Medical Device Contract Manufacturing World Market Outlook 2014 2024

1,745 views

Published on

For an Executive Summary of this report please contact ediz.ibrahim@visiongain.com (+44 (0)20 7549 9976) or refer to our website http://www.visiongain.com/Report/1189/Medical-Device-Contract-Manufacturing-World-Market-Outlook-2014-2024

Published in: Business, Technology
  • Be the first to comment

  • Be the first to like this

Medical Device Contract Manufacturing World Market Outlook 2014 2024

  1. 1. Medical Device Contract Manufacturing: World Market Outlook 2014-2024 & Future Prospects for Leading Companies ©notice This material is copyright by visiongain. It is against the law to reproduce any of this material without the prior written agreement of visiongain. You cannot photocopy, fax, download to database or duplicate in any other way any of the material contained in this report. Each purchase and single copy is for personal use only.
  2. 2. Contents 1. Executive Summary 1.1 Sector Highlights 1.2 Chapter Outline 1.3 Research and Analysis Methods 1.4 Glossary of Terms Related to the Report 2. Introduction to Medical Device Contract Manufacturing 2.1 Medical Devices 2.2 Classification of Medical Devices 2.2.1 The US Classification System 2.2.2 The European Classification System 2.3 Regulation of Medical Devices 2.3.1 The US Approval and Regulation System 2.3.2 The European Approval and Regulatory System 2.3.2.1 Post-marketing Surveillance in the EU 2.4 The Medical Device Industry 2.5 Medical Device Outsourcing 2.6 Benefits of Outsourcing 2.6.1 Reasons for Outsourcing Manufacturing 2.6.1.1 Focusing on Core Competencies 2.6.1.2 Shorter Time to Market 2.6.1.3 Tactical & Strategic 2.6.1.4 Lower Fixed Operating Costs 2.6.2 Reasons for Keeping Projects In-House 2.7 Service Agreement 2.7.1 Identifying CMOs 2.7.2 Contractual Agreement 2.7.3 Review of the Quality Manual 2.7.4 Audit and Site Visits www.visiongain.com
  3. 3. Contents 2.8 Final Discussions 2.8.1 Product Requirement Specifications 2.8.2 Term Sheets and Supply Agreements 2.8.3 Project Management 2.9 Medical Device Quality Management Systems 2.10 Medical Device Outsourcing Segments 2.10.1 Design Engineering 2.10.2 Device Manufacturing 2.10.2.1 Material Processing 2.10.2.2 Electronic Manufacturing Services 2.10.2.3 Finished Products 2.10.3 Final Goods Assembly 3. The Medical Device Contract Manufacturing Market 2014-2024 3.1 The Global Medical Device Market, 2012 and 2013 3.2 The Medical Device Outsourcing Market 3.2.1 Medical Device Outsourcing Segments 3.2.1.1 Strong Growth in Design Engineering 3.2.2 High COGs for Medical Device Manufacturing Market 3.2.3 Trends in the Medical Device Outsourcing Market, 2013-2014 3.2.3.1 Projected Spending on Outsource Device Manufacturing 4. The Medical Device Contract Manufacturing Market Segments 2014-2024 4.1 The Medical Device Contract Manufacturing Market Segments, 2012-2013 4.2 Medical Device Contract Manufacturing Market Forecast 2014-2024 4.3 Materials Processing Market Overview www.visiongain.com
  4. 4. Contents 4.3.1 Materials Processing Market Forecast 2014-2024 4.3.1.1 Medical Moulding 4.3.1.2 Medical Extrusion 4.4 Electronic Manufacturing Services (EMS) Overview 4.4.1 EMS Market, 2012 4.4.2 Medical EMS Market by Segments, 2012 and 2013 4.4.3 Leading Companies in EMS Sector, 2013 4.4.4 Electronics Outsourcing Market Forecast 2014-2024 4.5 Finished Products Overview 4.5.1 Finished Products Outsourcing Market Forecast 2014-2024 5. The Leading National Medical Devices Contract Manufacturing Markets 2014-2024 5.1 The Leading National Markets for Medical Device Contract Manufacturing: Transitioning from Old to New 5.1.1 The Leading National Markets for Medical Device Contract Manufacturing, 2012 5.1.2 The Leading National Markets for Medical Device Contract Manufacturing 2014-2024 5.2 The US Medical Device Contract Manufacturing Market Forecast 2014-2024 5.3 The EU5 Market for Medical Device Contract Manufacturing 5.3.1 The EU5 Medical Device Contract Manufacturing Market 2014-2024 5.3.1.1 The German Medical Device Contract Manufacturing Market 2014-2024 