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Coastal Competition? Industry Experts Believe MI can Compete in Med Device Space Thru Manufacturing

Tuesday, November 15, 2016   (0 Comments)
Posted by: Kate Oesterle
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While West Michigan may lack the depth of resources and talent that some regions of the country possess when it comes to the medical device industry, it may have one key advantage: the affordability of its contract manufacturing. 

The lower cost structure could be enough to lure business away from more established clusters around the country, if only the state and the West Michigan region heavily market their capabilities to OEMs and others in the industry. 

That’s according to industry insiders who acknowledge that Michigan plays at a distinct disadvantage in terms of the availability of capital and an experienced talent pool compared to regions like Silicon Valley, Minnesota and along the East Coast. 

“Why does biomedical manufacturing make sense in Michigan? Well, it’s because the cost of living is half or a third of California,” said Dr. Tim Fischell, CEO and chief medical officer of Kalamazoo-based Ablative Solutions Inc., who developed a catheter system to treat severe hypertension that’s resistant to medication.

Whether the region is ultimately successful in establishing a medical device manufacturing hub comes down to cost and quality, he said, noting that Ablative splits its operations between its headquarters in Kalamazoo and offices in Palo Alto, Calif., near where its current contract manufacturer is based.

“It’s crazy expensive,” Fischell said of doing business in Silicon Valley. “That is a place where (West Michigan) can compete with California and Boston. We can beat them on cost of goods. In the end, that’s what companies care about. I think that’s sellable today.” 

Ablative Solutions spends as much as $1,800 per device for contract manufacturing services on prototype runs with Cirtec Medical Systems, Fischell said. Those costs, coupled with commercial real estate lease prices nearing $80 per square foot — more than five times the average rates in West Michigan, according to local reports — make sustaining a company in California extremely difficult. 

However, if Michigan manufacturers could offer similar capabilities for complex medical devices at a lower cost, Ablative Solutions would consider moving its production to the state, Fischell said. 

Specifically, Fischell points to companies such as Kalamazoo-based Keystone Solutions Group as one of several contract medical device manufacturers that could benefit from life sciences companies shifting production to Michigan.

“If Keystone came to me and said, ‘You know what, we could do exactly what Cirtec is doing and we could do it for $1,200 a device instead of $1,800,’ come on baby,’” Fischell said. “Those are the kinds of opportunities I’m talking about in manufacturing.”

At Keystone, President Jim Medsker said West Michigan has the manufacturing base to attract business from the coasts. While the engineering, design and contract manufacturing company currently doesn’t have the machining capabilities for extremely sophisticated medical devices, it continues to invest in new equipment as it expands. 

Keystone recently completed a 17,000-square-foot expansion that it intends to turn into a “state-of-the-art” product center, Medsker said. The new addition brings the company’s manufacturing footprint up to 41,000 square feet. Keystone also recently invested in a high-tech sterile packaging machine. 

The company is prepared to continue to expand and add equipment as it gains more medical device manufacturing contracts, Medsker said. 

“We’re continually looking at adding more manufacturing capability,” he said.

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