One burning question we often get asked is, “How much does it cost to manufacture a medical device?” In this post, we’ll unravel the intricacies of medical device production costs to provide you with a comprehensive breakdown. Understanding the costs associated with medical device production is useful for industry professionals, especially those in procurement, as it allows you to make more informed decisions, knowing, as you will, why devices cost what they do and which aspects affect that cost the most.
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When calculating the intended sale price of a medical device, you need to factor in a number of elements, including research and development costs, fulfilling regulatory requirements, overheads, parts and materials, assembly time, sales and distribution costs, and, ultimately, the desired profit. Together, all of these items significantly influence the overall cost of a finished device. This blog reviews the specifics that influence medical device manufacturing costs in order to help you to understand how those costs are calculated and where costs can be saved.
Medical device manufacturing is a meticulous process that involves a significant amount of design, development, testing and production work. The intricacy of this process is essential to guaranteeing the safety and effectiveness of devices that play a vital role in patient care.
Design and development costs can be significant as it’s likely the design process will go through multiple iterations. The designs are then prototyped, tested and refined, with the process repeated until the final design is agreed on and ready to be put into production.
Once the design and development is complete, the device will then be tooled, or set up for mass production. This involves ordering production specification tools, fixtures, assembly aids and any required automation. The assembly process must then be validated and verified to ensure repeatability prior to production beginning. Devices will be subject to quality and regulatory testing, and once completed, approved for sale, before being stored and distributed to the end users.
There are several factors that influence the cost of manufacturing medical devices and, depending on your device or project, each may affect the price more significantly. The main cost-influencing factors are:
The choice of materials and components significantly impacts costs, with specialised materials often driving up expenses. Where possible, using off-the-shelf parts and materials saves design and prototyping time, as well as any new tooling that may be required. Typically, materials and components make up around 20-50% of the overall medical device manufacturing costs.
The complexity of the device design and the research and development phase contribute substantially to manufacturing costs. The front-end design costs have to be factored into the overall manufacture or sale cost of the device, as they need to be recouped. These costs are not easy to estimate without knowing the specifics of a project but expect them to be in the high tens of thousands of pounds with prototype products.
Meeting stringent regulatory standards is non-negotiable, but the work required to gain regulatory compliance adds to your overall medical device manufacturing costs. We recommend that you CE mark your devices in your own company name. It may be tempting and cheaper to have your device supplier CE mark the device on your behalf, however, in the long term it always works out to be a disadvantage. Also, don’t forget to factor in your business ISO registration, auditing and then CE/MDR/Tech file review.
Rigorous testing to ensure your device is safe and effective is another necessary cost in the manufacturing journey. A rigorous and comprehensive validation programme should be conducted to ensure the repeatability of your prediction process, which effectively proves that each device produced is within the required specification. This will involve manufacturing a number of devices and then verifying that those devices are correct, which typically renders them unsuitable for sale. The more complicated your device the larger this cost will be. This task is crucial, as it lays the groundwork for crafting your quality assurance inline inspection plan.
Economies of scale come into play, affecting costs differently for small-scale and large-scale production. In simple terms making 1 is easy and making 100,000 is easy but only making a 100 can be very problematic and costly. The larger the expected volume, the less customised the device becomes and the more the costs above can be amortised into the sale cost. Your buying power also improves as you purchase more of the raw materials.
Sales and distribution costs involve various elements, including marketing efforts, sales team salaries, distribution channels and logistics. Investing in targeted marketing campaigns to reach healthcare professionals and end-users is essential for driving product awareness and demand. Additionally, maintaining a skilled sales team capable of effectively communicating the value proposition of medical devices is vital for driving sales growth.
These encompass the logistical challenges of delivering medical devices to your customers efficiently and reliably, including transportation expenses, warehousing costs and inventory management. Leveraging efficient distribution channels and optimising supply chain operations can help minimise medical device manufacturing costs while ensuring timely delivery to meet customer demand.
In this section we will delve deeper into each of the factors outlined above as influencing the manufacturing costs of medical devices and provide insights into how they contribute to the overall cost.
Meridian Medical has produced more than 1,500 unique medical devices over the past 30 years and quoted even more. The following costs and estimates are best guesses based on our experience of the various projects we have been involved with. There is a huge range of scale between the cheapest and easiest medical device to that of the most complex active devices that can be developed. Keep in mind that Meridian Medical is a specialist supplier of single-use, disposable medical devices when reading the following about factors that influence manufacturing costs.
