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Medical devices: Processors' panacea?

Few markets provide as tantalizing a prospect for growth as the medical device sector. People may opt to buy fewer cars, homes, or electronic products, but there is considerably less leeway when it comes to getting sick. And as the 78 million baby boomers born from 1946 to 1964 in the United States continue to age, the market could expand as never before. Comprising one-third of U.S. population, baby boomers are seen as a boon to processors already serving the medical device market, and as salvation to those mired in markets with considerably dimmer prospects for growth.

As more plastics companies act to reduce exposure to sectors that have either fled en masse to China, or leveraged low-labor locales'' costs against their supply chain to squeeze out every dime, the plastics-dominated field of medical devices is being seen as a cure-all.

For Steve Harms, president of RIM Inc. (Weatherford, TX), the margins and compatability with the RIM process for some parts just made sense. "I think the RIM process lends itself extremely well to the medical instrumentation market," Harms says, "because typically what you''re seeing there is larger parts and lower volumes." That describes RIM''s first and only venture into medical, a set of 56-by-80-inch, 40-lb doors for a radiation therapy device. "We''re just getting into the medical market, really. We were basically a job shop."

Harms is finding, however, that the sector has its own set of unique challenges. Bill Morton, president of Medical Device Consultants Inc. (North Attleboro, MA) and his colleague, QA Manager Judy Andrews, are keenly aware of these challenges by virtue of working with companies to dissect the myriad restrictions placed on them, be they medical device manufacturers or simply suppliers.

Liability

From a purely legal standpoint, processors eager to enter medical as a component supplier could do so with relative ease. The FDA places ultimate product liability on those who package and send products directly to market. So in theory, the onus of liability rests only on full-fledged device manufacturers; but in practice, medical OEMs and contract manufacturers that source parts expect their supply chains to adhere to the same stringent standards to which they are subject.

"The component manufacturer, from the FDA perspective, doesn''t have to comply with any of the quality system regulations from a legalistic perspective," explains Morton. "From a practical perspective, however, I think the end manufacturer is going to be looking at them to have a quality system that is very similar to the FDA or ISO 13485.

"The key thing that [OEMs] are going to be looking for, is how do you know that you''re manufacturing a product that meets the specification consistently throughout the manufacturing process?" Morton says. "They''re going to be looking for process validation and documentation to show that in fact you are meeting the production control."

Harms is working on bringing his shop into compliance and setting up a system to perpetuate ISO standards. "I knew it''s important to our customer that we [become certified]," Harms says. "It wasn''t mandated that we did, but to go forward and to really move, that was one of the things that I felt we needed to do," adding that the number one issue medical OEMs are concerned with is quality. Harms is in the process of training at least two employees to become dedicated auditors monitoring data collection. "[The job] really doesn''t change, other than you''re documenting what you say you''re going to do."

Andrews says this level of validation and documentation is requisite in preventing and/or pinpointing failures.

Also, while many individual components don''t need a cleanroom for fabrication, they still require a keen eye trained on any possible contamination. The haphazardness with which part programs can mix regrind and virgin resins, or skip purgings between color and material changes, is not an option with medical products. Andrews offers the example of tubing:

"Tubing is not done in a cleanroom, but in a process where you know what the controls are and you understand your process, so you''re not introducing contaminants that you don''t know about. You wouldn''t want to run city water through it, but most of the subcontracting for plastics is not cleanroom."

In terms of materials, other markets may allow processors the ability to shop around for the best bargain among the various lines of one grade, knowing the basic mechanical properties are the same. Processors running medical resins, especially those considering biomaterials or materials that replace or restore function to a body tissue and are even intermittently in contact with body fluids, must be certified as biocompatible.

"Device OEMs use specified resins," Andrews says, "and changing from one resin to another is clearly not something that you can do even though you might know that it has the same characteristics. The trace contaminants and other things that have been qualified for one resin, may not be the same for another.

Market Overview

If the preceding gives reasons to reconsider entry into medical, what follows is a glowing endorsement. According to the consulting firm Frost & Sullivan, the medical device market in the United States tallied revenues of $57.6 billion in 2002, and through 2005 it''s predicted to boast compound annual growth of 8%. The U.S. isn''t only responsible for the half the world''s device output, but it also consumes 40%, with Japan and Western Europe trailing in the global $140-billion-plus market.

Unlike automotive, the medical device industry doesn''t consist of supplier strata or tiers that extend four and five layers. Instead, a select group of market heavyweights, each which earn more than $500 million/yr, hold 65% of the total market. "There''s probably no more than a couple of layers between the primary suppliers and the ultimate manufacturer," Andrews says.

The sector has become increasingly global, but it''s one the few manufacturing industries in the U.S. that actually maintains a healthy worldwide trade surplus—$4 billion to $5 billion/yr. From 1989 to 2000, medical imports rose from $3 billion to $10.8 billion, while exports rose from $5.1 billion to $15 billion. Primary trading partners are Japan, Germany, Mexico, and Canada. Noticeably absent from the market are China or other Asian nations that have staked out large claims to so many other industries. Quality and compliance remain an issue, for now.

"My understanding is in China there are very few, truly finished-device manufacturers," Morton says, "other than the very relatively low-tech kind of products. The quality and sophistication are not there today, but as we''ve seen it go in other markets, it would not surprise me to see them gain sophistication over time. China has had a major governmental push to improve quality."

That day may be here already. At January''s Medical Device & Manufacturing/Plastec West show in Anaheim, CA, several Chinese processors were spotted handing out business cards that indicated they were already well into the medical market.

