A global game of medical technology

05 November 2015

One of the biggest challenges facing the medical sector to date has been the consumerisation of healthcare devices.

The rise in mobile healthcare platforms, products with shorter lifecycles and increasing complexity has resulted in the endemic dilution of product quality and the rise in medical device failure. Here, Steve Hughes, managing director of REO UK, explores how SMEs are using globalisation to develop sustainable products for the medical market. 

There aren't many companies bigger than Apple. Having been attacked by critics for allowing its products to stagnate in the last two years, in April 2015 the company launched the Apple watch, its first new product since the late Steve Jobs was at the helm. Although most of the technology giant's products famously bear the statement "designed by Apple in California, assembled in China" the new watch may be the last device to do so.

An influx of robotics as well as significant decentralisation of manufacturing to workforces around the world has prompted Apple's main supplier, Taiwanese based contract-manufacturer Foxconn, to restructure its business, albeit gradually, to take advantage of regional benefits in countries around the world. 

Historically a major supplier to electronics companies including Amazon, Blackberry, Google, HP, Microsoft and Motorola amongst others, Foxconn holds an enviable position as the largest private employer in China, employing over a million people as well as being the world's biggest supply-chain manufacturer with a turnover in excess of $131 billion.

It is worth taking note that Foxconn is currently in the process of installing up to one million robots to slowly replace some of its 1.3m strong workforce. Analysis by experts, including innovation entrepreneur Vivek Wadhwa in Forbes and a special report by Reuters has predicted an age of hyper-localised manufacturing.  

Decentralised manufacturing 

China's middle-income economic growth will eventually make it too cost-prohibitive to use as a manufacturing base, which is why companies in industries as diverse as medical and pharmaceutical, automotive, engineering, electronics and aerospace are decentralising their supply chains from concept design, prototyping, production, finishing, testing and packaging. 

Business will continue to use traditional manufacturing regions including Brazil, India, Japan, Malaysia, Mexico, Pakistan and South Korea to take advantage of region-specific competencies. For instance, a manufacturer might now design a medical device in the UK, produce it in India, finish it in Brazil and test it in Germany. This would take advantage of raw materials, cost of labour and a higher consumer and patient demand locally in each region. 

With the influx of robotics, many countries, including Australia, the UK and the US, will be prompted to increase the pace of reshoring, the process by which traditionally outsourced manufacturing is brought back to the home region.

The problem is that, until now, only multinational corporations with large resources at their disposal and significant political influence have been able to implement a global infrastructure. For smaller SMEs, it has always been a struggle to compete in an international market place. 

However, as countries have matured economically, supply chains have become more responsive. Furthermore, business and government are increasingly demanding global legislation and regulation and technological innovation in testing and simulation has improved. This means it is now becoming easier for SMEs to gain a competitive advantage.

The REO advantage

REO is a perfect example of this. Headquartered in Germany, they produce power quality and wound components for industries including medical, renewable, transport and industrial automation. With operations in 12 countries, REO UK can take advantage of the group's competencies, which each Strategic Business Unit (SBU) holds in a specialist division but shares across the organisation.

The team in REO Germany is responsible for R&D as well as negotiating procurement agreements worldwide. Material procurement, one of the most cost-sensitive and challenging areas of the product development process is vital in ensuring that they can offer the same product and the same pricing and packaging, as well as the same quality that customers have come to expect, worldwide.

They hold design led intellectual-property centrally in Europe, with each SBU licensed to customise and add value in each country. REO handles product testing in Germany, employing a range of simulation, destructive and type testing in laboratory conditions to mimic real-world applications. 

One of the biggest challenges for European companies initiating production outside of the EU is adherence to product quality standards. For life-critical products such as REOMED, the medical isolation-transformer, it is essential that tolerances and finishing are up to scratch. A steady rise in the use of consumer electronics such as tablets, laptops and wearable devices in patient environments has taken its toll on power quality. 

Increased levels of electromagnetic interference can skew results on monitoring equipment and potentially pose a risk to long-term patient health and treatment. In medical environments, current isolation is even more important. During invasive surgery, the skin's natural insulation is circumvented, meaning that leakage currents as low as 50mA can cause ventricular fibrillation and even paralysis.

The discrepancy in these tolerances can be a result of minute differences in the raw materials used to produce isolation components and terminal connections. Historically, the slower development of a regulatory framework in countries like India and China has resulted in product quality issues. To overcome this, REO ensure that no matter where they manufacture a medical product, it meets IEC60601-1 standards for medical electrical equipment as well as the relevant ISO and EN standards for power quality components.

With the imminent launch of the Apple watch, we may have reached a watershed moment in the pursuit of globalisation. As newly emerging countries begin to pursue service led economies and, in turn, develop their academic and intellectual property capabilities, we may quickly see the last of the Apple products bearing the statement "Designed by Apple in China, assembled in California". Going forward, the market will be much more global than that. 

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