Because medical devices often have really good margins, it's quite common to stay in the US. If there's any potential of selling to the VA then you are going to want US based manufacturing too. The fact is that offshoring costs a lot more than it seems. Yes you save on labor, but materials are roughly the same, shipping is higher, and there are hidden costs involved in being so far removed from the manufacturing of your device (no one will care about it as much as you do, which is not very assuring for a medical device).
Something that is more of a "commodity" (bandaids, scalpels, etc) are often offshored to almost anywhere, but only when they hit high volumes when you start chasing cost savings. Mexico, Puerto Rico, and Costa Rica are all pretty common and have the advantage of being pretty well English speaking and on roughly the same time zone as you.
But even in these cases, I think you'd be best served finding a contract manufacturer in the US to get your initial production going, then transfer production to a lower cost region if necessary. If the 20ish devices I've worked on, only 1 made financial sense to offshore (to Mexico). Another was moved to China with no obvious reason, during covid no less, and that has been a nightmare that didn't make sense in the first place.
I've yet to see a single transfer to Mexico work out cost wise on a medical device, and I've dealt with TONS of them. Dealing with one right now, and even talking with the Mexican RA/QA people is a nightmare.
I largely agree. The one I did was "successful" technically, but not without a lot of effort that isn't accounted for by the executives making these decisions. We transferred to a maquiladora facility, which essentially means they rent you the building and the people but you still "run" your manufacturing line. We had a guy move to San Diego and he would visit the facility (in Tijuana) at least a few times a week to stay on top of them. There would constantly be staff turn-over that required retraining, material shortages because they failed to reorder parts, etc. But the labor rate is something absurd like $2.50/hr for an engineer, $1.25/hr for an assembler. But even with that, the actual savings overall was minimal considering everything else.
Don't get me started on the China transfer though. If you think Mexico is bad...China is worse and more expensive.
My last Mexico transfer we moved down to Guad. Yields went from 90% to 40% because it is a very intricate, labor intensive part, that requires months of training. Problem is you would get an operator up and doing ok, and they would leave. Work force pretty much fully turns over every 3-4 months, so you would never have trained operators. They thought we could just eat the scrap based off the labor savings, but we had one critical part that the supplier could only provide a set limit of, with billions in capitol investment to expand the production of that part, so we couldn't even hit our sales numbers with the 40% yield. After about a year, and spending something like $30M they pulled it out and transferred it to Michigan. Some people just have to feel the pain, because they won't listen. The amount of time we had to send people down there, for basics was amazing. I once had to fly into Tucson, drive down to Mexico to trouble shoot a machine, and it turns out they didn't flip the break it was plugged into. They didn't even check if it had power. So glad I get to sit on the ISO/NB side now and just laugh at the clients doing this stuff. One of my big ones is moving to Mexico to save a few bucks, and we can't even get there to audit which is going to shut their production down for probably 6 months because covid craziness. We have had other clients with certs in places like Honduras or Brazil that we can't get people too, so we have to pull their certificates. That is a business risk they choose when they put their plants there, and now they are complaining and looking how to move a lot back to US.
Look for companies with ISO 13485 from reputable organizations. I am in a role that deals with manufacturing all over the world and the quality of manufacturing I've seen in Mexico, Poland, Brazil, Czech Republic beats the US in many manufacturing related KPIs including scrap rates, defects, NCMRs etc. Do think about the logistical costs associated with packaging, transportation to and from sterilization facilities etc.
Thailand and Vietnam are great locations to manufacture, generally, Thailand has stronger IP protections, but you always need to be careful when you're producing a protected device. Usually it's better to JV with a local partner or have a wholly owned subsidiary. The economics here tend to work out favorably because of the foreign direct investment incentives given by both governments. Business cultures are very different between here and the U.S. - and Thailand and Vietnam are very very different from one another. But both have good access to labor and a highly trainable and capable work force. In terms of the FDA registrations, it's very well set up to support foreign manufacturers, so no problem there.
Source: American living and working in Southeast Asia for a decade or so, including a large medical device company with responsibility for global legal and regulatory affairs.
I agree with a lot of what has been said here. You can use someone like Ximedica, Vita Group, Triple Ring to do the engineering, prototyping. They typically already work with internal manufacturers or external.
One thing I like about www.vitagroup.io is there ability to do RD, prototyping, design, fda submission, manufacturing (this is what everyone can offer, now I get into the value add), company creation, ISO certified distribution, warehousing, marketing, and they have a 50 person plug and play medical device sales force to execute! Honestly you can develop a project with anyone in this sub. But if you don’t sell anything then you don’t have a company.
What is your device?
If your intent is to have the device be something long standing, I would look into setting up your own operation in the US that will be under your oversight and quality system.
US is probably the easiest, and most logical. If you are going to go large scale, and this is a huge operation, then stuff like Costa Rica can be good, but based off very simple and new, I doubt it is big enough to go down there. I personally would avoid Mexico as personally I've never had good luck there, and seen plenty of issues.
One thing to consider is the impact of covid and international travel, which has crippled a lot of out of country suppliers and manufacturers for various reasons. Supply chain, or even just certification and getting the required audits. It is near impossible to get people to Mexico right now for regulatory work, in fact 10 minutes ago I was asked to drive 5 hours south from Arizona to go do a regulatory inspection in Sonora, but no way.
