Key Medical Device Manufacturing Challenges that will Affect the Industry

MedTech Outlook | Wednesday, January 26, 2022

If the medical manufacturing industry can navigate these unique regulatory and market challenges, it will continue to widen as world demand for quality medical products.

FREMONT, CA: For medical device manufacturers working in connection with the Covid-19 pandemic response, 2020 has been a year of growth. According to the latest data, the industry has faced several challenges as other manufacturing sectors, with a -4.4 percent decline in US market size expected for 2020. Whether 2021 will witness a return to previous growth trends depends partly on global conditions – vaccine rollouts and supply chain stability. But also on how medical device manufacturers guide other hurdles specific to their sector. Here are the key medical device manufacturing issues that will affect the industry in 2021.

• Regulations

Traditionally regulation of medical devices has lagged the more tightly managed pharmaceuticals industry. This has been recognized and corrected for several major regulatory updates rolling out recently set to come into effect shortly. Two themes emerge from these new and updated regulations. Medical device manufacturers and distributors need robust and well-documented quality management systems in place.

• Combating Counterfeiting

One in ten medical products is substandard or falsified according to World Health Organisation (WHO) estimates. That presents a serious issue to medical manufacturers from a risk perspective: buyer trust is eroded when less effective or outright fraudulent devices are shown under their branding. There's also a significant impact on manufacturers in terms of complying with regulatory attempts to tackle counterfeiting.

• Distribution Costs

A significant issue impacting medical device manufacturers into 2021 and beyond is the high cost of reaching the market. According to leading medical device design service providers, distribution costs routinely account for more than 50 percent of all medical manufacturers' margin. This expensive model also impacts procurement, with the task of sourcing reliable, compliant, and traceable medical materials and components, usually soaking up a further 25 percent of margin. With such slim margins remaining to fuel profitability, it ultimately falls to CFOs and financial advisors to continuously monitor margins and track individual SKUs' performance across markets. And as supply chains and distribution networks head to 2021, these important financial decision-makers will need much more responsive, real-time margin reporting from their medical manufacturing software.

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