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The Link Between Quality, Distribution, and Growth for Pharma Devices

Poised on the brink of Q2, we’re seeing signs of hope ahead. This is good news, as the last year has been difficult for everyone. Undeniably, it’s been a year of reckoning for the medtech industry. Pharmaceutical device manufacturers (and other medtech OEMs) are still facing disruption, complexities, and ongoing pressures.

The second half of 2021, though, may offer relief, according to a recent report by JP Morgan analysts. Rising procedure volumes from pent-up demand, the growing market for telemedicine, and general recovery in the medtech industry could drive organic revenue growth of more than 10%, nearly twice the CAGR of recent years. Analysts note that underlying market fundamentals provide a healthy baseline for the reacceleration to come. In other words, the stage is set for a resurgence.

Yet it’s not a foregone conclusion that all firms will benefit from the 2021-2022 reacceleration. The complex medtech market is highly competitive, with often razor-thin profit margins. Riding this wave successfully will require a proactive approach to the supply chain—and building greater resilience into connections between manufacturing and the patient. Pharmaceutical device companies and medtech OEMs must seek strategic thinking and innovation to create a stronger link between quality, distribution, and growth.

Pharmaceutical device supply chain pressures

The pharmaceutical device supply chain has come under a variety of pressures in recent years, and especially in 2020. These include risks to safety, shifting regulations, imbalances in supply and demand, and the need for greater end-to-end visibility. Add to these the supply chain vulnerabilities revealed by 2020, necessitating new evaluation of the merits of dual sourcing and redundancy. It’s clear that managing supply chain risk and building resiliency enables manufacturers to bring legacy and new products to market more quickly, fueling growth.

What’s the key to overcoming these pressures and unlocking growth, especially during this promising period of reacceleration? For many forward-thinking manufacturers, the success path runs through an expert, quality outsourcing partner.

The upside of outsourcing

Most pharmaceutical device manufacturers—along with med device firms—do not have the necessary resources to make and deploy devices alone. Even if possible, it’s increasingly cost-prohibitive to do so, which is crucially important in a market with thin profit margins and a high degree of competition. Outsourcing with the right partner gives OEMs access to expertise, capacity, and innovation they could not otherwise afford. This reality is driving increased growth in medtech outsourcing—and for good reason. Recent research has shown that in competitive markets and economies, outsourcing helps to reduce production costs by 15% or more and drive higher returns. Another recent study by Deloitte concluded that advances in technology are a priority for 90% of medtech leaders, yet these firms do not consider themselves digitally mature.

Certainly, outsourcing for expertise can be a way to cost-effectively access technological tools, advance functionality and fuel growth. An expert distribution partner with proven industry experience can help OEMs overcome the challenges of remaining in compliance, mitigating risk, and creating tighter supply chain integration to ultimately benefit the bottom line. Here are three ways that distribution excellence can help fuel growth.

#1: Improve flow of finished goods

Complexity is ever-present in the medtech supply chain, including in the distribution function. Rigid FDA guidelines, good manufacturing practices (GMPs), and state licensure requirements can make distribution of finished goods a continual challenge. Products and processes must be compliant from start to finish, or manufacturers can face serious regulatory consequences.

Tighter integration of a distributed supply chain can help manufacturers reach the market and generate ROI more quickly and cost-efficiently. This can come down to establishing a dependable flow of goods across state lines while managing the administrative burden of maintaining accreditation and state licensures in good standing. (See more about VAWD accreditation, a safer supply chain and the challenge of distributing pharmaceutical devices across state lines).

#2: Boost supply chain visibility

The challenges of 2020 revealed that pharma and med device manufacturers are overly reliant on historical data to forecast demand. This constrains visibility and creates supply chain gaps that hamper their ability to forecast and plan. In short, these are vulnerabilities in a supply-chain technology deficit. According to research by McKinsey, other systemic shocks could threaten medtech supply chains, even after the pressures of 2020 are past. This is why savvy firms should prioritize greater visibility into the supply chain, including in distribution, or the final bridge between lab and patient.

#3: Increase velocity

Velocity in the last mile can be a deciding factor in growth, especially during times of opportunity. Working with a partner with proven distribution excellence and a strategic location in proximity to a shipping hub can help pharmaceutical device manufacturers be more agile in response to demand, extend shipping windows, and scale without the constraints of fixed costs.

Outsourcing with an expert partner offers upsides, especially in a time of market reacceleration. The right partner can free a manufacturer’s resources and talent to focus on core competencies. In addition, outsourcing can bring tighter integration and a more strategic approach to the supply chain, helping to ensure quality and get product to market safely faster to drive growth.

Ultimately, growth becomes possible through better logistics and the ability to scale. Integration and distribution excellence can reduce potential bottlenecks and unlock the benefits of supplier consolidation while minimizing risk and maximizing resiliency.

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.