There is a strong trend to go to outsourcing. People use the established environment of larger, established firms to market their products. They say, “you’ve got the distribution.” And the distribution folks don’t want to get into more manufacturing because products and technology are changing so fast that, by the time they get a product up and approved, the trend has changed—and they’re stuck with a factory.
We’re finding out that there are many pharmaceutical companies that need devices to help deliver their drugs, which increases the market potential of their product. Now the outsourcing need is even more important because we’re crossing into a different market—even though it’s within the healthcare industry. Devices and pharmaceuticals have always been kept separate. But we’re seeing a tremendous increase in inquiries from companies that want us to help them outsource components that can make their products more useful. How can a product be more useful? It not only can offer improved safety, but nontechnical people can be able to self-administer it.
Customers now frequently rely on contract manufacturer for value-added services, which include product design, package design, materials selection, and sterilization validation management.
OEMs view outsourcing as a vital competitive competency necessary to improve product quality, time to market, lower production costs, and reduce capital expenditures.
Industry surveys for the electronic manufacturing services market show growth rates in the 20-25% range. The medical device industry is experiencing the same type of robust growth as more medical device companies show an increased propensity to outsource engineering and manufacturing services. This is driven by the pace of technological advancements in the medical device market and the need to reduce costs or redirect costs on order to invest in their core competencies.
If you look across industries, you can see trends, particularly in outsourcing, that started first in other industries and eventually impacted the medical device market.