Research and development (R&D) is integral for long-term growth in any industry. In order to compete, organizations of various sizes depend on new ideas, services, and products. They can’t afford to get the process wrong.

For this reason, more and more decision-makers in medical device manufacturing are looking outside of their organization’s R&D services. Outsourcing R&D operations provides a myriad of advantages and disadvantages, but can be the intelligent choice for developing the new materials, products, and solutions that are needed to grow. New markets, evolving consumer tastes, and regulatory guidance can pull medical device makers in many different directions, beleaguering internal teams and affecting production capacity.

The benefits of third-party R&D include financial, competitive, and quality advantages over in-house operations. R&D operations can cost a lot, especially if they strain existing proprietary operations and overwhelm personnel and facilities. Expanding existing facilities can be expensive and often unnecessary. There is expertise advantage as well—medical device manufacturers have a great deal of institutional knowledge but may not have experience working with new technologies or materials. Outsourcing R&D allows manufacturers to leverage innovative information and use the resources to educate internal teams. Companies can also get viable products to market more quickly with an R&D partner.

Though not universal, there are some drawbacks associated with third-party R&D. Security and intellectual property rights are always a concern—companies must review industry standards and policies. Both parties in the R&D partnership must clearly communicate organizational structure, expectations, and project timelines as well. There can also be a knowledge gap. The manufacturer might not understand the research topic’s specifics or implications on the development process. And there’s always the issue of intellectual property (IP). Establishing ownership over IP is usually hammered out in the initial agreement but there are further risks when third parties become involved. Provisional patents can be expensive, and bringing a lawsuit over patent infringement can be costly.

There’s no universal formula for deciding between in-house and third-party R&D, so it’s best to bring together the stakeholders and make decisions based on a number of factors. Medical device manufacturers must rely on their experts to know the capabilities, resources, and expectations for outsourcing R&D. With this in mind, MPO spoke to five experts in third-party R&D services for medical device manufacturers to further shape the conversation.

• John Cooney, VP of R&D at Integer Holdings Corporation, a Plano, Texas-based full-service medical device outsource manufacturer.
• Yoshiharu Kikuzawa, president of PLA GIKEN, an Osaka, Japan-based manufacturer of plastic extrusion equipment.
• Steve Maylish, VP of strategic development at Veranex, a Raleigh, N.C.-based provider of a purpose-built, global service platform for the medtech industry.
• John Nino, CEO of Life Science Outsourcing, a Brea, Calif.-based contract manufacturing organization that offers assembly, packaging, sterilization, and specialized capabilities in diagnostics packaging and design.
• Joe Szyperski, director of advanced design and development at Medbio, a Grand Rapids, Mich.-based full-service contract manufacturer.

Sam Brusco: Do medical device customers seek the full breadth of R&D services, or do they tend to focus on specific areas? If so, which areas?

John Cooney: All customers are different. Some customers only need help with a small piece of the device, so they may ask for development of a component such as a battery, feedthrough, machined component, or a complete catheter assembly. These are usually the larger, more vertically-integrated customers. Other customers, typically the smaller earlier-stage ones, may require more comprehensive or end-to-end assistance with the whole device. 

Yoshiharu Kikuzawa: What medical device manufacturers seek is not always limited to tight tolerance of extruded products, but extends to their mechanical properties (such as elastic modulus), surface texture, and other functionalities required for later processes and/or performance of the finished products. Although we are involved with medical device development only through provision of extrusion equipment, we are ready to offer arrays of R&D services and manufacturing solutions to accommodate diverse requests from our customers.

Rheometers and flow simulation are vital tools to assess designs of screws and dies prior to manufacturing. We even built an extruder, which enables us to observe the behavior of the polymer melts inside the barrel through sight glasses and cameras. We also have multiple test extrusion lines for making prototypes for our customers.

We offer alternative manufacturing approaches to the existing medical extrusion process. The most notable example is the “multi-durometer tubing technology,” which we applied to catheter tubes and endoscope insert tubes to replace the conventional manual assembly. Extrusion is an “old technology”, but we make it our mission to explore its overlooked potentials to bring innovations to medical manufacturing.

Steve Maylish: Often, we see requests for the full breath of R&D services. For those that want a limited scope, it’s usually due to limited funding. As an example, a phase 1 grant might be great for developing a proof-of-concept device. Phase 2 on the same grant may fund the project to a working prototype or FDA submission. Other grants will help cover the costs of commercialization.

For institutional funding, there is also a milestone-based approach. Investors look for value inflection points, like proof-of-concept, pre-clinical trials, clinical trials, FDA submission/clearance, first-in-man, transfer to manufacturing, commercial launch, etc. If the project is on the simplistic side, it may be funded through the full breadth of R&D services with or without tranches. If the project is complex, it may require multiple iterations including feasibility, alpha, beta, and commercial versions along with many rounds of funding (Series A, B, C, D).