5.3.1.2 The UK Medical Device Contract Manufacturing Market 2014-2024 5.3.1.3 The Spanish Medical Device Contract Manufacturing Market 2014-2024 5.3.1.4 The French Medical Device Contract Manufacturing Market 2014-2024 5.3.1.5 The Italian Medical Device Contract Manufacturing Market 2014-2024 5.4 The Japanese Medical Device Contract Manufacturing Market 2014-2024 5.5 The Chinese Medical Device Contract Manufacturing Market 2014-2024 5.6 The Indian Medical Device Contract Manufacturing Market 2014-2024 5.7 The Central and South American Medical Device Contract Manufacturing Market 2014-2024 www.visiongain.com
  5. 5. Contents 5.8 The Rest of the World Medical Device Contract Manufacturing Market 2014-2024 6. The Leading Medical Device Contract Manufacturing Companies 2014 6.1 A Highly Fragmented Market 6.2 Accellent 6.2.1 Revenues and Recent Performance Analysis, 2012 6.2.2 Business Capabilities 6.2.3 Asian Expansion 6.2.4 Regional Breakdown 6.3 Flextronics 6.3.1 Revenue and Recent Performance Analysis, 2012 6.3.2 Business Capabilities 6.3.2.1 Business Restructuring 6.3.3 Net Sales by Region 6.3.4 Medical Certification Award Enhances Company Portfolio 6.3.5 Acquisition of Stellar Microelectronics 6.3.6 Acquisition of RIWISA 6.4 Symmetry Medical 6.4.1 Revenue and Recent Performance Analysis, 2012 6.4.2 Total Solutions Approach 6.4.3 Acquisition of Olsen Medical 6.4.3.1 Acquisition of Codman 6.4.4 Products Pipeline 6.5 The Tech Group (Part of the West Pharmaceutical Services Company) 6.5.1 Revenues and Recent Performance Analysis, 2012 6.5.2 West Pharmaceuticals Business Outlook 6.5.2.1 Focusing on Research & Development 6.6 Greatbatch www.visiongain.com
  6. 6. Contents 6.6.1 Revenue and Recent Performance Analysis, 2012 6.6.2 Investment in the Orthopaedic Business 6.6.3 Acquisitions 6.6.3.1 Acquisition of Micro Power Electronics 6.6.3.2 Acquisition of NeuroNexus 6.7 Nortech Systems 6.7.1 Revenue and Recent Performance Analysis, 2012 6.7.2 Nortech Life Sciences 6.7.3 Acquisition of Milaca 6.7.3.1 Acquisition of EMS Unit of Winland Electronics 6.8 Jabil Circuit 6.8.1 Revenue and Recent Performance Analysis, 2012 6.8.1.1 Revenue and Recent Performance Analysis, 1Q 2013 6.8.2 Revenue Performance Analysis by Segment, 1Q 2013 6.8.3 Recent Acquisitions and Divestments 6.8.3.1 Acquisition of Nypro 6.8.3.2 Divestment of its Aftermarket Services Business 6.8.4 Nypro’s Revenue and Recent Performance Analysis, 2012 6.9 Benchmark Electronics 6.9.1 Revenue and Recent Performance Analysis, 2012 6.9.1.1 Benchmark Electronics Medical Device, Revenue and Recent Performance Analysis, 2012 6.9.2 Acquisition of EMS Sector of CTS Corporation 6.10 Vention Medical 6.10.1 Acquisitions 6.10.1.1 Acquisition of Ansamed 6.10.1.2 Acquisition of ATEK Medical Group 6.10.1.3 Acquisition of RiverTech Medical 6.10.1.4 Acquisition of Fast Forward Medical 6.11 Creganna-Tactx Medical www.visiongain.com
  7. 7. Contents 6.11.1 Product Portfolio 6.11.1.1 Pilot Manufacturing 6.11.1.2 Volume Manufacturing 6.11.2 Mergers and Acquisitions 6.11.2.1 Partnership with BBA 6.11.2.2 Acquisitions of ABT Medical 6.11.3 Recent Developments 6.12 Other Companies and Services 7. SWOT Analysis of the Medical Device Contract Manufacturing Market 2014-2024 7.1 Contract Manufacturing Industry Trends 7.2 Strengths 7.2.1 OEM’s Lack of Reimbursement: Cost Cutting Pressures 7.2.1.1 The Changing Utilisation of Contract Manufacturers 7.2.2 Increasing Product Speed of Entry into Market 7.2.3 Allowing the OEMs to Focus On their Core Competencies 7.3 Weaknesses 7.3.1 Dependent on the Business Strength of OEMs 7.3.1.1 Substantial Percentage of Sales from a Small Number of Customers 7.3.2 Perception of Risk with IP Rights 7.4 Opportunities 7.4.1 Globalisation 7.4.1.1 Rapid Expansion in Emerging Markets 7.4.1.2 Asian Regions Offer Attractive Manufacturing Locations 7.4.2 Medical Device Excise Tax 7.5 Threats 7.5.1 Slower Growth Rate for Medical Devices www.visiongain.com
