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Follow That Trend
Trends. People, in general, seem to love examining trends. I must admit I count myself among those who do.
Industry watchers cling to little gems of information that they hope—when examined as a whole—will provide the ultimate “ah-ha” moment that, if acted on correctly, will lead to a desired outcome. Sure, trends can be early warning signs—calling for action or inaction—that help you prepare for the inevitable. But trends, of course, also can be positive early indicators of what’s to come, providing support for an important business decision that leads to the well-timed release of a product that beats competition to the punch and fills company coffers with record annual revenue. Or, trends simply can take you along for the ride, while you make decisions along the way.
No matter your point of view, one undeniable trend in the medical device market has been the growth of outsourcing. Outsourcing (not to be confused with offshoring) has become an important means by which OEMs control costs and improve time to market. Thirty years ago, medical device companies did everything in-house. Twenty years ago, they began outsourcing components. Within the last ten years, we’ve seen the growth in contract manufacturers providing a greater number of services, leading to full-service manufacturing solutions.
In the United States, 20% of all OEM manufacturing was outsourced to third-party vendors in 2005, resulting in annual market growth of 26% to $4.4 billion, up from $2.2 billion in 2002, according to research by Boston, MA-based Covington Associates. The firm also predicted that as much as 40% of all device-sector manufacturing could be outsourced by 2010. OEMs are under tremendous pressure to develop new products faster. They’re investing more money in research and development activities and they’re becoming more comfortable with manufacturing “partners,” which is a trend that certainly has been felt in orthopedics. This issue of Orthopedic Design & Technology examines that trend with a look at a few different market sectors.
Our cover story, “Instruments of Change,” details how instrument manufacturers are being asked to handle more of the design and development work, along with a number of other important tasks, for their OEM customers.
“All of our customers are looking for a partnership,” Chris Rawlins, sales manager for Mentor, OH-based Miltronics and Skye, told ODT. “They all rely heavily on us to help them through the design hump and move the product to launch phase together, so once designs are FDA approved and ready to run, they are getting flawless products that are manufacturable. That’s where we build value.”
In this issue, our feature “Supply Chain Evolution” follows suit, describing how orthopedic suppliers are taking more control of the complete manufacturing supply chain for customers, adding a plethora of start-to-finish services. And testing service providers outline in “Fast-Paced Device Development Outpaces Testing Standards” how many orthopedic companies turn to them for help slogging though the often-confusing standards and guidelines that are part of the testing process.
Whether you’re one of the many trying to read the tea leaves or you’re just going with the flow, we know you’ll find the information in this month’s issue beneficial. As we kick off 2008, we also know there will be many more trends to watch and predcitions to make. We look forward to being along for that ride.
