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Balancing risk and reward.

German writer Johann Wolfgang von Goethe once observed: "Knowing is not enough. We must apply.

The devil surely is in applying the details. Few industries realize that as well as medical devices. With safety and effectiveness depending on what's often the life-or-death precision of an application, ultimately there's no such thing as even a "simple" catheter, IV tube or syringe. Though medical device companies increasingly have been recognized--by the general public, Wail Street and the media--for their positive contribution to patient care, the spotlight also brings with it a healthy helping of scrutiny (from international regulatory bodies, in particular). Recent calls on Capitol Hill for greater oversight by the FDA of all areas of healthcare have been constant, and both houses of Congress have been grilling the agency's top officials and the White House about what they consider a lack of necessary funding to protect public health (see Top of the News on page 12).

What does all this attention mean? As far as broader industry impact, the pros and cons depend on your point of view and are open for discussion. Undeniably, however, for the medical device outsourcing industry, it means a greater share of the risk and responsibility (and reward when the industry does succeed). Outsourcing continues to grow as a larger factor in device firms' product development and manufacturing strategies. As such, it will become harder to be a "faceless" supplier.

"There is a general trend toward looking for strategic partners as opposed to outsourcing companies," said Falguni Sen, PhD, professor of Management, Graduate School of Business at Fordham University in New York, NY, and an internationally recognized expert on medtech outsourcing issues. "The advantage of strategic partners is that even risk is shared. A number of uncertainties in technology, economy and regulatory systems is increasing the element of risk in new product introduction, and firms are looking for ways to spread that risk."

Sen recently spoke with me as part of this month's full-service outsourcing feature (page 50).You'll find this theme, among many others, explored in greater depth, along with perspective from a variety of industry leaders from different sectors of the industry. The themes of increased scrutiny and risk are examined even further throughout this month's issue.

"A Quality Eye on Suppliers" additionally examines how contract manufacturers and suppliers in the medical device industry will have to prepare themselves for the harder line being taken by regulators. This feature article (on page 84) also discusses upcoming industry guidance from the Global Harmonization Task Force, which is charged with achieving greater uniformity among international medical device regulatory systems.

In "Risk Management Drives Supplier Development ... and Demise," MPO columnist Marc Miller writes, "Two tectonic forces are converging in the medical device industry today: risk management and outsourcing. Their impact is producing waves that are only now beginning to wash up on the shores of industry's numerous suppliers." As always, Miller's depth of experience provides sharp and insightful guidance and is not to be missed. (You'll find his smooth prose on page 24.)

But lest you think it's all about compliance gloom and doom, allow me to provide some positive figures to end on an upbeat note. According to a recent study report, OEM Contract Manufacturing in Medical Devices, World Market, Vol III: Finished Clinical Products and Systems, by research firm Kalorama Information, the outsourcing of commodity and non-commodity finished clinical products is a $13.6 billion market worldwide, with 69% of the total coming from the United States. The largest sectors--cardiovascular, respiratory and orthopedics--are none too surprising. What is impressive, however, is that Kalorama researchers expect the total market size to double by 2010.

Perhaps potential market gains such as these make the additional scrutiny and burden of true partnership a lighter load to bear. And helping you stay on top of what's ahead and prepare for it, we hope, makes a complex process easier. Armed with that knowledge, it's time to go forth and apply.

Christopher Delporte

Group Editor
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Title Annotation:Editor's Letter
Author:Delporte, Christopher
Publication:Medical Product Outsourcing
Date:May 1, 2008
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