By Mark R. Smith, Contributing Writer
The medical device manufacturing industry is an innovative, thriving industry, to be sure. But even innovative, thriving industries entered 2025 with questions concerning making and assembling product, harnessing artificial intelligence, the new administration’s direction and, of course, costs.
But answering those questions is what leads to progress.
“With the ongoing pressures in health care to control costs, I believe the industry will continue to seek innovative ways to develop and produce products in a more efficient, cost-effective manner,” said Bob Vitoux, president and CEO of Warsaw, Ind.-based OrthoWorx, “while not forgoing the importance of quality and efficacy that has long been the focus in its care for patients.”
“Looking for ways to automate and simplify the various processes wherever possible will be the key,” said Vitoux, “as given the tight and ever-changing labor market, we find ourselves routinely challenged to have sufficient manufacturing ‘artisans’ in our talent pipeline to produce products the way we have in the past ― and that’s what makes it imperative to find innovative ways to address the needs of the market.”
Workforce Skills
“There are many matters to address in this complicated mix,” said Gray Swoope, president and CEO of Vision First Advisors, Tallahassee, Fla.
“As the industry operates today, there are concerns about the FDA approval process,” said Swoope, “however there seems to be an opportunity for new technologies.”
Such as, for instance, wearables. “Almost every industry is in the midst of a tech revolution with wearables,” he said. “Including products like a digital stethoscope incorporating AI. So when you look at the industry as a whole, everything is changing.
Also know that, due to the value add, there are opportunities in the site selection industry to set up a North American presence for products that are being manufactured offshore.”
He used the Apple Watch and Kardia as examples. “You can check your heart rate and other information for your doctor,” said Swoope. “There is even a wedding band that measures heart rate and can provide other medical information.”
That the user is contemplating buying these devices [and can share information with their doctor] means the market will expand. “I feel like there will be a huge space,” he said, “that I think will be embraced by the new administration.”
As the industry transitions, the skill sets necessary to make these and other products will change, too. “A more highly-skilled workforce will develop, as opposed to more of an automated, assembly-line approach,” he said.
Such an upswing in new technologies and the necessary capital investment “has happened in every industry sector. We’ll see more capital investments and fewer new jobs,” said Swoope. “However, the good news is that there will be more skilled jobs that pay more and the work involved will be much less mundane.”
That has also meant the labor shortage has been evening out. “As we came out of COVID-19 we had a labor crisis, but the workforce had already been shrinking,” he said. “So companies were contemplating how to produce more product with a smaller workforce; the pandemic just brought it more to the fore. For that reason, these companies will have to train new workers or make other training easily available.”
The crux of the matter revolves around how much product can be produced within a local labor force. Swoope then pointed to what brings the industry to this juncture: money.
“Overall, private equity is looking at what the health care needs are for this country. Those needs are being addressed by startups and they’re looking for money,” he said, “and there is money available via venture capital concerns, tech transfer programs, academia,” etc.
And those investors aren’t just in Silicon Valley anymore. “They’re all over the country,” said Swoope. “The capital is there for solutions and it could be money, intellectual property rights, royalties,” etc.
Tight Margins
Speaking of money, at the New York office of Washington, D.C.-based FTI Consulting, Senior Managing Director Rick van der Vegte and company have worked on many bankruptcy, restructuring and business transformation cases concerning medical device manufacturing. He said that one of the biggest challenges is working within the swirl of changing regulations.
“For instance, concerning updated European legislation, the European Union Medical Device Regulation forces companies to track what devices are used at what locales,” said Van der Vegte. “That’s very expensive and labor intensive because it’s challenging to track products after they’ve been sold.”
Many companies “are scaling up to cope,” he said, “and have had to use purveyance to obtain feedback on any product issues or failures. If there is an issue with one product, significant effort is put into analysis and remediation of that single issue to the full portfolio of sold and unsold product. That adds expense to post-marketing and sales efforts, resulting in medical devices companies hiring dozens, or even up to 100, full-time equivalent employees working on various post-marketing issues.
“And these are specialized workers,” he said, “as they’re researchers and writers who try to solve whatever issue is at hand.”
That’s just part of the reason why on the manufacturing side, cost pressures are intense. “In addition, due to the geopolitical climate, some companies want to be more independent and therefore want to oversee their manufacturing processes closer to home,” Van der Vegte said. While that topic has been discussed ad nauseum since COVID-19 hit, “it had been ongoing. It was just amplified by the pandemic.”