Larger OEMs may search for subject matter experts to augment their in-house engineering team or help with a highly-technical subsystem, such as optics. We suggest the high technical risk areas be addressed before starting the larger project. It’s best to retire this risk as a gating function, instead of in parallel with the development.

John Nino: In the dynamic world of medical device development, our understanding of the needs of early-stage startups is profound. These companies often require a full spectrum of R&D services, a necessity when pioneering new technologies in the medical industry. Recognizing this, LSO is actively expanding our reach to encompass the earliest phases of development. We currently offer crucial support in areas like medical device packaging and tray design, a service that dovetails with our primary offerings. These core services include medical device manufacturing, medical package testing, and sterilization validation. Our expertise in these domains is pivotal, enabling us to streamline the market entry process for these innovative startups. This approach accelerates their path to market and ensures a more efficient and effective journey toward groundbreaking innovations in the medical field.

Joe Szyperski: Many of our customers have their own R&D groups and that is generally the focus of their businesses (R&D and marketing). They tend to outsource manufacturing, but product development within their team is where their custom devices take shape. Some—typically newer/smaller—customers will seek assistance from third-party design firms who help with CAD development and drawing creation, but larger firms will handle this work internally. Over the years, we’ve partnered with the design firms, as they are often asked to recommend contract manufacturers, and these firms are a good source for leads.

Brusco: What are a manufacturer’s typical goals when outsourcing R&D services to an outside firm?

Cooney: Our customers’ primary goals are to partner with us on the production of high-quality devices/assemblies at an appropriate value. They want to leverage our deep technical expertise, enabling technologies, speed of execution, and large-scale manufacturing network to get the solutions that meet their needs.

Customers may come to us with an existing design, in which case they look for our input on how the design should be modified to fully leverage our manufacturing capabilities. Because we are vertically integrated with respect to many of our capabilities, we can simplify their supply chain and have more control over the development process. They also look to provide our own design solutions so that they, in turn, can deliver a better patient outcome or get to market faster.

Kikuzawa: While medical device manufacturers are primarily responsible for product development of devices themselves, we take charge of process development as a production line provider. One of our specialties is the existing production process, and we ensure quality of extruded products. We’ve developed an extrusion line that can seamlessly extrude catheter shafts (multi-durometer tube), mixing two types of resin. In general, the catheter shaft is generated by plural extruders and the process of connecting them together in order of their hardness. Our flagship line has reduce machines—only two extruders and one mold to mix in resin. We have a capital investment by simplifying equipment configuration, as a result of a review of the tube molding process, which has improved both quality and yield. When considering the function of R&D from a wider perspective, we design equipment with efficacy and inexpensive production lines.

Maylish: Typically, they are looking for a good working relationship with an outsourcing group that has expertise and knowledge of their space, knowing that we have done similar design projects. They also want to have control over the project and influence on the project’s direction. Clients want to know that they can trust the design team to use their best judgement to not go down too many rabbit holes, and that they are getting value for their dollars spent and that work spent adds value to their final goals or milestones.

Clients want to know that we know the FDA, MDR, CFDA, etc. process/knowledge in order to get them over the finish line, and that we can design for the user’s needs while incorporating their product requirements. They also want to know that solutions we come up with can be scaled well for their volumes—DFM.

Nino: When customers turn to firms for outsourcing R&D services, their goals are multifaceted. Startups typically search for expertise that complements their existing teams, necessitating a blend of specialized technical knowledge and access to state-of-the-art equipment and facilities. Larger OEMs, meanwhile, focus on achieving efficiencies in development timelines and cost-effectiveness. The overarching aim for both is to optimize their investment while upholding the highest quality standards. A CMO offering tailored services, ranging from cleanroom space rental to full production, is instrumental in meeting these objectives. This range of services can facilitate an efficient transition from initial concept to market entry and allows the CMO to effectively support the practical needs of various players in the medical device sector.

Szyperski: The third-party design firms are most often tasked with taking a general concept, refining the 3D CAD models, creating the 2D drawings with tolerances and GD&T, and often achieving the first working prototypes. There are certainly firms given larger budgets and will perform the industrial design (aesthetics and ergonomics) and performance testing, but from our perspective, those are 10% or less of the projects that eventually come to us as a CM.

Brusco: How does your company handle intellectual property management for an outsourced R&D project?

Cooney: Any intellectual property our customers bring to a project belongs exclusively to them. Since we have worked with most companies in the medical device space for decades, we have developed good discipline and processes for protecting our customers’ IP. These processes involve very structured project teams with electronic and physical controls for ensuring any proprietary information is protected. We also develop some of our own IP that customers can leverage when it enhances the lives of patients or gets their products to the market faster.

