The Pros and Cons of Medical Device Outsourcing
Due to continuous cost pressures coupled with growing demands to minimize time to market, manufacturers of medical devices are increasingly involved in completely or partially outsourcing their product manufacturing and assembly. This creates space for medical device companies to concentrate more on their core competencies and also focus on cost reduction and market pace opportunities. But these are the only considerations that businesses must weigh before committing to outsourcing a medical product. Experts at Infiniti Research believe that when it comes to medical device outsourcing, there is much more to assess and measure, especially in terms of adhering to the necessary quality standards.
From the typical pitfalls to the assessment of the vertical integration capabilities of an outsourcing partner, this article encapsulates the key advantages and the many considerations to consider before outsourcing medical devices:
Capitalize on resources: Medical device outsourcing allows OEMs to take advantage of the resources of third parties without having to procure and store them locally or train workers. This would potentially result in more cost-effective manufacturing. Top manufacturers of medical devices include countries like Taiwan, China and Korea. It is also more practical for a U.S. medical device manufacturer to outsource manufacturing activities entirely overseas rather than to produce medical devices with equipment, both in terms of cost and quality standards.
Focus on core activities: depending on outsourcing companies for medical devices gives other core activities such as R&D of new medical devices and marketing and promotion of existing products the ability to pay more attention. Through doing so, medical device companies will also eliminate obstacles in the production process related to hiring and educating new workers.
Data and information security: The possibility of loss of private information is one of the most pressing problems in outsourcing the manufacture of medical devices. It is important to share technical proprietary knowledge with the manufacturer in the outsourcing process for medical devices, raising the chances of losing private information. In the case of information being exchanged with suppliers in foreign locations, this adversity of such threats is more important.
Reimbursement policies: The relentless pressure on medical device companies to reduce the price of the product, combined with cost control steps taken by many industry players, is hampering the market for medical devices. While healthcare spending is growing dramatically, many healthcare providers are still unwilling to pay for medical devices. If this situation prevails, the outsourcing market for medical devices at large could be affected.