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

1. Medical Device Contract Manufacturing:
World Market Outlook 2014-2024 &
Future Prospects for Leading Companies
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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
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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
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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
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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
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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
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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
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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
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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 ($bn) by Region, 2012,
2017 and 2024
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10. Contents
Table 5.4 The US Medical Device Contract Manufacturing Market Forecast: Revenue ($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 ($m), FY 2012
Table 6.4 Flextronics Financial Results: Sales Share (%)
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11. Contents
Table 6.5 OEM Symmetry Medical: Revenue ($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 ($bn) by
Segment, 2012
Figure 4.2 The Medical Device Contract Manufacturing Market: Market Share (%) by Segment,
2012
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12. Contents
Figure 4.3 The Total Medical Device Contract Manufacturing Market Forecast: Revenue ($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 ($bn),
AGR (%) 2012-2024
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13. Contents
Figure 5.12 The Italian Medical Device Contract Manufacturing Market Forecast: Revenue ($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 ($m) by Segment, 1Q 2013
Figure 6.15 Jabil Circuit: Revenue (%) by Segment, 1Q 2013
Figure 6.16 Nypro: Revenue (%) by Market, 2012
Figure 6.17 Nypro: Revenue (%) by Region, 2012
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14. Contents
Figure 6.18 Benchmark Electronics: Revenue ($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
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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
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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
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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)
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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
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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.
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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
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