  8. 8. Contents 7.5.1.1 Changes to Reimbursement Globally 7.5.2 Fluctuating Cost of Goods for Contract Manufacturers 7.5.2.1 Manufacturing Costs in China: On the Rise 8. Expert Opinion 8.1 Interview with Matt Giza, Vice President and General Manager, Cogmedix, Inc. 8.1.1 Drivers for Medical Device Contract Manufacturing Industry 8.1.2 Threats to Contract Manufacturing 8.1.3 Strategies for Market Growth 8.1.4 The Future Strategy for Contract Manufacturers 8.2 Interview with Mark Kemp, President of Medical, Flextronics 8.2.1 Medical Device Industry Drives Contract Manufacturing 8.2.2 Challenges for Medical Device Outsourcing 8.2.3 Flextronics’s Focus on Asian Markets 8.2.4 Flextronic’s Growth by Acquisition 8.2.5 The Risks for CMOs 9. Conclusions 9.1 Overview 9.2 The Electronic Manufacturing Services Shows Strongest Growth 9.3 Consolidation of the CM market 9.4 Outsourcing and Offshoring will Become a Strategic Necessity 9.5 Concluding Remarks www.visiongain.com
  9. 9. Contents List of Tables Table 2.1 The US and EU Classification of Medical Devices, 2014 Table 2.2 The Tactical and Strategic Reasons for Outsourcing Manufacturing, 2014 Table 3.1 The Global Medical Device Market Forecast: Revenues ($bn), AGR (%), CAGR (%) 2012-2024 Table 3.2 The Medical Devices Market: Revenue ($bn) and Market Shares (%) by Sector, 2012 Table 3.3 Sectors of Medical Device Outsourcing Market: Revenue ($bn) and Market Shares (%), 2012 Table 3.4 Medical Device Market: Gross Margin and COGS, 2012 Table 3.5 Spending on In-house and Outsourced Device Manufacturing, 2012 Table 4.1 Sectors of Medical Device Contract Manufacturing Market: Revenue ($bn) and Market Shares (%), 2012 Table 4.2 The Total Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 4.3 The Material Processing Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Table 4.4 Companies Offering Moulding Services to Medical Devices OEMs, 2013 Table 4.5 Industries Served by EMS Providers: Revenue ($bn) and Market Share (%), 2012 Table 4.6 Medical EMS Market: Revenue ($bn) and Market Share (%) by Segment, 2012 Table 4.7 Leading Companies Offering EMS Services to Medical Device OEMs, 2013 Table 4.8 The Electronics Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 4.9 The Finished Products Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 20122024 Table 5.1 The Leading National Markets for Contract Manufacturing: Revenues ($bn) by Region, 2012 Table 5.2 The Leading National Markets Forecast: Revenue ($bn), AGR (%), CAGR (%) 20122024 Table 5.3 The Medical Device Contract Manufacturing Market: Revenue ($bn) by Region, 2012, 2017 and 2024 www.visiongain.com
  10. 10. Contents Table 5.4 The US Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.5 The EU5 Medical Device Contract Manufacturing: Revenues ($bn) Market Share (%) by country, 2012 Table 5.6 The Total EU5 Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.7 The German Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.8 The UK Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.9 The Spanish Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.10 The French Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.11 The Italian Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.12 The Japanese Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.13 The Chinese Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.14 The Indian Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.15 The Central and South America Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 5.16 The Rest of The World Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 Table 6.1 Accellent Financial Results: Revenue ($m), 2008-2012 Table 6.2 Accellent Financial Results ($m), 2012 Table 6.3 Market Segment: Revenue ($m), FY 2012 Table 6.4 Flextronics Financial Results: Sales Share (%) www.visiongain.com
