—all of their products are primarily nonstick types of plastics, which is our forte. The peripheral market is big too, as all these companies have looked past the heart and are looking into the rest of the body and the neurological side.”

Jennings agreed with industry experts that peripheral areas most likely will be a big growth market in the future. “It’s one of those things where if you’re just now coming to the dance, you’re way behind. As soon as the drug-eluting stent guys got their products out, they started looking for where the next big blockbuster area was to grow, and it was outside of the heart,” he explained.

“Then there’s also all this structural heart repair work going on, and a lot of that is being done minimally invasively. I think that’s the next boom area—just a little behind peripheral. Those are the markets we play in and we feel like we’re developing materials for those markets in the future. We’re just hoping that some of the regulatory environment and other healthcare initiatives don’t drive a lot of it out of the country.”

Moffo said his core markets are arthroscopic and endoscopic instruments and expects, as his company grows, to expand into the fields of drug delivery devices and cardiovascular devices.

“It’s disposable catheters—the majority of them for cardiovascular applications—including the housing that steers the catheter through the groin and deploy stents,” said MicroLumen’s Heard. “Another area of increasing activity is in products for treating peripheral artery disease.”

SSF’s East cited leads for catheters as a big item, as well as anything made with silicone. “One area we’re eyeing for growth is combination products, involving drug-eluting silicone,” he told MPO. “It has strong potential.”

Not Getting Any Worse

Despite some of the expanding and promising end-use applications, the current business environment, of course, impacts tubing providers.

“Overall, the economic environment is one of caution,” Jennings said. “We see some positive things going on, but none of our customers seem to be wanting to commit to anything outside of a 30- to 90-day window in terms of what kind of quantities they want. A lot of companies are conserving their cash, so they’re managing inventories closely.”

Jennings said his company’s international business is going “pretty well,” but it isn’t easy. “We have a manufacturing plant in Ireland that supplies most of our European customer base. And then we have sales offices in China, Japan and Singapore and other countries in Asia, and that business continues to be an avenue of growth for us,” he said. “We find our niches in China. It’s challenging, but we’re pretty happy with the way things are going there overall. If you’re a multinational company and you’re really selling on a global basis, you have to be selling in China.”

Miller said that regulatory issues are one of the biggest problems facing manufacturers, which has a direct economic impact.

East added, “Last year, things were a little tight in this sector, but this year we’re building a new 120,000-square-foot plant, so we’re anticipating improvement.”
Things aren’t getting any worse, according to Moffo.“The market is not seeing the growth it has in years past, but we are definitely getting over the hurdles that the recession brought with it,” he said.

Jim Stommen, retired editor of industry publication Medical Device Daily, is a freelance writer focusing on the medical product sector.