The COVID Effect on CMOs.

COVID-19 caused supply chain disruptions that were as unusual as they were unpredictable, spanning the medical device development and manufacturing industries amongst many others. Despite the challenges posed, many CMOs faced oncoming issues by investing, further expanding operations to enable them to continue supporting key OEM customers.

From acquisitions and mergers to the expansion of facilities, supply chain issues haven’t stopped companies from investing and adapting to remain competitive. Switches from spot buying to contracts, prioritising a build-up in inventory, and focusing on sourcing more products domestically are just a few of the common options.

Before the supply chain crisis, moving a container from Asia to Los Angeles might cost $2,500 – now, it’s a totally different story. Despite roots being in the pandemic, there is a potentially deeper issue stemming from the staunch traditional strategies in place prior to the pandemic. The last 20 years of lean management, just-in-time inventory, and offshore productions made keeping close to production points difficult when supply chains slowed. For the last decade, companies have not needed to compete on logistics specifics. Now, those with a more robust strategy have a noticeable competitive advantage.

As supply chains clearly require serious modernisation, these key players in the contract manufacturing market are successfully ironing out the kinks in an attempt to keep up with the pandemic-induced demand. Here’s a few innovators I’ve had my eye on.

Integer

Driven by innovation and expertise, Integer is a company priding itself on manufacturing excellence and quality. Its rapid prototyping, design and development expertise, and clinical know-how are combined to offer certified guarantee on a broad range of medical devices.

Through its industry-leading platform technologies and market-ready products, Integer provides differentiated performance and portfolio expansion for companies to optimise their supply chain. In its recent acquisition of Oscor, a private medical device company headquartered in Florida that designs, develops, manufactures, and markets a variety of highly specialised devices, Integer has made a strategic acquisition - to further its product portfolio and R&D capabilities.

The new arm of its portfolio specialises in cardiac pacing leads, venous access systems, and diagnostic catheters, adding low-cost manufacturing capacity for the company. It also creates an opportunity for the construction of a new, innovative manufacturing facility in Ireland to support its fast-growing structural heart and neurovascular market and provide easy access for Europe and the UK. Integer’s President and CEO, Joseph Dziedic, said:

We expect these acquisitions to be incremental to our organic sales growth objective of 200 basis points above the markets we serve.

SteriPack

SteriPack is a company Rowan highlighted as one of the most exciting to watch in 2021, and he was right! As a leading global contract manufacturing service provider to the medical device, diagnostic and pharmaceutical industries, SteriPack sees a recent acquisition of Colorado-based Halleck-Willard, Inc. (HWI). HWI specialises in electronics, firmware, software, electromechanical, robotics, IoT, RF, ASIC and microminiature across medical & healthcare applications.

The company received a hefty $14.743 million contract from the U.S. Department of Defense (DoD) and Department of Health and Human Services (HHS), to develop domestic production capability for a COVID-19 related diagnostics product. This development meant supply chain efficiency became crucial, and a functional and strategic acquisition was a great way to ensure that.

This powerful expansion will see SteriPack's capabilities boom, as the number of medical devices and products requiring specialist design services continues to increase. Combined with HWI, it will be armed to provide innovative and responsive design, development, and contract manufacturing solutions and holistic product lifecycle management services across all key global regions.

Phillips-Medisize

Another leading CMO, Phillips-Medisize (Phillips), recently announced the plan to expand its global manufacturing capacity through several collaborations and internal initiatives. Phillips has been a global leader in front-end design, development and manufacturing solutions for highly regulated industries including pharma, diagnostics, med-tech, consumer, automotive and defence for over 60 years.

As it plans to meet growing production demands from customers in continental Europe, Phillips is set to build a state-of-the-art medical manufacturing facility in Katowice, Poland to open in 2022. This will join a range of production sites and innovation centres across Asia, Europe, India, Mexico and North America and will soon be followed by a new production facility in Suzhou, China.

Alongside this, it plans to transform an existing production facility owned by the holding group, Molex, in Arkansas to address increasing requirements in the U.S. With the continuous addition of new product introduction teams at each of its sites, Phillips expects to add at least 1,000 employees globally over the next few years to facilitate this growth. In addition, the group confirmed its strategic partnership with Credence MedSystems to enable increased production of the Credence Companion syringe system and dual chamber reconstitution systems at its European sites.

Paragon Medical

Another key global provider of medical components and products, Paragon Medical (Paragon), also recently announced the opening of a new additive manufacturing facility in Pierceton, Indiana. With over a dozen locations worldwide, including North America, Europe, and China, this move will allow the company to further expand their offering to meet growing demands in the U.S.

Simon Newman, CEO of Paragon’s parent company, MW Industries, said:

A new facility will allow us to provide industry-leading technology and processes for metal additive manufacturing. We’ll be able to produce lighter, more complex medical parts faster, helping our customers provide solutions that advance the entire healthcare industry.

He is, of course, referencing the company’s latest partnership with technology process leader, 3D Systems. With the added capability of speciality 3D printing for medical devices, the collaboration will add more than 30 years of additive manufacturing experience to the already impressive Paragon profile. It's believed that this, combined with Paragon’s medical manufacturing experience, can make a truly meaningful difference in the healthcare market.

Biomerics

Biomerics LLC is a leading mid-market contract manufacturer for the interventional medical device market, serving the Interventional Cardiovascular, Gastrointestinal, and Advanced Surgical markets. It also recently announced its plans for expansion, by doubling both its micromachining capacity and additional metals capabilities. The California-based company already has four new Willemin-Macodel machining centres and plans to add twelve more by mid-2022.

The company has also acquired a noticeable interest in Berg Manufacturing, based in Santa Clara, California. An industry leader in Swiss micromachining, Berg Manufacturing specialises in the advanced robotic surgery, endoscope, and interventional catheter markets. As part of the merger, Biomerics will also acquire Knight Machining LLC, a metal component and laser processing business located in Plymouth, Minn.

This substantial acquisition allows Biomerics to build a leading vertically integrated micro-metals business unit with a range of new specialist sectors. These include laser processing, Swiss micromachining, Swiss turning, guidewire processing (coiling, grinding, and marking), metal finishing, and medical device assembly, and allow the company to become a truly global giant in its offering.

What does this mean?

Using collaboration, acquisition and focus on more domestic production capabilities across global markets sees these key players continue to adapt and thrive. By doing so, they stand in a better position to serve customers and remain competitive.

Are you interested in discussing the effects of COVID on CMOs with me in some more detail? I’d love to speak with you. Please drop me a message at lloyd.hines@cm-medical.com.

To check out more of our content in the CM Medical content in the contract manufacturing market, click here.