Contract manufacturing
There has been significant interest from investors due to the strength of the burgeoning medical device contract manufacturing sector.
Strong investor interest We’ve seen first-hand the strong M&A investor interest in such companies. GGI, for instance, has made significant, purposeful investments in manufacturing equipment, processes and systems. In particular, GGI’s expertise in metal injection moulding (MIM) allows it to produce complex components at high volumes while significantly improving efficiency and reducing cost for its OEM customers. GGI’s end-to-end solutions allow the company to act as a full-service partner to its customers, from design for manufacturing and prototyping through high-volume production. This end- to-end approach and focus on design for manufacturing provides significant value for its OEM customers, which supports strong long-term relationships. Another business exemplifying the characteristics of best-in-class contract device manufacturers is Motion Solutions, which Harris Williams advised on its sale to Novanta. Motion Solutions supplies customised, application-tailored engineered products to manufacturers and industrial customers in multiple high-growth end markets, including medical, life sciences, semiconductors, robotics, and industrial automation. As a precision motion specialist, the company partners with manufacturers to engineer custom mechatronic solutions that empower the science driving their customers’ innovations. It also serves as an essential supply chain partner for its clients via the development of highly engineered, specified-in components and subsystems for extended life cycle programmes.
Investors find companies with precision mechatronic engineering capabilities highly attractive, particularly when they enjoy the attractive customer profile possessed by Motion Solutions. Its proficiency in developing repeatable sub-micron motion subsystems across a wide range of advanced
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applications is a key differentiator, and one that positions the business for ongoing growth.
Conclusion
Overall, the ageing population, medical and technological advances, and a clear push by OEMs to outsource bode well for medical device contract manufacturing. And, across the medical device contract manufacturing subsector, secular trends, a normalising environment, and burgeoning OEM innovation are fostering strong M&A momentum. At Harris Williams, we believe this will continue to be an attractive sector for M&A investors seeking sustained growth for the foreseeable future.
While those investors will have a wide range of opportunities, a few key themes can help them discern those with the greatest promise. At the highest levels, medical device contract manufacturers with a pronounced focus on medical end markets are preferable to companies that serve a more diverse set of end markets. Within medical end markets, long-term demographic and medical trends favour companies specialising in minimally invasive procedures, including RAS, as well as those with a focus on cardiology and vascular applications and micro-fluidics and drug delivery. Perhaps most importantly, the most attractive medical device contract manufacturers are thoughtfully investing in comprehensive capabilities that help them solve a wider range of customer challenges and create lasting differentiation in the marketplace. Such companies are better positioned to create high-value, long-lasting relationships with their customers, earning a spot as trusted advisors versus service providers. Medical device contract manufacturers able to achieve that level of customer value are best positioned to benefit from the growth this sector promises. ●
Medical Device Developments /
www.nsmedicaldevices.com
PopTika/
Shutterstock.com
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