Tony Deligio [email protected]

Standards compliance makes players

Acquiring the physical assets needed for success in the medical parts market, including automation equipment and clean room processing capability, is surely difficult. But physical assets are useless without the body of knowledge needed just to ante into the market. Recently, three leading European processors all improved their chances of success in the market by meeting new compliance procedures.

One of Europe''s largest injection molders, Wilden (Regensburg, Germany), last fall recertified its medical manufacturing facilities—two in Germany and one each in Switzerland and the Czech Republic—to DIN EN ISO 9001 and DIN EN ISO 13485 certifications standards. The molder has also added procedures for compliance with American Food & Drug Administration (FDA) standards for registering drug master files (DMF) and process assurance in accordance with 21 CFR, Part 11. The former are listed with the FDA to ease product entry into the U.S. The latter certifies the molder''s computer and automation systems for storage of information relating to part production, a must in an industry where product liability can be disastrous.

Compliance with U.S. standards is difficult but necessary, say Wilden officials. The long and expensive development period associated with medical parts means processors must compete in the international arena, and especially in the massive U.S. medical market, to recoup R&D costs. Another quality assurance step is now being introduced which, in accordance with FDA requirements, will screen raw materials for extractable and leachable additives before the materials are processed. The processor must also document that no further additives are subsequently employed or added during processing.

Wilden added medical parts processing as a counterbalance for the larger volume of business it does with the oft-unstable automotive market. Two other leading European processors, Balda and Perlos, took the step into medical to lessen swings in their lead market, telecommunications.

In early 2002 Balda (Bad Oeynhau-sen, Germany), which controls about 15% of the global mobile phone parts market, entered medical with a focus on equipment for diabetics and asthma sufferers. Balda''s move was preceded by nearly a decade by Finnish mobile phone parts'' molder Perlos, which began molding medical parts in 1986; it placed its bet on asthma inhalers.

Balda''s move into medical parts molding was expected to bear fruit last year. But the firm''s entry into medical has not been all smooth. In a December 2003 interview with German publication Euro am Sonntag, Balda CEO Joachim Gut admitted that the firm''s medical division sales, projected to hit €17 million last year, would only amount to about €3 million. The more optimistic projection was based largely on the predicted success of its self-injection device for diabetes patients.

Gut admits the firm underestimated the complexity of the medical market. Since September 2003 it has the certifications required to market products globally. This year it begins high-volume processing on its second medical project—a dry powder inhaler for asthma sufferers—for ac Pharma and Hagepharm. Balda expects its medical parts sales to reach €80 million by 2007.

Perlos has been contracted by Hovione, a Portugese chemicals firm serving the pharmaceutical industry, to mold that firm''s dry powder asthma inhalers, with production starting this spring in cleanroom facilities built last year at its site in Sutherland, Scotland. This brings to four the number of inhaler models the firm molds; it claims to be world leader in this application.

Perlos officials say the demand growth rate for drug delivery devices is about 10%, the same as for its much larger mobile phone business. Last year sales in the medical market accounted for €32.9 million, up 25% and about 11% of Perlos'' net sales. Despite the jump, the firm has put on ice plans announced early last year to divest its medical business as a stand-alone operation.

Matt Defosse

Internationalization, new materials, and miniaturization in European medical device processing

In Europe, as in other developed areas, age-related demographic changes are spurring the health care market. The longer people live, the greater the likelihood of greater demand for medical services. Cost concerns call for treatment options that are both efficient and cost-effective.

However, Volker Hempel, organizer of MedicaMedia, a workshop and forum held last November in Düsseldorf, Germany, says there is often a disparity between necessary product ideas and concrete problem solving. "The gap between vision and application results in part from research and development offering good products without first looking at a realistic implementation," Hempel says.

Some recently introduced products to the European medical market are are also tackling markets beyond traditional borders. "There is a clear tendency toward internationalization," says Karin Taiber, responsible for marketing at medical processor Wilden AG (Regensburg, Germany). "Compliance with FDA standards is gaining increasing importance for companies that want to function as global players."

Such products include a new family of medical hoses extruded from high-temperature (>300C) polyetheretherketon, polyetherimid, and fluorinated ethylene/propylene in sizes as small as .07 mm. "The tendency is toward new materials, including coated ones, that demonstrate improved slide properties, increased biocompatibility, or nanostructures," says Johann Christian Wendl, manager of the medical marketing division of processor Rehau AG+Co., based in Rehau, Germany.

Nanocomposite coatings are reportedly finding new niches in easy-to-clean or anti-stick surfaces, separation, and slide properties. Processor Moller Feinmechanik (Fulda, Germany) says nanocomposite coatings can improve hygiene by repelling dirt and moisture as well as providing residue-free cleaning using small quantities of cleansers.

Another trend seen is toward further miniaturization in medical technology. Bartels Microtechnik, based in Dortmund, Germany, has just introduced a micropump smaller than a euro-cent. "Typically these components are manufactured using silicon, but this imposes limits on their geometry because of the natural crystallization levels of the material," says Frank Bartels, directing manager. "We have developed polymer [polycarbonate] alternatives." Only the micro-injection molded pump''s actuator is made from a piezoceramic and glass, the latter functioning as a membrane. "With these products we can take the leap into the mass markets," Bartels says.

Robert Colvin

Contact information

Frost & Sullivan   www.frost.com
Medical Device Consultants Inc.   www.mdci.com
Reaction Injection Molding Inc.  www.mhaplastics.com
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