In September, I delivered the keynote presentation at the LSR 2018 conference in Anaheim, CA, where key decision-makers and industry experts gathered to discuss new silicone chemistry, novel processing and manufacturing techniques, emerging technologies, market dynamics and new business directions of liquid silicone rubber (LSR).
In my presentation, I took a macro look at the business of liquid silicone from a raw material perspective, as well as a deeper focus of end-use markets for LSR and, most specifically, liquid injection molding (LIM). We discussed different markets, processes, applications, technologies and the future areas for growth—with a special focus on healthcare and medical applications—as well as the global LSR landscape and what the future holds. Lastly, I shared recent M&A, investments and consolidation in the LSR/silicone space. Here are some highlights.
What is LSR? What is LIM?
LSR has a wide operating temperature and high thermal stability. It is hypoallergenic, bacteria resistant and has high biocompatibility, making it the perfect substance for medical applications. It also has electrical resistance and is a good insulator. It’s odorless and tasteless.
Major LSR processes include LIM, extrusion, dip molding, gels, liquids, adhesives, lubricants, compression molding and transfer molding. Applications and uses include ophthalmology, healthcare, automotive (under hood and interior), coatings, lubricants, cookware, construction (building and plumbing), personal-care products, industrial processes, electronics and energy.
LIM is a long-established process, but due to the favorable benefits of LSR outlined above, LIM is experiencing increased adoption in a variety of industries. There are specific types of LSR for various applications, including medical, making it possible to take full advantage of this amazing substance in healthcare settings. LIM requires specific machinery and processing considerations in comparison to conventional thermoplastics molding, but the vast benefits are well worth the up-front capital investment.
The global demand for liquid silicone rubber is on course to reach $3.29 billion by 2025, according to a report by Grand View Research Inc. Market revenue reached $1.5 billion in 2015 and is expected to grow at a compound annual growth rate (CAGR) of 7.9% from 2016 to 2025, according to the study.
The market is being driven particularly in the medical and electronics industries as well as by aging populations and new material developments. Medical is the fastest growing segment over the forecast period, with an estimated CAGR of around 9% from 2016 to 2025. Global LSR revenue in medical applications was $285 million in 2015.
LSR applications in the medical sector include implants and devices, valves, skin-contact devices, infusion pumps and tubing. Industrial-grade LSR was the largest segment in grade category in 2015 and held 53.5% of the overall market revenue. This area is forecast to generate over $1.7 billion in revenue by 2025.
The automotive sector, the study added, includes major applications in manufacturing of LED headlights, wiper blades and several other electronic components. By region, Asia Pacific is projected to witness rapid growth over the next decade, owing to various developments across major economies, especially in the automotive and electronics industry. The regional LSR market is expected to grow at a CAGR of 8.6% from 2016 to 2025.
Silicone is a great fit for medical applications. It is the most extensively bio-tested material with biocompatibility and bio-durability, making it suitable for implants. It has versatile manufacturability and can be used in extrusion, compression, dip, dispersion and coatings. It’s lubricious and has amazing mechanical properties: Compression set, thermoset, inert range of durometer, heat stability and permeability.
Top current medical silicone applications:
- Wearables (fast growing for LSR)
- Urology, urology catheters
- Surgical drains
- Respiratory devices
- IV access devices
- Valves, o-rings and seals (IV, drug delivery, renal/dialysis, other)
- Needles, blades (coatings, lubricants)
- Ophthalmology/contact lens
- Wound care (adhesives)
- Tubing (many sectors)
- Drug delivery—transdermal, excipients (topicals)
The business and future of the silicone market: Outsourcing and manufacturing trends
Business trends in the medical industry
Outsourcing continues to increase due to the benefits of cost savings and expanding capabilities. Outsourcing also provides a global footprint of contract manufacturers and a reduction in capital investment, allowing OEMs to focus on their core competencies.
There is a continual blurring of the lines between OEMs, original device manufacturers (ODMs) and contract manufacturers (CMs). Teleflex is one example of this. “Frenemies” can be confusing to new people in the industry—there is significant buying and selling of product to competitors!
Here are the top business trends we’re seeing in the medical industry:
- Cost reduction and supplier reduction has been and continues to be a priority for OEMs
- Off-loading design and development to suppliers as much as possible
- OEMs extremely reluctant to add new suppliers, even if there is a strong need; not uncommon to have “new supplier bans”
- Supply chain management and supplier consolidation by OEMs
- Top performing suppliers with scale and comprehensive capabilities will continue to gain more business and become closer partners with OEMs
- Development of “Tier 1” supplier systems, similar to what is seen (but with many differences) in the automotive sector
- Continued M&A consolidation of CMs and OEMs
- Challenging for CMs if two major customers merge (Medtronic and Covidien or St. Jude and Abbott, for example)
- Trelleborg just acquired Sil-Pro in August 2018, after SSF acquisition in early 2017
- Non-medical, diversified industrial players such as TE, Carlisle, Molex, etc. entering the fray
- Global supply chains continue to develop overseas
- OEMs adopting Asia for Asia, Americas for Americas and Europe for Europe models
- Current trade war with China could change things going forward
Top medical silicone trends of 2017-2018
In 2017 and into 2018, we are seeing the following industry trends taking hold in the medical silicone market:
- Drug/device combination products
- Multi-material applications
- Implantable applications/minimally invasive surgery
- Tooling advancements—cold decks (“hot runners” for silicone)/robotics/better simulations
- Foamed LSR
Other intriguing emerging trends:
Wearable health-monitoring devices: Data transmission via the Internet, artificial intelligence, brain/computer interfaces, robotics, telemonitoring and even 3D printing.
In-vitro diagnostics (IVD): Remains one of the fastest growing sectors in the medical device space.
3D printing: Unlikely to have an immediate impact on the medical device industry, but the possibility of customized prosthetics and other products will likely give new meaning to the term “personalized medicine.”
Biomedical sensors: Innovations are rapidly transforming what’s possible. A single computer chip is now capable of containing a number of accelerometers, gyroscopes and magnetometers, for example.
Laboratory-on-chip: Now a reality, and paper-based sensor technology, for parameters such as blood glucose levels, are becoming common.
While silicone has been around for quite some time, technological advances using LSR and LIM continue to prove that this space still has a lot of room for growth and innovation. It is an amazing material with properties and applications that make it invaluable for nearly every industry. Based on recent studies, it is clear that this is a growing global market, with Asia and medical being the top growth areas.
About the author
As the President of Bonifacio Consulting Services, Mark Bonifacio works with medical device OEMs and contract manufacturers to help them grow organically and through mergers and acquisitions. He leverages his education, decades of global manufacturing experience and extensive international network to provide unique value.
Bonifacio worked for several major medical device OEMs before co-founding APEC, a medical device contract manufacturer, which was sold to Freudenberg Medical in 2007. Bonifacio Consulting Services was established soon afterward. The consultancy assists organizations in business growth, strategy and tactical execution, M&As, joint ventures and licensing. Bonifacio also advises on cost-reduction initiatives and operational and organizational improvements. Notable clients include TE Connectivity, MedPlast, Wendel, Onex, Medtronic and Millipore.
With a BS in plastics engineering from the University of Lowell (now UMASS-Lowell), Bonifacio brings deep engineering and operational expertise along with an entrepreneurial drive. He is well-known in medical device manufacturing and is a regular speaker and contributor for industry events and publications.