Van der Vegte offered the example of an orthopedics product. “About 65 percent of manufacturing steps are handled in China, before the product is forwarded to the EU or the U.S. That’s still very common. The product might have a “Made in the U.S.A.” sticker, but many of the smaller parts may have been made in China or elsewhere. This is such a global industry that there’s no way that will ever fully change.”
This leads to the point: making money.
“The margins in this space are really tight. Prices in the U.S. are partially determined by insurance companies and their reimbursement policies. This makes for a tricky triangle between the manufacturers, insurers and the health care providers who use the product clinically.”
Still, Van der Vegte said there is no one overarching issue as to why companies go under, restructure, conduct layoffs, etc. “There remains a huge need, especially in orthopedics, and the industry overall is still growing and strong. Many materials and devices have continued to develop.”
They’re doing so, as Swoope noted, with a big new twist. “They’re increasingly paired up with electronics and are getting more personalized to the patient,” he said. The end is not in sight, and these advancements should be welcomed as this sector continues to improve patient outcomes, even though new challenges are introduced.”
More Data, Tech
New challenges often spark innovation, as Vitoux can attest.
“In our community, which is also known as the Orthopedic Capital of the World (a registered trademark of OrthoWorx),” he said, “we’ve been quite fortunate to land a new orthopedic/med tech hub site through an organization called Plug and Play, one of the largest startup accelerators in the world.”
“With approximately 75 of these types of hubs around the world in support of various verticals,” said Vitoux, “we expect this to be a major contributor for startup companies that will help our orthopedic industry with the advances necessary in products, services and the like.”
As the orthopedic field continues to evolve, “the traditional ways in which we have served the market are moving toward a more advanced approach,” he said, “that incorporates more data and technology into the entire continuum of care for the patient by the surgeon and the manufacturer.”
That’s being accomplished by developing new products and becoming more focused on more than just the surgery through engagement, pre-operatively and post-operatively.
“Today, it’s more about innovation and product advances than ever before and technology is fueling that movement,” Vitoux said. “We’ve already seen significant movement with a heavy percentage of traditional surgeries going to outpatient surgery centers in lieu of hospitals.”
Historically, patients have delayed orthopedic procedures as long as they could. “But with the significant advances continuing to be made in materials, products and procedures, that’s no longer the case,” he said. “Today, the surgeries are less invasive, more routine, and the patients are getting younger and younger.”
Investment Needed
Meeting challenges is also a key theme in the regenerative medicine sector, said Dr. Ruchika Nijhara, executive director of the Maryland Stem Cell Research Fund (MSCRF) at the Maryland Technology Economic Development Corp. (TEDCO), who emphasized “this dynamic landscape.”
The medical device manufacturing field “faces significant challenges, yet it is simultaneously experiencing remarkable developments that hold promise for the future,” said Nijhara.
One of the primary hurdles in this field “is the transition from prototypes to mass production,” she said. “Ensuring consistent quality, sterility and efficacy of biologically-based products, such as stem cells and tissues, is no small feat. Overcoming these challenges necessitates the implementation of advanced manufacturing techniques to effectively deliver innovative therapies to patients who need them.”
Nijhara noted that recent technological advancements “have made tackling these challenges more feasible.”
“Innovations like 3-D printing, bioprinting and microfluidics are revolutionizing manufacturing processes, allowing for greater precision and efficiency tailored specifically for regenerative medicine applications,” she said. “MSCRF plays a crucial role in supporting companies as they build these advanced manufacturing solutions. For instance, the Manufacturing Assistance Grant program enables organizations to automate scaling process or to create or acquire modular manufacturing facilities and prefabricated clean rooms, as well as closed systems.”
But in this field, constant innovation is the rule, with the end game “enabling more treatment to come on the market,” Nijhara said, “in a constant flow of medical breakthroughs.”
And such breakthroughs require investment from various organizations, like … well, TEDCO, as “many smaller companies struggle to attract traditional venture capital within an increasingly competitive landscape,” she said.
While funding levels may be low, she remains optimistic about the future.
“Investing in this sector is key to driving automation and on shoring efforts that enhance economic competitiveness and job creation,” Nijhara said. “States like Maryland reap significant benefits from their highly skilled workforces, which are among their most valuable assets.”
So as the medical device industry progresses, the collaboration between public and private entities will be vital in navigating challenges. That’s how the key players can go about “unlocking the full potential of innovative technologies,” she said, and “ultimately transforming health care and improving patient lives.”
