Page 24 - MetalForming April 2011

More than 20,000 organizations comprise the $275-billion medical-device industry, which within the next four years is expected to grow to $375 billion, although the number of players is expected to decline dramatically. Despite the expected severe consoli- dation, manufacturers enjoy numer- ous opportunities within the med- ical-device arena, particularly for companies that historically have spe- cialized in metalforming within sec- tors such as cardiology, orthopedics and neurology.
If you’re considering entering the
Jeff Jenkins is a partner with Plante & Moran, PLLC; jeff.jenkins@plante- moran.com
medical-device industry, there are a variety of factors to keep in mind. Con- sider this a primer for organizations looking to leverage opportunities with- in the industry.
Today’s Medical-Device Supply Chain
Fragmented—that’s the best adjec- tive to describe the medical-device supply chain. For example, one of our clients, a $2.5-billion medical-device original equipment manufacturer (OEM), spends $27 million/yr. pur- chasing products from 283 suppliers. This is not atypical of what we see in the OEM supply base.
The medical-device supply chain also is characterized by a variety of unsophisticated procurement prac-
tices, rapid product launches, high launch volumes and low replenish- ment volumes, and limited supplier involvement in design and planning stages. Moreover, there is a high rate of prototype manufacturers evolving to become production suppliers (which is how the proliferation of suppliers occurred in the first place). We expect to see a number of changes within the next four years.
What’s Changing?
The most significant change expect- ed is severe industry consolidation. There are more than 4000 contract manufacturing organizations (CMOs, the equivalent of Tier 1 automotive suppliers) within the medical-device industry. By 2015, we expect consoli-
So You’re Thinking About
Medical
Device Manufacturing?
Consider this a primer for organizations looking to leverage opportunities within the medical-device industry.
BY JEFF JENKINS
22 MetalForming/April 2011
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