  11. 11. Contents Table 6.5 OEM Symmetry Medical: Revenue ($m) by Business Segment, FY 2011-2012 Table 6.6 Symmetry Medical: Revenue ($m), Market Share (%) by Business Segment, FY 2012 Table 6.7 The Tech Group, Pharmaceutical Delivery Systems Segment: Revenue ($m) by Fiscal Year, 2010-2012 Table 6.8 Greatbatch: Revenue ($m) by Fiscal Year, 2010-2012 Table 6.9 Greatbatch: Revenue($m) by Business Segment, 2012 Table 6.10 Nortech: Revenue ($m), 2011-2012 Table 6.11 Nortech: Revenue ($m), 2012 Table 6.12 Jabil Circuit: Revenues ($m), AGR (%) 2008-2012 Table 6.13 Jabil Circuit: Revenue ($m), 1Q 2012-2013 Table 6.14 Nypro: Sales (%) by market sector, 2012 Table 6.15 Benchmark Electronics: Revenue ($m), 2008-2012 Table 6.16 Benchmark Electronics: Revenue ($m) for medical device sector, 2012 Table 6.17 Other Companies in Medical Device Contract Manufacturing, 2014 Table 6.17 (Contd.) Other Companies in Medical Device Contract Manufacturing, 2014 Table 7.1 SWOT Analysis of the Medical Device Contract Manufacturing Market, 2012-2024 Table 9.1The Segment Contract Manufacturing Market Forecast: Revenues ($bn), AGR (%), CAGR (%) 2012-2024 List of Figures Figure 2.1 Services Offered by Medical Device Outsourcing Companies, 2014 Figure 3.1 The Global Medical Device Market Forecast: Revenues ($bn), AGR (%), 2012-2024 Figure 3.2 The Medical Device Market: Market Share (%) by Sector, 2012 Figure 3.3 Sectors of Medical Device Outsourcing Market: Market Share (%), 2012 Figure 3.4 Spending on In-house and Outsourced Device Manufacturing, 2012 Figure 4.1 Sectors of Medical Device Contract Manufacturing Market: Revenue ($bn) by Segment, 2012 Figure 4.2 The Medical Device Contract Manufacturing Market: Market Share (%) by Segment, 2012 www.visiongain.com
  12. 12. Contents Figure 4.3 The Total Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Figure 4.4 The Material Processing Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Figure 4.5 Industries Served by EMS Providers: Market Share (%), 2012 Figure 4.6 Medical EMS Market: Revenue ($bn) by Segment, 2012 Figure 4.7 Medical EMS Market: Market Share (%) by Segment, 2012 Figure 4.8 The Electronics Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Figure 4.9 The Finished Products Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Figure 5.1 The Leading National Markets for Contract Manufacturing: Revenues (%) by Region, 2012 Figure 5.2 The Total Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%) 20122024 Figure 5.3 The Medical Device Contract Manufacturing Market: Revenue ($bn) by Region, 2012, 2017 and 2024 Figure 5.4 The US Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Figure 5.5 The EU5 Medical Device Contract Manufacturing Market Breakdown by Country: Revenue ($bn), 2012 Figure 5.6 The EU5 Medical Device Contract Manufacturing Market Breakdown by Country: Market Share (%), 2012 Figure 5.7 The Total EU5 Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Figure 5.8 The German Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Figure 5.9 The UK Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Figure 5.10 The Spanish Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Figure 5.11 The French Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%) 2012-2024 www.visiongain.com
  13. 13. Contents Figure 5.12 The Italian Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), 2012-2024 Figure 5.13 The Japanese Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), 2012-2024 Figure 5.14 The Chinese Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), 2012-2024 Figure 5.15 The Indian Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), 2012-2024 Figure 5.16 The Central and South America Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%) 2012-2024 Figure 5.17 The Rest of The World Medical Device Contract Manufacturing Market Forecast: Revenues ($bn), AGR (%) 2012-2024 Figure 6.1 Accellent Financial Results: Revenue ($m), 2008- 2012 Figure 6.2 Flextronics Financial Results: Revenue ($m), 2011- 2013 Figure 6.3 Flextronics Market Segments: Revenue ($m), FY 2012 Figure 6.4 Flextronics Market Segments: Revenue (%), FY 2012 Figure 6.5 Flextronics Revenue ($m), 2011-2013 Figure 6.6 Symmetry Medical: Historical Revenue ($m), 2008-2012 Figure 6.7 Symmetry Medical: Market Share (%) by Business Segment, FY 2012 Figure 6.8 The Tech Group, Pharmaceutical Delivery Systems Segment: Revenue ($m) by Fiscal Year, 2010-2012 Figure 6.9 Greatbatch: Revenue ($m) by Fiscal Year, 2010-2012 Figure 6.10 Greatbatch: Market Share (%) by Business Segment, 2012 Figure 6.11 Nortech: Revenue ($m), 2011-2012 Figure 6.12 Nortech: Market Share (%) by Business Segment, 2012 Figure 6.13 Jabil Circuit: Revenue ($m), AGR (%), 2008-2012 Figure 6.14 Jabil Circuit: Revenue ($m) by Segment, 1Q 2013 Figure 6.15 Jabil Circuit: Revenue (%) by Segment, 1Q 2013 Figure 6.16 Nypro: Revenue (%) by Market, 2012 Figure 6.17 Nypro: Revenue (%) by Region, 2012 www.visiongain.com
