Changing Role of the Medical Device Contract Manufacturer

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In the last ten years, OEMs were chasing lower costs in other countries for manufacturing. Most recently, we are finding OEMs willing to build/manufacture medical electronics in the United States due to lower total costs and this has had an impact of the medical market on the electronics manufacturing industry. This is great news for our U.S. contract manufacturing facility.

Changes have encompassed our business in the past few years from the rising costs of medical insurance to a generational workforce; the economic changes anticipate and conceptualize our future as a medical device contract manufacturer. The biggest impact that the medical market has had on the electronics manufacturing industry is quality systems due to the regulations of medical devices.

So what does that mean for contract manufacturers? The major challenge we face today is cost, from an internal standpoint, and from a customer standpoint, it depends on what they are willing to pay for. ObamaCare's presence in the market has led to medical companies being more cost-conscious than ever.

Technology is the leading decision maker in our market. Technology allows for lower costs for the OEMs including opportunities for designers of medical devices for example. However, the changing regulatory environment is the key lead. When I say technology, I am bearing in mind, my costs to update our technology due to regulatory compliance and to stay afloat of our competition. Our most recent investment in the U.S. Offices due to continuous improvement is, an X-ray Inspection machine. Currently, we are working on updating dispensing units for encapsulation and rework systems. These are just a few items we have invested in during the past year and moving forward. Technology is not just a focused on our end, it is extremely important to the OEM to conceive, engineer, prototype, trial, approve and put to market a medical device.

In addition to investments, supplier components we also take extreme measure in reliability due to the high issuance of counterfeit component parts in the market. By utilizing a DFMEA analysis, and our requirements, we are able to ensure reliability to our components in our supply chain. Our ERP system also provides serialization and upward/downward traceability.

Changes to the medical device industry are also taking rapid change in Europe according to a study done by the European Union. Stringent changes to the medical device regulations are ahead which will bring higher development costs and slower the time-to-market. These changes/challenges will affect the entire supply chain, especially those smaller start-ups. 

As the time to market trend continues to increase, we are also overhauled with innovation. Innovation is an exciting part of the healthcare industry. The biggest driver in medical electronics innovation is cost constraints that:

  1. Drive the reduction of medical devices
  2. Continued increase of millennials who are more apt to using various technologies
  3. Increase of biomedical graduate students
  4. Need for medical electronics 

What we need to expect for our future is that change is relevant and never ending. Our focus is to comply with regulatory bodies and find solutions for our customers' issues. In the medical device industry, and even other industries like security or aerospace, electronic devices will continue to become more complex, smaller, lighter and faster with greater functionality.

Jay Wimer is the executive vice president of the Valtronic Group, and president and CEO of Valtronic USA.


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