Medical Device Assembling And Packaging: Should You Outsource?

By Jim Kasic, Boulder iQ

Getting a medical device through concept development, prototyping, design, and the regulatory process is hard enough for any developer. It’s no wonder that assembly and packaging are often afterthoughts, with decisions on how to handle them receiving little (or rushed) consideration.

Yet these decisions are critical ones that impact a device’s safety, protection, and marketing. Cost ramifications can make or break a developer’s bottom line. Developers can consider these six factors to make the right decision for their device and their company.

• Core competency. Every company must decide what kind of company it is — a decision that may be harder than it appears. Whether a startup business or the largest of companies in the industry, every medical device business must determine if it is primarily a design, development, manufacturing, sales, service, or other type of company. Each has different strengths requiring unique combinations of talent, equipment, organization, and infrastructure. Are assembly and packaging among your core competencies? If yes, handling them in-house may be the right call. If not, leave them to the specialists.

Consider, for example, the incredible technology coming out of university labs. As advanced and critically important as the resulting devices may be, universities are generally not set up to handle assembly and packaging in the most efficient, cost-effective way.

Or consider a small orthopedics company that has found its niche in adapting technology used in knee and hip surgery to surgical kits for hands and feet. The company may have done an outstanding job in identifying the market and may be excellent at selling into the market. But assembly and packaging likely won’t be among its core competencies. Outsourcing would be the right decision.

• Infrastructure. Assembly and packaging generally require fairly significant infrastructure. For example, most medical devices need to be assembled within a controlled environment in a cleanroom, which is expensive to build and maintain. For smaller companies with just one device, or even a few, it will be far too costly and take too much time to install an appropriate cleanroom. As an alternative, contract vendors that specialize in assembly and packaging for medical devices already have made the investment and can spread the cost of the cleanroom over hundreds or thousands of devices.

• Labor. Developers want to — and should — perform assembly operations as inexpensively as they can, while meeting all requirements. Finding, training, and retaining a skilled and reliable labor force is exceedingly difficult today. Outsourcing to a company that has assembly and packaging as a core competency, and that is already taking on the labor responsibly, means you can avoid these issues while obtaining a fair price.

• Volume. Medical device developers frequently have needs for low volumes. It may be 50 pieces for a clinical trial or several hundred for early test marketing purposes. It can be difficult to find a contract manufacturing organization (CMO) to handle those quantities. In that case, outsourcing is not an option; you will need to assemble in-house.

• Technical requirements. Some devices are so technical to assemble that it’s not practical or time-effective to teach a third party how to do it. In this case, the best decision is not to outsource. Similarly, if you require equipment for assembly or packaging that is highly specialized and/or not easily moved or duplicated, it will be best to handle it in-house.

• Intellectual property concerns. If you are extremely concerned about sharing your intellectual property or what you consider a trade secret, NDA notwithstanding, don’t outsource.

5-Step Strategy To Identify And Choose A Contract Firm

If you do decide to outsource your assembly and packaging, the next step is to identify and qualify the CMO that will do the best job for you and serve as the best fit for you, your company, and your device.

1. Understand, in detail, the requirements of the firm you’re outsourcing to. Choose a CMO that has experience working with devices at your stage of market introduction. For example, a large CMO will want your device to be completely finished before it begins assembly and packaging. However, more often than not, a developer will think the device is finished but then discover it needs some tweaks once initial devices get to market. At that point, it can become difficult and expensive for the contractor to make any changes — if and when it can fit the work into its schedule.

Large CMOs can provide very good per-piece pricing, but in exchange for that, they have very strict protocols. If your contract is for 1,000 pieces and you have only 995 ready to go, do not expect work to begin unless you change the contract – which then will probably come with new prices and a new time schedule. A smaller firm specializing in working with startups and smaller businesses will be more apt to charge on a time-and-materials basis, start working on your project upon receipt of a purchase order and deposit, and provide greater flexibility along the way.

2. Find a contract firm that can help with manufacturing issues. Medical device developers often get to the assembly stage only to learn that their device is not manufacturable at scale. It may work in the lab, for a test group of users, or as a 3D prototype, but is not easily manufactured or assembled. For instance, one company we worked with was building a device with 10 different-sized screws to hold all the different components together. It wasn’t because 10 types of screws were needed, but rather because different people were working on the device throughout development. Not only were they not coordinating, but they also weren’t designing with manufacturing and packaging in mind. Ten types of screws then had to be inspected, inventoried, and processed in assembly. The bill of materials grew and costs rose. We were able to go back and figure out how to carefully tweak the design to use just one size of screw.

3. Consider dealing with one vendor that can handle all needed processes. It’s possible to work with different companies for assembly, sterilization, and packaging. If you do, keep in mind you’ll need to manage and coordinate the relationships and timetables with each vendor and, often, the communications between them. Alternatively, consider finding a company that can handle all three steps or at least manage them all for you if they can’t perform all the steps themselves.

4. Seek stability. Being in business for several years is not a guarantee of success with a CMO, but it does provide a foundation of experience. A measure of stability can offer some assurance the company can grow with you as your needs increase. Be sure to see if the company you’re looking to outsource to has a good quality management system, too.

When considering location, be careful. It can most certainly be helpful to find a great company for assembly and packaging geographically close to you. Being able to easily visit the location can be a great convenience. But don’t choose a business just because it is local. A company in another part of the country that’s willing and able to work with you, and can meet your needs, will pay off in the long run.

5. Look beyond price. A discussion on outsourcing would not be complete without mentioning price. While price is indeed important for any developer, avoid choosing a company on initial price quotes alone. How flexible is the vendor? Will they work with you as needs and quantities change? Are they able to grow with you and your business? Can they help you when you need a quick turnaround? Are they people you actually like working with and trust?

Start Early

As much as developers must do in a time-strapped environment to get their devices to market, they will thank themselves by thinking about assembling and packaging early in the process. It may be analyzing whether a device can withstand manufacturing automation, determining if it’s possible to use just one size screw, or incorporating FDA’s standards on labeling into the device design. In starting early, you will have time to make an informed decision on outsourcing. And whether the decision is to outsource or not, you will get to market faster, easier, and less expensively.

About The Author:

Jim Kasic is the founder and chairman of Boulder iQ. With more than 30 years of experience in the Class I, II, and III medical device industry, he holds more than 40 U.S. and international patents. His career includes experience with companies ranging from large multinational corporations to startups with a national and international scope. Kasic has served as president and CEO of Sophono, Inc., a multinational manufacturer and distributor of implantable hearing devices, which was acquired by Medtronic. He also was the president of OrthoWin, acquired by Zimmer-BioMed. He received a B.S. in physics and an M.S. in chemical/biological engineering from the University of Colorado, and an MBA from the University of Phoenix. He can be reached at jim.kasic@boulderiq.com or on LinkedIn.