Over the past few years, the pharmaceutical and medical device industry has seen a significant reduction in new product development and approvals due to the global financial crisis. To remedy this, the use of business process outsourcing services has proven to be an effective way of minimizing operational, management, and infrastructure costs. This has driven several life science companies to increase their outsourcing activities as a strategy to reduce capital expenditure and labor costs. There has been a paradigm shift in the pharmaceutical and medical device industry, with multinational healthcare companies and smaller companies being increasingly dependent on outsourcing service providers to improve efficiency and productivity. Additionally, intense competition in the health care industry is compelling these companies to recalibrate their marketing strategies and explore new opportunities in product design, development, and manufacturing. Consequently, most pharmaceutical and medical device giants have adopted the strategy of outsourcing to specialist service providers such as contract manufacturing organizations (CMOs).

One of the most effective ways to lead in the highly competitive medical devices market is to reduce the time to market. Reduced time to market directly influences market revenues and offers significant advantages in the medical devices industry, where new products are launched in three to five years. Medical devices have advanced significantly. Their complexity has made them more diverse and accurate. However, mass production of these devices has become challenging. This is the primary factor attributed to the outsourcing of the production of these devices to other manufacturers. As the demand for medical devices and their raw materials is more or less constant in the long run, companies find it mutually profitable to bind themselves in contracts. This is boosting demand for medical devices contract manufacturing services.

Contract manufacturing may involve the manufacturing of either a whole product or a single component of a larger device. Companies adhere to their expertise, which  include assembly, CNC machining services, computer integrated products, consulting, converting, die-cutting, forming and finishing services, joining and sealing services, lyophilization services, machining services, medical device prototyping, molding and casting services, packaging services, R&D design, and stamping. With such varied services, the contract manufacturing industry is able to serve a range of businesses\customers. Globalization has paved the way for effective business process management and a clear distinction between value chain and supply chain. Visibility solutions can be customized to support a range of requirements, including inventory visibility, simulations, end-market demand steering, and service parts management. Cost is clearly a major tipping factor in favor of contract manufacturing outsourcing. The overall cost structure of contract manufacturers (CMs) is significantly lower compared to that of complete product manufacturers (CPMs), making CMs more efficient and financially stable. Procurement of raw materials, paperwork, and negotiations add to the expenses, which are saved by outsourcing. Strict regulations and guidelines by regulatory agencies such as the FDA have made it difficult for organizations to maintain different quality standards for different process. CMs have approved standards for a particular production expertise, enabling them to focus on quality. CMs also save on time required to manufacture, as they are usually prepared to manufacture at a moment’s notice. This is a noteworthy benefit for their customers. Rise in market competition due to the entry of Asian manufacturers provides an interested business/customer the freedom to choose the better alternative. This has also resulted in competition among players over post-sales services and efficiency. However, factors that make CMs preferable may also affect selection, especially if the manufacturer does not possess the required approval guidelines. The location of CMs also plays an important role in decision making. Some CMs are located offshore, thus bringing into picture the unpredictable nature of shipments and export-import sanctions. This, in turn, changes the profitability of the whole enterprise.

Key players in the global medical device contract manufacturing market are Admedes GmbH, Donatelle Medical, Advanced Molding Technologies, GlobTek, Inc., Norman Noble Inc., Lumenous Device Technologies Inc., Spectra Medical Devices, Inc., and Integer Holdings Corporation.

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