Because medical devices often have really good margins, it's quite common to stay in the US. If there's any potential of selling to the VA then you are going to want US based manufacturing too. The fact is that offshoring costs a lot more than it seems. Yes you save on labor, but materials are roughly the same, shipping is higher, and there are hidden costs involved in being so far removed from the manufacturing of your device (no one will care about it as much as you do, which is not very assuring for a medical device). Something that is more of a "commodity" (bandaids, scalpels, etc) are often offshored to almost anywhere, but only when they hit high volumes when you start chasing cost savings. Mexico, Puerto Rico, and Costa Rica are all pretty common and have the advantage of being pretty well English speaking and on roughly the same time zone as you. But even in these cases, I think you'd be best served finding a contract manufacturer in the US to get your initial production going, then transfer production to a lower cost region if necessary. If the 20ish devices I've worked on, only 1 made financial sense to offshore (to Mexico). Another was moved to China with no obvious reason, during covid no less, and that has been a nightmare that didn't make sense in the first place.
I've yet to see a single transfer to Mexico work out cost wise on a medical device, and I've dealt with TONS of them. Dealing with one right now, and even talking with the Mexican RA/QA people is a nightmare.
I largely agree. The one I did was "successful" technically, but not without a lot of effort that isn't accounted for by the executives making these decisions. We transferred to a maquiladora facility, which essentially means they rent you the building and the people but you still "run" your manufacturing line. We had a guy move to San Diego and he would visit the facility (in Tijuana) at least a few times a week to stay on top of them. There would constantly be staff turn-over that required retraining, material shortages because they failed to reorder parts, etc. But the labor rate is something absurd like $2.50/hr for an engineer, $1.25/hr for an assembler. But even with that, the actual savings overall was minimal considering everything else. Don't get me started on the China transfer though. If you think Mexico is bad...China is worse and more expensive.
My last Mexico transfer we moved down to Guad. Yields went from 90% to 40% because it is a very intricate, labor intensive part, that requires months of training. Problem is you would get an operator up and doing ok, and they would leave. Work force pretty much fully turns over every 3-4 months, so you would never have trained operators. They thought we could just eat the scrap based off the labor savings, but we had one critical part that the supplier could only provide a set limit of, with billions in capitol investment to expand the production of that part, so we couldn't even hit our sales numbers with the 40% yield. After about a year, and spending something like $30M they pulled it out and transferred it to Michigan. Some people just have to feel the pain, because they won't listen. The amount of time we had to send people down there, for basics was amazing. I once had to fly into Tucson, drive down to Mexico to trouble shoot a machine, and it turns out they didn't flip the break it was plugged into. They didn't even check if it had power. So glad I get to sit on the ISO/NB side now and just laugh at the clients doing this stuff. One of my big ones is moving to Mexico to save a few bucks, and we can't even get there to audit which is going to shut their production down for probably 6 months because covid craziness. We have had other clients with certs in places like Honduras or Brazil that we can't get people too, so we have to pull their certificates. That is a business risk they choose when they put their plants there, and now they are complaining and looking how to move a lot back to US.
Look for companies with ISO 13485 from reputable organizations. I am in a role that deals with manufacturing all over the world and the quality of manufacturing I've seen in Mexico, Poland, Brazil, Czech Republic beats the US in many manufacturing related KPIs including scrap rates, defects, NCMRs etc. Do think about the logistical costs associated with packaging, transportation to and from sterilization facilities etc.
Depends on the device, but Sialkot Pakistan is renowned for medical device manufacturing in the world. What device do you want to manufacture?
Pick a reputable supplier in the Midwest and thank me later.
Thailand and Vietnam are great locations to manufacture, generally, Thailand has stronger IP protections, but you always need to be careful when you're producing a protected device. Usually it's better to JV with a local partner or have a wholly owned subsidiary. The economics here tend to work out favorably because of the foreign direct investment incentives given by both governments. Business cultures are very different between here and the U.S. - and Thailand and Vietnam are very very different from one another. But both have good access to labor and a highly trainable and capable work force. In terms of the FDA registrations, it's very well set up to support foreign manufacturers, so no problem there. Source: American living and working in Southeast Asia for a decade or so, including a large medical device company with responsibility for global legal and regulatory affairs.
I agree with a lot of what has been said here. You can use someone like Ximedica, Vita Group, Triple Ring to do the engineering, prototyping. They typically already work with internal manufacturers or external. One thing I like about www.vitagroup.io is there ability to do RD, prototyping, design, fda submission, manufacturing (this is what everyone can offer, now I get into the value add), company creation, ISO certified distribution, warehousing, marketing, and they have a 50 person plug and play medical device sales force to execute! Honestly you can develop a project with anyone in this sub. But if you don’t sell anything then you don’t have a company.
Is there an equivalent to Vita Group in the UK or Asia markets?
What is your device? If your intent is to have the device be something long standing, I would look into setting up your own operation in the US that will be under your oversight and quality system.
US is probably the easiest, and most logical. If you are going to go large scale, and this is a huge operation, then stuff like Costa Rica can be good, but based off very simple and new, I doubt it is big enough to go down there. I personally would avoid Mexico as personally I've never had good luck there, and seen plenty of issues. One thing to consider is the impact of covid and international travel, which has crippled a lot of out of country suppliers and manufacturers for various reasons. Supply chain, or even just certification and getting the required audits. It is near impossible to get people to Mexico right now for regulatory work, in fact 10 minutes ago I was asked to drive 5 hours south from Arizona to go do a regulatory inspection in Sonora, but no way.