  14. 14. Contents Figure 6.18 Benchmark Electronics: Revenue ($m), 2008-2012 Figure 6.19 Benchmark Electronics: Market Share (%) by Business Sector, 2012 Figure 6.20 Benchmark Electronics: Revenues ($m) for Medical Device Sector, 2012 Figure 9.1 The Segment Contract Manufacturing Market Forecast: AGR (%), 2012-2024 Companies Listed Abbott Laboratories ABT Medical Accellent AccuPlace Advanced Moulding Technologies Advanced Polymers Advanced Scientifics Advanced Semiconductors AdvantaPure Alcatel-Lucent Ansamed Applied materials Asteel Flash The ATEK Medical Group B. Braun BC Tech Benchmark electronics Beyonics Technology Boston Biomedical Associates Boston Scientific C&J Industries Celestica Cirtech Medical Systems www.visiongain.com
  15. 15. Contents Cisco systems Codman Coeur Coghlin Companies Cogmedix Creganna-Tactx Medical CTS Corporation Da/Pro Rubber Dell Drager Medical DTR Medical DTS Mechelec Ericsson Europlaz Fast Forward Medical Filtertek Inc. Flextronics Forefront Medical Technology Foxconn (Hon Hai Precision Industries) Fresenius Greatbatch GW Plastics Inc. Helix Medical Heraeus Medical Hewlett-Packard Huawei Integrated Biosciences iQor holdings Jabil Johnson & Johnson www.visiongain.com
  16. 16. Contents J-Pac Kimball Electronics Group Kitron Lenovo Medefab Medtronic MeKo Micro Power Electronics Microsoft Milaca Moog NeuroNexus Nortech Systems Nypro Olsen Medical PCI Limited Phillips-Medisize Plexus Corporation PSC Industries Research in Motion RiverTech Medical RIWISA Sanmina-SCI Sauflon Secant Medical Siemens Medical SIIX Corporation Smith & Nephew SMS Technologies St. Jude www.visiongain.com
  17. 17. Contents Stellar Microelectronics Stryker Symmetry Medical TDC Medical The Electronlizing Corporation of Ohio The MedTech Group The Tech Group West Pharmaceutical Services Tricor-Systems Vention Medical Venture Vincent Medical Wesley-Coe Winland Electronics Wytech Xerox Other Organisations Mentioned in This Report Food and Drug Administration (FDA) International Organization for Standardization (ISO) World Health Organisation (WHO) National Health Service (NHS) Servizio Sanitario Nazionale (SSN) State Food and Drug Administration (SFDA) The Ministry of Health of the People's Republic of China (MOH) World Trade Organisation (WTO) National Competent Authorities (NCAs) European Databank on Medical Devices (EUDAMED) www.visiongain.com
  18. 18. Medical Device Contract Manufacturing: World Market Outlook 2014-2024 & Future Prospects for Leading Companies cost controls that will come into effect in the near future and will certainly indirectly affect the medical device CM industry. Table 5.11 The Italian Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), CAGR (%) 2012-2024 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Italy ($bn) AGR (%) CAGR (%) 2012-2017 CAGR (%) 2012-2024 1.36 1.46 1.56 1.67 1.79 1.93 2.08 2.26 2.45 2.65 2.86 3.10 3.36 7 7 7 7 8 8 9 8 8 8 8 9 7 2018-2024 8 8 Source: Visiongain 2014 Figure 5.12 The Italian Medical Device Contract Manufacturing Market Forecast: Revenue ($bn), AGR (%), 2012-2024 4.00 10 3.50 9 8 7 2.50 6 2.00 5 1.50 4 AGR (%) Sales ($bn) 3.00 3 1.00 2 0.50 1 0.00 0 Year Sales ($bn) AGR (%) Source: Visiongain 2014 www.visiongain.com Page 78
