“I’m seeing that coming through the associations,” said Lauralyn McDaniel, medical industry manager at SME (Dear- born, MI), of the demand for repeal. McDaniel was referring to the Advanced Medical Tech- nology Association and the Medical Device Manufacturers Association, which advocate repealing the tax. They say the tax hampers innovation and costs growth and jobs. Both AdvaMed and the MDMA are among about 1000 signato- ries on a 2015 letter that urges Congress to repeal the tax. Congress has taken steps to repeal the levy, but has been unsuccessful so far.
Squeezed at the Margins
While advocates for device tax repeal exert pressure on lawmakers, medical manufacturers beset by deteriorating margins will continue their efforts to offset shrinking profits in 2017, said Kevin Lewis, leader of PwC’s medical device manufacturing practice (Boston). “From a high-level perspective, we’ve seen deteriorating margins … leading to overall cost reductions,” Lewis said. “At the factory level, we see an emphasis on lean, where that’s appropriate, and in automation.” Also driving operations improvements with a view toward the bottom line are investments by private equity groups, Lewis said. As a result, manufacturers are outsourcing for devices and equipment; focusing on zero-defect production with some attention to supplier quality and holding suppliers responsible for that quality; reducing the complexity of their products and offerings so they’re more on-target with the majority of their customers; and tweaking the manufacturing network structure to favor production in low-cost countries such as Costa Rica, Puerto Rico, Malaysia, China, Ireland and Singapore. Where companies are outsourcing, they’re doing so for injection-molded parts and bigger electromechanical prod- ucts like imaging and diagnostics equipment. Despite outsourcing for hard goods, Lewis said in con- sumables he’s seeing insourcing and in-shoring. While companies are in cost-cutting mode, they’re paying a lot of attention to quality to eliminate the cost of defects, Lewis said. “We’re seeing a lot of activity around building products right the first time,” he said. “And that’s a big emphasis we see emerging both in the focus of the FDA and the focus of manu- facturers.” FDA refers to the US Food and Drug Administration.
Jack Curran, industry research analyst at IBISWorld (New
York), said that as manufacturers try to maintain their profit margins in the United States, expect to see lower employ- ment and less innovation in factories. “They’re still likely to benefit in terms of revenue because of the aging population,” Curran said. “In general, people spend money in their later years on medical care and de- vices, plus we have a growing insured population.”
Adding more Additive
McDaniel said 2017 will be the year a lot more medical device manufacturers will use additive manufacturing, even for mass-produced devices.
“All the major orthopedic device manufacturers are look- ing into it or are already into it,” said McDaniel. Lewis agreed with McDaniel that manufacturers will in-
crease their use of AM, but more for patient-specific devices and outliers than mass-produced parts. “It’s got a place, but right now because of how long it takes to manufacture additively manufactured technologies, that place is in custom applications,” he said. In addition to patient-specific skull patches and cutting guides for knee surgeries, Lewis said, look for 3D-printed outliers. For example, stents come in a wide range of sizes, with the greatest majority in the middle of the size spectrum. Manufacturers may start to make those stents that are very small or large with AM, he said. That’s not to say manufacturers think there’s no future for AM in mass production, Lewis said. “We’re going to see a lot of investment [in the technology] with the goal of bringing 3D printing to high-volume work,” he said. McDaniel said she also expects to see growth in biological 3D printing.
“I’m thinking, based on what I’m seeing, that 2017 is going to be the year that the bioengineered stuff really is going to get more attention,” she said. “There’ve been some developments recently.”
Those developments, McDaniel said, are both at North-
western University (Evanston, IL), and include bioprinted ovaries that restored fertility in mice and synthetic bone that rapidly induced bone regeneration and growth. “The pore structure that promotes in-bone growth is a huge advantage of AM,” McDaniel said. Also playing into the increased use of AM in factories is FDA guidelines on the technology, a draft version of which was released earlier this year.
December 2016 |
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