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Confronting the New Post-COVID Complexities of the Orthopedics Industry

The orthopedic industry is highly complex and fiercely competitive, which puts significant pressure on OEMs. A rapidly evolving market, complex and highly regulated processes, sourcing and procurement challenges, and difficulty balancing supply and demand can make overall orthopedic complexity more than the sum of its parts.

Yet this level of complexity was the norm before the developments (and difficulties) of the last year exerted themselves on the market. After all, the height of a global public health crisis wasn’t an opportune time for many patients to have elective surgeries. As a result, there were widespread consequences for the industry, and they’ve contributed to creating a new set of complexities for the market.

With rising procedure volumes and general recovery in the medtech market, key analysts foresee full relief in the second half of 2021 as vaccine rollouts expand and accelerate. In many ways, it appears that a new day is on the horizon for orthopedics. This new day, though, brings new complexity, which OEMs must understand and address. Here’s a closer look at six key trends driving a paradigm shift for orthopedic-specific complexity.

Market tightening

Among many other things, 2020 was the year of reckoning for supply chains worldwide, and the medtech industry was no different. Its events revealed interconnected vulnerabilities in global supply chains, spurring the medtech industry to prioritize greater supply chain resilience and integration to address business continuity—and prepare for future potential shocks.

As an industry, we may be grappling with the need to build supply chain resilience, while the present market climate is very tight, as suppliers contend with critical material shortages resulting from high demand elsewhere. Given the industry dependence on raw material availability these shortages affect lead times and assembly schedules, while the market is also tight on human capital, creating a perfect storm of supply chain challenges as the recovery takes hold.

Market reacceleration

As healthcare focused on COVID, elective procedures fell precipitously over the last year. It’s no secret that the world’s biggest OEMs saw revenue from elective procedures drop by anywhere from 7% to 15% or more over Q2 and into Q3 2020. Now, though, with increasing procedure volumes and pent-up demand, the time is ripe for market reacceleration. OEMs are under pressure to grow revenue, whether from initiatives like reverse logistics to maximize inventory utilization or through introducing new products to market and pursuing M&A opportunities.

Ever-changing regulation

Remaining in compliance with evolving regulatory guidance remains a prime challenge for orthopedic OEMs. With the EU Medical Device Regulation (MDR) guidelines going into effect in May 2021 (and later, for some devices), many OEMs are now navigating conversion of their product lines from non-sterile to sterile packaging. This presents new complexity, from managing reverse logistics programs to reclaim, clean, repackage, and redeploy existing implants and instruments, to ensuring that newly manufactured devices and products are packaged in safe, compliant ways.

As a highly regulated industry, medical device manufacturing is subject to the pressures and complexities of evolving compliance standards. Partnering with a trusted industry expert can help OEMs maintain a bird’s-eye view of the evolving regulatory landscape to navigate change more easily.

Remote work and distribution

While 2020’s worldwide shift to remote work happened nearly overnight, the trend toward increasingly remote work is nearly a decade old. According to Gallup, nearly 40% of employees worked remotely some of the time in 2012. Given what we’ve experienced, a hybrid work environment may be the workplace of the future.

If this paradigm is really shifting, it changes how companies must set up their businesses for a truly efficient remote workforce. This affects how med device manufacturers may opt to distribute finished goods, as well as how they operationalize their pick, pack, and ship operations. With an eye to efficiency in a competitive market, it’s advantageous to outsource with an expert partner, who can unlock the flexibility to scale with demand.

Supply chain integration

We’ve already mentioned the vulnerabilities that supply chain breakdowns unveiled across industries, including raw material and component shortages, difficulties in forecasting demand, capacity and labor restrictions, and delays in moving goods around the world. Even as the current health crisis ebbs, strain on healthcare systems around the globe is projected to continue for some time, which will create increased demand, change inventory flow in and out of hospitals, and perhaps continue to affect material availability. As a result, many medtech businesses are prioritizing increased end-to-end supply chain visibility and tighter supply chain integration to facilitate agility in these uncertain times.

Though the supply chain challenge is a high priority for many firms, it’s a difficult one to solve internally—and as we’ve seen with the distribution of COVID vaccines, sometimes the final miles can be the most difficult. Tighter integration of the distribution function can be a (somewhat) quick win for firms to get product to market more effectively and efficiently. This is why savvy firms are looking to expert outsourcing to provide the right insight and tools to solve today’s supply chain challenges.

Growth opportunities

Even before COVID, there were signs of accelerating growth in robotic assisted surgery. Increasing demand for minimally invasive surgery, technological advancements, and a large potential market were all important factors. Over the last couple of years, M&A activity and increased competition have helped to accelerate market growth. Several of the world’s largest orthopedic OEMs see robotic assisted surgery platforms and products as true growth drivers for the future.

These products introduce new complexities, from go-to-market challenges like kitting and distribution to regulatory compliance and shifting sales approaches. As firms look to earning or expanding marketshare in robotic assisted surgery, it will be essential to tap proven product launch expertise in the major platforms that manufacturers and healthcare systems are adopting.

With deep roots in the orthopedics industry, Millstone understands complexity. We know that things don’t have to be done the way they’ve always been done. As your expert industry partner, we can help you understand and meet the challenges of our new paradigm of complexity to help you focus on the products that will change patients’ lives.

At Millstone, we understand the challenges. We believe that quality drives patient success and that the expertise of a trusted outsourcing partner can help at this critical time. That’s why we’ve perfected all the capabilities medical device manufacturers need to get to market. Today we offer post-manufacturing and aftermarket services to more than 50 customers, including some of the top 10 orthopedic companies in the world. We are constantly evolving our processes and services to help OEMs achieve sustainable success. We offer clean room packaging, medical device specific warehousing, finished goods distribution, loaner kit management, advanced inspection and reverse logistics services—all with an unparalleled focus on quality.

 

What could we help you do better? Learn more at https://millstonemedical.com.

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