  19. 19. Medical Device Contract Manufacturing: World Market Outlook 2014-2024 & Future Prospects for Leading Companies 6.7.2 Nortech Life Sciences Nortech Life Sciences (part of Nortech Systems) offers EMS and design support of complex electro-mechanical, medical, diagnostic, analytical and life-science devices. Each new customer receives a single point of contact, backed by a dedicated team that stays with them for the duration of the contract. The company operates their life sciences business across four sectors: • Engineering – electrical, software and mechanical engineering, embedded software, optics and power systems • Manufacturing – final assembly and testing of electronic and electromechanical equipment. A supply chain management team is available that helps to reduce costs and ensure availability of supplies for timely delivery of the product. • Post production – drop ship, inventory management and storage, spares and disposable distribution, service repair and refurbishment, warranty and service history tracking • Quality and compliance – Nortech System’s facility is routinely audited by the FDA and other compliance certification authorities. There are strict guidelines and procedures in place to ensure that the finished product always meets agency approval. 6.7.3 Acquisition of Milaca Nortech acquired a life science electronics manufacturer in Milaca, Minnesota in 2010. This company offers sophisticated design, engineering and manufacturing capabilities that is highly valued by medical OEMs. 6.7.3.1 Acquisition of EMS Unit of Winland Electronics In January 2011, Nortech Systems completed the acquisition of the EMS business unit of Winland Electronics, located in Mankato. Winland Electronics is a manufacturer of custom electronic products and systems. This acquisition increased the manufacturing capacity and support for medical and industrial customers. Visiongain believes that these acquisitions are expected to increase the sales of the company in the long term. www.visiongain.com Page 109
  20. 20. Medical Device Contract Manufacturing: World Market Outlook 2014-2024 & Future Prospects for Leading Companies 7.3.1.1 Substantial Percentage of Sales from a Small Number of Customers The medical device industry is more consolidated than the medical device contracting manufacturing market. Therefore large multinational OEMs have a plethora of small contract manufacturers to choose from and hold the market power. This leaves small contract manufacturers in a vulnerable position as a large percentage of their net sales are dependent on a limited number of large orders from a few customers. As the healthcare industry consolidates with further mergers and acquisitions, competition to provide products and services to prospective customers will become more intense. The contract manufacturing market is forecasted to continue to experience a high degree of customer concentration during the forecast period, particularly if there is further consolidation within the medical device industry. 7.3.2 Perception of Risk with IP Rights Medical device OEMs have been late on the utilisation of contract manufacturers as compared to other industries, and the key reason for their early reluctance has been the lack of control once outsourcing part or parts of the process. In particular the benefits from outsourcing could be offset by the risk of companies losing IP rights which is often the most valuable asset for any medical device company. The increased risk caused by contract manufacturers may come from for a number of sources: • Not fully understand IP and the importance of IP rights • Understand the OEM’s technology as well as they do • Unaware of their customer’s position regarding IP • Develop medical devices(s) around the OEM’s technology space • Not have an incentive to assist with IP issues round this invention • no loyalty to the OEM customer • reveal the OEM’s proprietary information to attract or retain other customers/competitors OEMs have had to implement in their business strategies when or when not to outsource. In some instances, these information sensitive areas have been ‘firewalled’ from contract manufacturers and performed in-house, despite additional costs. OEMs would have to carefully break-down products or processes into component parts to firewall areas from contract manufacturers that add the most value to a product or process and/or significantly differentiates the product or process from other medical devices. This strategy, inevitably, will reduce the revenue generating sales of www.visiongain.com Page 128

×