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Life Sciences ERP Software Medical Device Manufacturing—Challenges and Opportunities


Life Sciences Business Mandates

It's clear the market for medical technology (medtech) – while still very profitable – is requiring manufacturers to adapt in order to continue to be successful. Here's a closer look at how the top three life sciences challenges are affecting the manufacturing process.

I. Maintaining Quality and Keeping Up with Mounting Regulatory Requirements

It could be said the U.S. regulatory environment is a bittersweet situation. The standards established by the FDA have secured the highest confidence in the quality of products being manufactured and distributed to healthcare providers worldwide. At the same time, according to a study from the Journal of Medical devices, nearly 9 out of 10 companies surveyed felt these standards and regulations were hindering innovation and global competitiveness. An example of this burden is seen in the FDA review process which is almost twice as long as that of its European counterpart, the European Medicines Agency, for devices not requiring clinical data, and almost three times as long for medical devices that do.

Manufacturers know why. If you take the US quality and regulatory requirements into consideration - from FDA 21 CFR Part 11 and ISO standards to cGMP 820, each with multiple pieces and parts - the process of meeting these compliance standards is extensive and requires a highly sophisticated approach. Monitoring, regulating, data gathering and reporting are required for the entire manufacturing process from design to delivery.

Add globalization and a variety of differing requirements across numerous foreign markets and what is already an arduous manufacturing process can become even more of a challenge for even the most equipped companies.

II. Reducing Costs and Meeting Competitive Pricing

Ernst & Young's Medical Technology Report cites that since 2008, the medtech industry's growth year over year has slowed to approximately 8%, down from an average growth of 13% consistently achieved between 2000 and 2007. Rising costs in R&D and the entire manufacturing process, increased competition, and mounting regulation — including the introduction of the Affordable Care Act (ACA) — have manufacturers searching for effective ways to maintain profitability.

Most recently, manufacturers are dealing with the ACA’s 2.3% excise tax that affects every sale of a medical device in the U.S. According to a recent report, "It’s estimated that the tax will generate about $30 billion in income for the federal government over the next ten years and, since they started making semi-monthly payments to the IRS, medical device companies have already paid more than $1 billion to the federal government under the tax."

This tax, in combination with an already cost-conscious industry and growing global competition, creates a stress for medical device manufacturers to maintain their profit margins while providing a competitive price to the consumer. This translates into decreasing costs associated with manufacturing the product and increasing efficiency across the entire process.

III. Speeding up and stabilizing new product innovation

The U.S. Medical Device Industry report, titled Challenges at Home and Abroad, reports that "During the past 50 years, the United States has provided an ideal environment for innovation that has facilitated significant advances in medical technology. This has been due to its market size, the institutional knowledge available in both the government and universities, the increase in patient knowledge and demands, and its strong venture capital community.”

It’s true — medical device manufacturing has been extremely successful in the U.S. in comparison to the rest of the world. It's estimated the United States serves approximately 40% of the world market for medical devices and instruments. Despite increased regulation and cost-related pressures facing manufacturers, new product innovation is a top priority for most medtech companies. With constantly shifting demand and increasing competition, innovation is required to maintain relevance and continue to seek profitability into the future. The challenge is not only securing R&D funding for this innovation, but ensuring a company's processes and supply chain are prepared for shifting demand and quick delivery to market of new products.

Despite these pressures, the future is not all bleak for medical device manufacturers; where there are challenges there are opportunities. With an increasingly aging population and the need for medical technology to aid in the health of the population, profitability is a certainty for companies who can efficiently compete.

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Since 2008, the medtech industry's growth year over year has slowed to approximately 8%, down from an average growth of 13% consistently achieved between 2000 and 2007.



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