By Dr. Frank Gindele, SCHOTT Electronic Packaging
Medical device manufacturers and designers must overcome various challenges to succeed in an expanding global marketplace. Lucintel’s report Growth Opportunities in the Global Medical Device Market asserts that the industry is projected to reach approximately $342.9 billion by 2021, with a CAGR of 4.6 percent from 2017 to 2021. While this growth paints a positive picture for industry-wide innovation, medical device manufacturers will be challenged along the way to design, research, validate, and bring their devices to a competitive market in a cost-effective manner.
To meet and exceed patient needs while maintaining a healthy bottom line, these companies must reduce time to market while coping with multiplying competitors, rising healthcare costs, evolving regulations, and shortened product life cycles. For manufacturers and designers facing these challenges, it will become even more important to aim high, taking every opportunity to innovate and enhance quality in anticipation of evolving regulations and faster-approaching, game-changing technologies. Therefore, these companies — many of them small-to-medium enterprises (SMEs) — must continue to lean on their vendors as resources to navigate an ever more competitive marketplace.
Beating the Competition with Innovation
Commensurate with industry growth projections, there is a feeling of optimism amongst medical device manufacturers and designers in the United States and Europe. Emergo’s Global Medical Device Industry Outlook for 2017 reported that 60 percent of U.S. participants expect strong growth for this year, and 51 percent of European participants feel the same. Ultimately, the positive outlook is welcome news for the oversaturated and highly competitive industry. In April of 2016, the Boston Business Journal reported that the number of medical device companies in Massachusetts alone more than doubled in 20 years, from 204 to 436, “even as seed funding for medical device firms is tougher than ever to come by and IPOs are scarce.”
Quality and innovation are important measures needed to differentiate products and brands in this crowded marketplace. Medical instruments require precision, functionality and, most importantly, reliability. When developing new instruments, designers seek to implement state-of-the-art technology, granting their customers the most up-to-date and innovative solutions available. This can be an arduous and costly task, given the speed at which technology is advancing.
Anticipating Rising Costs & Regulatory Changes
The federal government’s budget proposal for fiscal year 2018 includes an estimated $2 billion in fees for healthcare companies seeking U.S. regulatory review of medical devices and drugs through the Food and Drug Administration (FDA). This is approximately double the amount from the 2017 budget proposal. While specifics have not yet been shared regarding whether the proposed budget is allocated evenly between the medical device and drug industries, the fee hike’s proposed aim is to accelerate FDA’s review and approval process of healthcare products in general.
While the impact of these changes remains to be seen, the potential effects could include increases in healthcare costs. Though medical device companies may reduce their new products’ time to market via a quicker review and approval process, they still will have to act fast to beat their competition out the door.
It also is critical for medical device manufactures to lean on a wider network to fully understand and anticipate the effects of pending regulations. Knowledgeable suppliers perform more like partners in assessing where product changes must be made to minimize regulatory delays and accelerate time to market.
Streamlining R&D Amid Shorter Product Life Cycles
Kalorama Information research reports that medical device manufacturers invest approximately seven percent of their revenue into research and development. Innovation trends for new devices suggest R&D investments will continue to increase. With product life cycles shortening, it is critical for medical device companies to streamline these processes and reduce costs.
The trend of declining product life cycles can be attributed to the exponentially increasing rate of technological advancement. Every year, medical device designers and manufacturers adapt their product designs to integrate innovative technology and keep up with the latest features, functions, and available software. Medical device manufacturers can minimize costs by eliminating redundancies created by the use of low-budget solutions that do not deliver high-level performance. Manufacturers should consider the big picture of cost savings and “future-proofing” by using high-quality components to minimize testing timeframes, and have solutions on hand that can be integrated in both current and upcoming product lines.
Utilizing components with forward-thinking engineering provides a level of confidence that allows for more stable design cycles, enabled by the repeated use of reputable components through multiple design iterations. This ultimately helps reduce costs and eases manufacturing processes through minimized disruption — in other words, there is no need to “reinvent the wheel” when using reliable components.
A Need For Growing Support Networks
A notable attribute of the medical device sector is its make-up. Of the approximately 7,000 medical device companies in the U.S., most are SMEs, employing only 400,000 people directly and two million indirectly. SMEs benefit tremendously from a more agile business structure with fewer layers of decision-making and red tape. It’s no surprise the sector has grown so quickly and innovates at a rapid clip compared to other industries.
To overcome the many challenges they face this year, medical device manufactures and designers must continue to expand their networks of experts and lean more heavily on suppliers who can help them streamline R&D processes, understand and anticipate regulatory changes, and uncover opportunities to compete on innovation – no matter how small. By improving collaboration, these companies stand to streamline time to market while enhancing — not sacrificing — performance and quality.
Dr. Frank Gindele is the Development Manager of Autoclavable Solidur LED products for SCHOTT’s Electronic Packaging unit.