Contract manufacturing $668.2bn
The amount that the global medtech industry market is estimated to grow in 2024, from
$642.5bn in 2023. MarketsandMarkets
$22.5bn
The estimated value of the global CMO/ CDMO* market in 2023. It is projected to reach $39.4bn by 2033, exhibiting a CAGR of 5.7% .
Future Market Insights (* contract development and manufacturing organisation)
“Over the past few years,” Verkaik continues, “there have been many supply chain and operational changes that have made a once relatively simple process complicated to manage and execute within budget.” From scarce and expensive labour, increasing energy costs, and disrupted and unpredictable supply chains, to demands for sustainable options in packaging and ESG – all mean that outsourcing is often seen as the way forward when getting products manufactured. To put it differently, unit cost forward planning, reliable supply chain infrastructure, the cost-effective exploration of new markets, and the delivery of sustainable alternatives are all drivers of collaboration with CMOs, which can provide significant improvements to a host of operational processes. “De-risking is a big piece of the puzzle, with today’s fractured global supply chains, so more portions of manufacturing volume are moved to CMOs around the world,” says Graeme Cameron, CEO of UK-based medical equipment manufacturer Pennine Healthcare. “CMOs give companies the opportunity to improve balance sheets while de-risking, and they can pass on workforce challenges to third parties, too.” Regulatory changes such as the European Union Medical Device Regulation (EU MDR) also represent risk, but that risk can also be pushed out to third parties, rather than OEMs having to build or modify their own sites. Furthermore, demand for higher standards is greater than ever, so commercial partners need the confidence that a CMO can meet those standards.
Standing out in a crowd
Growth in demand is making the CMO market more competitive, and as outsourcing partners become more indispensable to OEMs, they need to focus on how to differentiate themselves from their rivals and create long-lasting, collaborative relationships. “There is growing demand among OEMs for full- service CMOs that can address more challenges, from front-end design and development work to high- volume production,” says Taylor Will, director of the Healthcare and Life Sciences Group at US multinational independent financial services company Harris Williams, which has looked in depth at the CMO market. “The more services CMOs can offer, such as prototyping, tooling, sub-assembly, assembly, or supply chain logistics, the greater value they bring and the stickier the relationship,” Will continues. “CMOs also need consistent and impeccable quality in this demanding and highly regulated space.” The most in-demand services are those that help OEMs get fully developed, commercially viable, high-quality products into customer hands as quickly as possible. In pre-production, this includes co-development, design and engineering, rapid
24
prototyping, regulatory support, and product commercialisation services. In terms of production, specialty capabilities like
metal injection moulding are very difficult and time- consuming to develop in-house. In post-production, meanwhile, OEMs seek CMOs strong in packaging, kitting and assembly capabilities. They might also look for the logistics support to help with delivery, or secure the quality control they need to ensure products meet the highest standards. Many of these capabilities require significant time and capital to develop, which can slow the process of bringing devices to market, so it pays to engage the best CMOs, as they may have already established those capabilities and will continue to invest in and refine them. They do so in order to spread the cost among several customers. When OEMs work with a full-service CMO, they save substantial time and effort that would otherwise be spent managing multiple vendors. Cleanroom facilities and cleanroom assembly processes are essential parts of the manufacturing process that would be expensive for OEMs to develop in-house, but which are more cost-effective for CMOs. Similarly, CMOs can provide laser and plasma welding services, or passivation capability to protect components from corrosion – and many other processes – as part of their portfolio because they can spread the cost between different clients. Whatever is offered, at any rate, the key is to provide solid and dependable solutions with consistent service levels, as well as a proactive approach to engagement with OEMs. “Moreover, the current climate is making purchasing of packaging and ESG mainstays for clients, and being on board with these will help manufacturers to be indispensable and create solid partnerships,” remarks Verkaik.
In some markets, location is also of paramount importance, hence the growing prevalence of onshoring – a move to manufacturing in or near the geography where the product will be sold – to overcome the supply chain issues and provide faster routes to market and remove uncertainty.
Location, location, location? Working with smaller CMOs – perhaps located in or close to a key market – does have advantages. For example, they are inherently more nimble and can more easily provide fully customised services. With this in mind, at any rate, even larger CMOs are acquiring multiple domestic and international production sites to support supply chain risk-mitigation strategies, as reshoring and nearshoring remain hot topics for discussion. The pandemic was a big driver of CMO relationships. For instance, by the end of 2021, Pfizer and BioNTech had engaged more than 20 CMOs to ramp up the manufacture of vaccine doses. Nearshoring
Medical Device Developments /
www.nsmedicaldevices.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150
