Talent pool – European med-tech manufacturing8 April 2014
Throughout the European med-tech sector, regulatory pressures loom large and many big corporations are inclined to play it safe. One way to shake this conservatism is to outsource product development to small, dynamic teams. Medical Device Developments asks Raimund Erdmann, founder and owner of Swiss industrial and corporate design company Erdmann Design, about how small companies are combining their strengths to create truly novel device designs.
Medical Device Developments: What would you say are the principal challenges being faced by manufacturers in the European med-tech sector?
Raimund Erdmann: The human-centred elements of design and engineering are becoming more relevant. In Switzerland, where we're based, the process is not so much engineering-driven as user-driven.
It usually starts with consulting and market research - you really need to check whether this product innovation is needed. Of course, then time to market is an issue, necessitating quick prototyping and quick engineering. There is also the quality issue - can you achieve the necessary quality within a short production time?
To add to the engineering aspect, there are marketing and branding issues. We work in orthopaedics for companies like Stryker and Smith & Nephew, and understand that marketing begins very early in the process. If you have good ideas, you have to ask whether they fit the company's portfolio. Does the corporation really need this innovation, or is it necessary to wait a little longer and then come at it later?
Import regulations are also a challenge, especially when you're entering BRICS countries. With high-quality products, you need to address the transportation issues, the tax issues and then the risk involved in a new market.
What sort of services are OEMs particularly looking to outsource and why? What trends are you seeing in this area?
Mainly, they like to farm out innovation. Within a corporation, if you haven't got a very specific patent-related innovation, then you can farm it out to smaller teams. Then somebody can say they know how to do it at half the price, or using a different technology, and then you can let small teams do the work in a short time.
They can bring together market research, consulting services, project management experience, human-centred design, regulatory experience, prototyping, marketing and branding. After that, you bring the product to your sales and marketing team, and then you can achieve fast results in the market. So actually, if speed is essential, it's a good idea to find small teams outside of the corporation.
This depends of course on intellectual property issues. You really have to see whether you would like to go into intellectual property or if you would prefer to do it on your own so you're faster on the market. The legal issues are a really demanding factor in the beginning, because you do need a patent if it's a long-term project.
In Switzerland there are plenty of small, specialised providers accustomed to pooling their expertise. How does this streamline the value chain for device manufacturers? Is this a sustainable model in general?
What's unique about Switzerland is that we have very small companies, so it's easily possible to put a new team together. Let's say that some companies only have ten people, and you need people with high expertise in a very specialised environment. You can put together an expert group on a specific topic and work with ten different small companies for maybe six months or a year. And at the end, when the project is done, each company goes its own way again.
Interdisciplinary work is easy for us, and we like to do it. The Swiss join forces for any kind of reasons, just to make sure innovation is guaranteed and there is a new approach for the market. At Erdmann Design, we work in an expert group for consulting, design thinking, usability, engineering and manufacturing.
It's also important to have an expert who understands the regulatory requirements. That helps because, once you've done the research, the certification and testing become a lot faster.
For instance, let's say we have a very new way of cutting bone. This is done by laser, and we have the proof of concept through animal studies that the laser can cut the bone and be very precise. We then need a robot to handle the laser, a lot of software engineering and we need to build a prototype in a very short given time; those elements together are all necessary to create the product.
But you cannot have one company working as an expert in laser technology, robots and software, so we start up a new company. We have the scientific and research expertise, and then we have producers involved that can add speed to the production process, because, if we are working on a cadaver, we need the whole system working very accurately.
How can OEMs ensure a successful partnership with a contract manufacturer? What sort of factors should they be looking for when selecting an outsourcing partner?
Partnering means relying on each other's expertise and performance; each company's speciality needs to be understood and defined for the job. The responsibility lies with the corporation that asks teams to come and help: you need to have the right partners that are performing according to your needs.
In each contract, there is a risk that you won't work well together, so, in terms of selecting the team, you need to check for competence, and understand how they will fit and integrate with your company.
One thing we have noticed is that the younger generation tends to work together a lot faster than the older generation. With the older generation, there's a certain conservative element that sometimes hinders innovation.
At what stage in the process should an OEM partner with a contract manufacturer? What are the problems associated with leaving it too late?
The earlier the better and the longer-term the relationship the better too. At the beginning of a medical project, you have to understand where the possible hazards to the user are and whether you really can implement a new technology.
More and more certification is needed, so you have to really know the regulations, and perform and test according to these regulations. If you don't meet the them, you cannot enter the market.
The med-tech industry has it easier than the pharmaceutical industry in general, but, these days, the two often overlap. So you'll have an element like a syringe that you use to inject something; it's a medical device, but the content is pharmaceutical. You therefore need to certify it as a pharmaceutical product, which can take much longer - a year longer in some cases - and you have to finance that.
So the earlier in the research phase you partner the better, as the more the outside view will contribute to the project. Even for a simple production job, the knowledge of the context will help define risk for certification.
How do you expect the European contract manufacturing marketplace to change in the future?
Regulatory testing issues will be more influenced by the regulatory complexity of the pharmaceutical industry. It's getting tougher to be innovative, because conservative design elements are certified on the market, and nobody will change a winning horse. If you innovate, you have to do it in a very short window of time, because the response always comes from the market, not through engineering and testing. The market will accept it or will force the manufacturer to modify it.
It's difficult to secure the necessary investment these days, which is why many innovations are done through start-up companies. They take risks, and have excellent people and performance, and, if they fail, it's just a small company, rather than a corporation, that will fail.