Contract manufacturing plays an important role in the development and production of the medical device industry. Contract manufacturing, also known as outsourcing, occurs when a company partners with a third party to produce a product in its entirety or a single part of a larger product. Original Equipment Manufacturers (OEM) of medical devices generally focus on a specific area of expertise, such as assembly, modeling, and R&D design. Essentially, these companies create and produce devices or device parts that another company later sells. Contract manufacturing has several advantages, such as reduced costs and eliminating overhead, but there can be disadvantages if you partner with the wrong outsourcing company.
What is a Medical Device?
The term medical device covers a wide range of products. They can range from a tongue depressor to something as complex as a pacemaker, blood glucose meter, or diagnostic ultrasound products.
The FDA considers a product to be a device and subject to regulation if it meets the definition of a medical device per Section 201(h) of the Food, Drug, and Cosmetic Act.
Per Section 201(h) of the Food, Drug & Cosmetic Act, a device is:
An instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is:
1. recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them,
2. intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or
3. intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and
which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes through chemical action within or on the body of man or other animals an which is not dependent upon being metabolized for the achievement of its primary intended purposes. The term “device” does not include software functions excluded persuant to section 520(o).
Source: FDA.gov
Many companies have enjoyed the benefits of moving some of their services or production needs to out-of-house. According to Statista, as of 2019, the global market size of outsourced services (across all industries) was around 92.5 billion US dollars.
Contract Manufacturing
As mentioned above, contract manufacturing can consist of outsourcing the entire product or parts of the product. There are a many skills required to create a successful product: innovation, design, financing, research, development, production, marketing, and more. Each of these areas require expertise and resources. Requiring all of these resources can be a financial burden on an organization. By outsourcing a part or all of a product, a company can reap the following benefits:
Capital Investment: With the savings of utilizing a third party for manufacturing, there will be more capital available to invest in research and development, marketing, and other areas that will advance your overall business goals. Thus, improving the success of your product.
Expertise: When you select a reputable contract manufacturer, you can rely on receiving the highest quality in the industry. This can also give you positive brand recognition right out of the gate.
Production Time: Most contract manufacturers have the ability to produce larger quantities of products faster than an independent organization. Thus, allowing you to get your product to market more quickly.
Distribution: Many contract manufacturers have the capability to manage product distribution and shipping, saving you time and money.
Issues with Outsourcing
There are many benefits to contract manufacturing outsourcing; however that does not mean that outsourcing is the best solution for everyone. Sometimes, it may be better to keep portions or all manufacturing in-house. The real deciding factor isn’t whether it was the right move—it is more about whether you choose the proper organization to partner with. Some of the issues you may encounter should you not partner with the appropriate organization are:
Control: When you outsource to a third party, they tend to manage all tasks associated with the production process. For an entrepreneur or creator that wants more control, you want to be sure that the third-party process allows for this. OCCAM Design is a true partner that establishes parameters that each organization feels comfortable working with.
Communication: This tends to be a number one issue when working with a third party. OCCAM Design prides itself on the open communication between its clients and manufacturing team.
Intellectual Property: The more outside parties involved in the process, the bigger the risk of a leak. OCCAM Design has clear protocols in place to protect your intellectual property.
Human Rights: Some contract manufacturers, particularly overseas in developing countries, do not provide their workers with fair wages or work conditions. You’ll want to ensure you’re working with a company that values its employees and treats them fairly. With OCCAM Design, this is not an issue you would need to be concerned about.
What to Look For In A Contract Manufacturer
Facility: You will want to visit their facility. Take a tour reviewing their work areas and machinery.
ISO-Certified: ISO certification ensures that contract manufacturers meet specific regulatory standards for production quality and employee support.
Distribution Capabilities: If your contract manufacturer is producing your complete product, you can inquire if they assist in the distribution to customers. This saves you time and money.
Flexibility: Work with a partner that can be flexible regarding production numbers and deadlines.
Quality Assurance: Ensure your manufacturing partner has open communication and is trustworthy.
Reputation: Ask around the industry, and read reviews. You want to make sure they have a strong reputation.
Management & Team: Meet with the executive and manufacturing team to ensure the partnership is a good fit and that they have a great leadership team.
Contract manufacturing or outsourcing is an excellent option for entrepreneurs and creators to bring their products to market. It can eliminate barriers that prevent someone from getting their concept to reality. To experience the many benefits of contract manufacturing, you must partner with a company that is innovative, collaborative, and serious about regulatory compliance and protecting your property rights.
OCCAM Design can meet all of your needs. Whether you are a startup company or a Fortune 500 company, there is much to be gained from the right partnership. To learn more about OCCAM Design and the benefits of working with us, request a free product analysis by visiting: https://occamdesign.com/free-project-analysis/
OCCAM Design is ISO 13485:2016 Certified and FDA Registered. As a full-service development firm, OCCAM Design exclusively focuses on medical products and has over 30 years of experience developing medical devices, combination products, and consumer healthcare products. OCCAM Design is an innovative leader in developing and manufacturing the highest quality medical devices. We are located in Louisville, Kentucky. You can contact our team at info@occamdesign.com or via phone at 502.714.7200 for more information on working with our team.