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MINIMIZING TECHNOLOGY DRIFT IN VERTICALLY-INTEGRATED MEDICAL DEVICE COMPANIES VIA STRATEGIC OUTSOURCING

07 July 2011 /Mark Benson

Published in Medical Design Technology (MDT) Magazine, by Mark Benson.

ABSTRACT: Medium to large medical device companies often strive to become vertically integrated: they might own their own silicon fab, design their own hardware, engineer proprietary protocols, build their own testing and deployment equipment from scratch, and design their own custom manufacturing processes.

Although there are good reasons for companies in regulated markets to become more vertically integrated (control over diverse processes, control of quality, and control of the supply chain), it can often cause a technology drift effect over time between the company's core competencies and industry trends.

This article discusses how outsourcing can be used strategically in key circumstances to gain valuable access to otherwise unavailable and diverse solutions from non-medical industries for medical device manufacturers thereby minimizing the technology drift effect.