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West Michigan Med Device Suppliers Navigate Consolidation, Pricing Pressures, Talent Constraints

Monday, November 13, 2017   (0 Comments)
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Many executives at companies in West Michigan’s medical device supply chain came out of the automotive industry only to find they’re facing all-too-familiar challenges in their current roles. 

The global medical device industry continues on its pace of rapid consolidation, driven by the cost of commercializing innovations in a highly regulated market. That’s likewise consolidated power among fewer, larger customers, who’ve increasingly targeted the supply chain for annual pricing concessions common in the automotive industry. 

That’s one dynamic reshaping how suppliers approach their business and creating opportunities for well-managed companies like the ones in West Michigan, according to executives who joined MiBiz in a recent medical device industry roundtable discussion.

The roundtable, which was sponsored by Holland-based JR Automation, included:

  • Rob Ball, CEO of Genesis Innovation Group LLC, a Holland-based portfolio of medical innovation companies whose backers proposed a $10 million venture capital fund to invest in the industry
  • Eric Icard, senior business development manager at The Right Place Inc. and facilitator ofMiDevice, a West Michigan-based medical device industry consortium
  • Jim Medsker, president of Keystone Solutions Group, a Kalamazoo-based product development and contract manufacturing firm 
  • Tom O’Mara, executive vice president of Autocam Medical Devices LLC, a Kentwood-based global contract manufacturer of orthopedic implants, spinal implants, orthopedic cutting tools and other medical device components
  • Chris Witham, president of Fruitport-based Motion Dynamics Corp., a manufacturer of small metal components and sub-assemblies used in disposable medical devices
  • Here are some highlights of the discussion. 

From the 30,000-foot view, what’s happened in the med device industry in West Michigan in the last couple of years? What’s your outlook?

Icard: What I’ve seen in West Michigan visiting 30 to 40 companies in the last year, for the most part, it’s substantial growth. I think I can name in the last 24 months at least a half dozen companies that have added on facility wise and certainly employment wise. I think overall it’s been good for the West Michigan economy to grow in the med device sector. Within the existing businesses we’re seeing a lot of expansion. On the attraction side we’re seeing a lot more interest from outside of the area. I’m responding to a lot more requests for information in the med device arena. 

Medsker: At Keystone, we’re at the early stage. We work with a lot of startups and smaller companies, usually on the leading edge. Even with larger clients, we’re working on the product development arena first and then in the manufacturing. We see the same thing, the referrals and leads and growth is pretty strong. 

O’Mara: From the manufacturing side, consolidation is definitely a big deal. The OEMs that we target — which would be the largest OEMs — definitely have a process for thinning the supply base. 

Witham: The past couple of years, I would say there’s been an accelerated number of acquisitions under the supply base umbrella. I personally think that has created an opportunity for us because a previous competitor for us now becomes a competitor to the big OEMs as far as components go. I think it’s created opportunities for us over the past couple of years.

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