Contract manufacturing
Contract manufacturers that solve a greater number of complex problems for OEMs will continue rising to the top.
Looking ahead, we’re encouraged by several trends. For one thing, the supply chain issues and OEM stockpiling that challenged this and many other sectors have largely been resolved, clearing the way for renewed growth. Similarly, the pandemic-induced reduction in OEM R&D is ending, and healthy new product development pipelines will provide a host of opportunities for contract device manufacturers. While we’re excited about investor interest across the sector, a few areas stand out. Broadly, device manufacturers with roughly 75%-plus revenue exposure to medical end markets will see the most intense attention, specifically those active in cardiology and vascular applications, micro-fluidics and drug delivery, and robotic-assisted surgery (RAS) and other areas linked to minimally invasive surgeries. All of these areas share powerful demographic drivers paired with the promise of better clinical outcomes. For example, in the cardiology segment, there are six million-plus Americans with some type of heart failure, growing to eight million by 2030. Heart failure is more common as people get older, so, as the population ages, these conditions will only become more common, driving demand for devices used in transcatheter aortic valve replacement (TAVR), a minimally invasive alternative to open-heart surgery. In terms of micro-fluidics and drug delivery, there are a few different drivers at play. Continually rising diabetes rates are supporting growing demand for insulin pumps and driving innovation around more advanced dose control and diagnostics. On the auto- injector side, we’re seeing more pharmaceuticals being developed to use this technology, including diabetes and chronic pain medications.
And, overall, RAS stands to benefit from the greater precision it lends across a wide range of less-
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invasive procedures. Minimally invasive surgeries are known to reduce hospital stays and total system costs, and often result in better health outcomes. Across these areas, contract device manufacturers that solve a greater number of complex problems for OEMs will continue to rise to the top. OEMs are becoming increasingly attracted to ‘one-stop shop’ outsourcing partners that can provide a full suite of services. The more services CMOs can offer an OEM, such as prototyping, tooling, sub-assembly, assembly or supply chain logistics, the greater value they bring and the stickier the relationship. In particular, leading contract device manufacturers are engaging earlier in the product life cycle, offering expertise in product design and manufacturability. Some contract device manufacturers may even be specified in as an approved component during final regulatory filings. This is a powerful differentiator: OEMs typically avoid altering approved components in a medical device since doing so requires re-clearing the product with regulators. This process entails expensive and time-consuming regulatory hurdles. When a contract device manufacturer’s products are specified into the end device, the company will continue to benefit as long as that device is being manufactured. Another way for contract medical device manufacturers to create sticky long-term manufacturer partnerships is by offering superior technical engineering capabilities. Along the same lines, it is highly valuable to have direct, engineer- to-engineer relationships with customers. That language and technical knowledge shared with manufacturers empowers the medical device contract manufacturer to more readily translate customer goals into products that can be manufactured at scale.
Medical Device Developments /
www.nsmedicaldevices.com
REDPIXEL.PL/Shutterstock.com
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