Maylish: We support the client in filing intellectual property but the client is responsible for reviewing the current IP landscape and freedom to operate. Any work that our client pays for, they own as IP.

Nino: Intellectual property management is a crucial aspect of outsourced R&D. We address it from two primary perspectives. First, from a quality standpoint, our quality management system is continually refined through regular audits to ensure all intellectual property is handled with the utmost confidentiality and integrity. Second, from a technological perspective, we uphold the highest cybersecurity standards and comply with NIST 800-171, a comprehensive standard covering aspects such as access control, incident response, and system and information integrity. This ensures a high level of security for sensitive information in our projects. This dual approach guarantees that our clients’ intellectual property is safeguarded and managed in a manner that aligns with the best industry practices.

Szyperski: The first step in all projects with external suppliers is to complete a mutual Non-Disclosure Agreement (NDA) to provide assurance that IP is secured and not communicated to parties who don’t have a specific reason to see the information. Many firms even disallow the mere mention that a project is being discussed, so it is important employees on the team know the specific requirements from each customer.

The use of file-sharing software (DropBox and the like) allows for only intended users to receive the CAD and drawings/specifications that must be shared, and often the files are otherwise too large to send via most email systems. With the help of document-control software that keeps file names unique and date/time addressable, the users are better able to keep track of files.

When part samples are sent to sub-suppliers for quoting purposes, they must be returned to control what gets shared. It is impossible to know who viewed an actual sample part, whereas the sharing of electronic files is typically traceable in any investigation.

One additional method of protecting IP is to limit the geographical exposure, where certain countries are more prone than others to violating confidentiality and/or exploiting IP for their own benefit. Many customers in the medical device realm have historically used only domestic suppliers for proprietary tooling and manufacturing services to limit the chances of IP theft. The use of overseas suppliers is questioned on every project.

Brusco: How has the digital shift influenced outsourcing in engineering and R&D?

Cooney: The digital shift is expanding the customer base and changing the types of technologies we are developing to improve the ability to collect, store, and transmit data. Bluetooth-Low Energy is replacing MICS-based communication. Patient monitors and controllers are giving way to mobile devices, which are readily available and in frequent proximity to the device. Cybersecurity is becoming more important. Devices are integrating additional forms of sensing to monitor patient behavior and progress, and standalone sensing devices are beginning to proliferate.

Maylish: The digital shift has affected most of the industry. There are digital software products, software as a medical device (SaMD), machine learning and artificial intelligence, software to augment or improve functionality, interconnectivity to the internet for compliance and reporting, software as a service, cybersecurity requirements and concerns, data analysis and retention, web services, software apps, remote analysis using software (pay per click), etc. These options are driving demand for software engineering, and software is now our fastest growing discipline.

Nino: The digital shift has profoundly impacted outsourcing in engineering and R&D, revolutionizing the delivery and management of these services. With the advent of advanced digital tools and technologies such as AI, machine learning, and cloud computing, there has been a significant increase in efficiency and precision in project execution. These technologies enable faster prototyping, more accurate simulations, and efficient data analysis, leading to quicker turnarounds and more informed decision-making. Additionally, the digital shift has facilitated improved collaboration and communication between OEMs and CMOs, allowing for more dynamic and flexible project management. This shift is driving OEMs to seek partners with digital expertise to gain a competitive edge in their respective markets.

Szyperski: The creation and transfer of CAD files is faster and easier than ever. As recently as 30 years ago, many of a company’s drawings were still on Mylar, and the process of converting to CAD was just beginning. Now, as in the automotive industry, a team can work on a design in the U.S. during business hours, transfer the latest files to a team in Bangalore, India, and can continue working nearly 24 hours a day to develop designs. Getting customer approval of a design change is a matter of sending a new file over for review, which can happen in minutes. The advent of document-control software that allows unique file names to be applied with each update allows for less confusion, since a single part design might change 25 times or more before it is “frozen.”

Another change over the last 30 years is the ability to perform complex Finite Element Analysis (FEA) on parts, assemblies, or entire vehicle systems, where static or impact loads can be simulated with accurate results, reducing the number of prototypes that might otherwise be generated. While 3D prototyping options are better and cheaper than ever, there are still limitations in what can be made with the proper materials in the proper geometry and/or manufacturing process. Machining parts out of plastic can be very different from injection molding, and concerns about the ability of a part to sustain the expected loads can largely be vetted with FEA. Mold Flow Analysis is one form of FEA that has been around for a number of years. It’s getting better with time, and most large CMs have their own Mold Flow software to assist the customer in assessing fill conditions, knit-line locations, venting, and warp.

These digital tools make it easier for internal R&D groups to develop new products, but it makes outsourcing of these services much easier than in the past, and the ability to transfer large files via the internet has also improved significantly in the last 10 years to make these exchanges of information almost instantaneous.