Strategic Considerations in Selecting a Low-Cost Country for Medical Device ManufacturingAriel
Strategic Considerations in Selecting a Low-Cost Country for Medical Device Manufacturing
Outsourcing medical device manufacturing can dramatically lower the cost of operations and can play a central role in the product strategy for gaining a competitive advantage. The goal of course is in lowering prices without compromising on quality, on-time delivery, and other industry expectations. For many device designers, one of the biggest hurdles to outsourcing is finding the best geographic location for manufacturing.
The country you choose will impact everything from the cost of labor to the reliability of your supply chain and the quality of the manufacturing partners you can choose from.
This article provides an overview of the strategic considerations in choosing a new manufacturing location. We will also highlight some of the top countries for medical device low-cost outsourcing as per the industry status as of 2020.
The Trade Agreement Shuffle
Medical device designers have been hit particularly hard by the US’s recent trade spat with China. But the US-China trade war isn’t the only trade issue that manufacturers looking to outsource production need to worry about.
For example, device makers that work on US government contracts are required to abide by the Trade Agreement Act (TAA). That puts strict limitations on what products can be manufactured for the federal government in countries like China, India, and Indonesia, which are not TAA-compliant.
Mexico On the Rise
Free trade agreements with Mexico, including the recently ratified US-Mexico-Canada Agreement, make Mexico an interesting option for medical device producers. Mexico has low-cost labor and a growing population. When examining the comparison of medical device, the number of quality manufacturing partners in Mexico is still limited in comparison to the major manufacturing hubs in China.
Quality of Human Resources by Region
Another important factor that can be easily overlooked although directly impacts production efficiency is the quality of the workforce. Of course, this will depend on the culture within every individual manufacturing organization but on a macro level when looking at the region as a whole. When comparing the human resources factor by regions of the world, keeping in mind traits such as professionalism, dedication, and discipline, Asia has the upper hand.
Supply Chain The Asia-Pacific MedTech Market
Asian countries, and particularly China, have been the prime location for medical device production over the past several decades. Manufacturing in this region makes sense for several reasons.
Accessibility to Ports Impacts the Supply Chain
Many countries in East Asia, including China, Thailand, Malaysia, and Indonesia, have excellent access to ports. That makes these countries’ manufacturing supply chains more robust when relying on imported materials. It also ensures that you can get your device to market on schedule.
While Vietnam has very low-cost labor and is developing, small ports and a nascent supply chain make it less than ideal for medical device outsourcing.
Thailand’s domestic supply chain is also still developing, so it is generally best for low-complexity medical devices.
Of countries in the Asia-Pacific MedTech market, China has the largest and most robust supply chain. This makes it the ideal destination for highly experienced contract manufacturers. For this reason alone, one might say that China remains the best option for low-cost medical device manufacturing. Even despite the trade war.
China’s Medical Device Manufacturing Regulations
China has established clear regulations around medical device manufacturing, which can make it easier for designers to gain access to the massive Chinese medical market. Critically, China also has IP protection laws that are crucial to any Western medical company looking to outsource production overseas.
Outsourcing Your Device Manufacturing
Choosing a country for outsourcing manufacturing for your medical device is a major decision. While many companies have looked for alternatives to China in the wake of the trade war, China is still the best option for low-cost manufacturing of complex medical devices. The country boasts a strong domestic supply chain and has a wealth of high-quality contract manufacturers. For less complex products, Thailand offers an attractive alternative.
If you’re considering low-cost outsourcing for your medical device, contact a Quasar expert today to discuss the best option for your device among our several manufacturing plants in China and Thailand.