In February, LSO participated, for the 17th consecutive year in the MD&M West show at the Anaheim Convention center. This year, Barry Kazemi, LSO’s CEO & President, had been invited to be one of the panelists for a seminar titled, “Strategies for a Successful Scale-up to Manufacturing”. So we took the opportunity to attend and listen to what other experts in the industry had to say about Outsourcing and Medical Device Contract Manufacturing. Here is a brief overview of what was discussed at the seminar.
What trends are you currently seeing in the Medical Device Manufacturing and Outsourcing Industry?
Currently the Medical Device Contract Manufacturing & Outsourcing Industry is valued at $8.6 billion and is estimated to grow to $12.2 billion by 2018. All the panelists agreed that they were seeing a trend of the return of manufacturing to the US (from BRIC countries, etc) with the ever increasing pressure of regulations and quality levels. While the trend wasn’t overwhelming, companies were definitely putting some thought into “Off Shore Manufacturing” as well.
On what criteria should an OEM select a particular CMO (Contract Manufacturing Organization)?
Twenty years ago, the question OEMs asked themselves was why they should outsource as opposed to keeping production in-house. For the past 10 years this trend has changed because of the growing popularity of outsourcing. Due to the myriad of advantages to be had by outsourcing, the question has now changed to, why keep production in-house? To really get the full value of outsourcing, the panelists emphasized the importance of choosing the right CMO, likening the relationship between the OEM and CMO to a marriage.
The most important considerations when choosing a CMO were:
- Time to Market
- Best Business Fit
The biggest advantage of choosing the right CMO – Quicker Time to Market:
The panelists went as far as to say, that a good CMO is one that specializes in ‘time to market’, rather than on any one service. So when choosing your CMO, do not just look for the best extrusion house or an exceptional molder, but instead, search for a multi-service company that has consistently achieved its deadlines and has the knowledge experts to can carry you to market on a timely basis. The right CMO can always outsource to specialists whatever service it personally cannot provide. What is more valuable is their ability to manage the project for you and ensure its completion in a timely manner. In today’s current market where funding is more difficult, delays in a project can spell its demise
Look to the Future – Scalability:
You’re done with clinical trials, your product is a huge hit and the demand is more than you can meet. You are ready to ramp up and take over the market. But wait, your CMO doesn’t have the capability to grow with you! So now you have to go back to your black book of vendors and search and sort through multiple options to find the one (or 10) CMO(s) that meets all your business and product needs. To avoid this situation, ensure that the CMO of your choice, doesn’t just meet your current needs, but has the flexibility, scalability and capability to grow and adapt to your needs.
Your business partner – Best Business Fit:
The relationship between an OEM and CMO is compared to that of a marriage, indicating an involvement beyond the mere fulfillment of requested services. Like any relationship, it is only as successful as the participation of both parties. So it is in the best interest of the OEM to involve the CMO early in the process, thus investing them in the success of your company. As an OEM you need to look for a CMO that has open communication channels and is willing to do what is best for your overall business strategy. You are looking for a “Business Partner” that you can trust and depend upon to meet your corporate objectives and timelines
With increasing competition, what can CMOs do to market themselves?
More and more CMOs are adopting a one-stop shop model rather than specializing in one aspect of the supply chain. And they are doing this expansion well. The OEM can depend on such a CMO to manage the project (sometimes) from start to finish to distribution, and ensure the quality of the product throughout.
Once again, the earlier the CMO is involved the more value add they can provide. The panelists even recommended that CMOs should be involved in the design phase, lending their expertise to manufacturing optimization of the device.
In summary everyone agreed that, OEMs, especially start-ups and mid-size companies, benefit greatly from working with the ‘right’ CMO. Besides the obvious cost benefits, the access to industrial expertise is invaluable. And remember, when choosing your Contract Manufacturer – Keep these principals in mind for the success of your product introduction:
- Time to Market
- Business Fit