Typically, materials and components should make up around 20- 50% of the overall manufacturing cost of the device. For example, this could include polymer, moulded or extruded parts, packaging, labels, cartons or anything else that would be shown on a bill of materials. If outsourcing the design work, then expect to pay a design company £50-£150 per hour depending on the complexity of the project, and then around £500 each for prototyping components, if they are being produced via rapid Service Level Agreement. 3D printed parts will be significantly cheaper, but the materials may not be representative of the finished device.
The complexity of the device and the number of parts it features will have a huge impact on your medical device manufacturing costs. Fewer parts that are easy to fit together will always make assembly cheaper than a device featuring lots of parts that are difficult to assemble. Processing and assembly time can again typically make up around 20-50% of the overall cost of manufacturing the device. The processing price is calculated by the hourly rate of assembly, for example, £39 per hour for operator assembly, divided by how many units that operator can produce per hour. Machine hourly rates can differ depending on its size, the expense to run it or its initial purchase price. However, the calculation is the same – hourly rate divided by products produced per hour.
During the assembly process there will inevitably be component scrap or in-process destructive testing, and this will be costed into the finished batch cost. The scrap and testing should always be costed separately to the main production activity, as both should ideally reduce over time and/or reduce as batch sizes increase.
Examples of in-process testing scrap can be:
The medical device manufacturing costs involved in gaining regulatory compliance is very specific to the classification of the medical device, depending on whether it is a new device or an updated version of an existing device. Auditing costs should be budgeted at £2,000 per day (per auditor) for your ISO registrations and certification. Device technical file audits can range from £2,500-£8,000 per day depending on whether the audit is remote or onsite. These costs can spiral quickly and should be factored in as recurring costs.
In this section we will look at some examples of typical cost ranges for manufacturing different types of medical devices, including low-complexity devices, moderate-complexity devices and high-complexity devices. These are general estimates and presented as examples only. Actual costs can vary depending on your specific circumstances.
The examples presented below have been created to show how parts and complexity make a difference to overall medical device manufacturing costs.
Example 1: A single component that has been purchased eg. (medical sponge), sealed into a labelled pouch, packaged in boxes of 20 and sterilised by EtO. There are 10 boxes of 20 per shipper.
The device is not inspected or tested in any way and no retained samples are kept. Batch size is 500 units.
Example 2: A single component that has been purchased (eg. medical sponge), dipped in sterile water and then dried. Each sponge is measured to ensure the correct size and weighed to ensure it has been dried sufficiently. As in Example 1, each device is sealed into a labelled pouch, packaged in boxes of 20 and sterilised by EtO. There are 10 boxes of 20 per shipper.
4 x finished products are sent to a lab for EtO residual testing and a single bioburden report. First and last samples are retained. Batch size is 500 units.
Example 3: Three medical sponges (red, green and blue) are dipped in sterile water and then dried. Each sponge is measured to ensure the correct size and weighed to ensure it has been dried sufficiently. At the beginning of each batch, each colour sponge is force tested to ensure uniform durability.
As in Example 1, each device is sealed into a labelled pouch, packaged in boxes of 20 and sterilised by EtO. There are 10 boxes of 20 per shipper. Batch size is 500 units.
There are many ways to reduce the average medical device manufacturing cost per unit, but in most cases, to be effective without compromising the quality or changing the specification, they need to be implemented over the lifecycle of the device’s production.
Your first few initial batches will typically be the lowest volume and the batches with the most teething issues. They should also have the highest number of quality control and test samples. As the number of batches increases, you will gather important data that shows the reliability of your process, as well as the outcomes of any external testing. With repeated positive results your testing can be reduced, saving time and money. You may also be able to reduce in-process testing from every device to a random sample or a few every hour. Reducing the testing and inspection based on reliable historic data could save 10% of your medical device manufacturing costs.
As the number of batches increases the process should become more streamlined and production scrap reduced (assuming you have good tooling and a standardised process). The assembly time should also reduce, as the operators become more familiar with the process. This does not always net you a cost reduction, as in most cases production starts slow and ends up in line with the goal assembly time.
Process optimisation can also occur with improved assembly aids, better tooling or automation. These can all have high, upfront costs and, as a result, are not always suitable for your first batches. However, once you have secured regular sales and have a good estimation of expected annual requirements, you may feel more confident in investing further in the process. Effective automation and improvements in tooling could save more than 50% of your medical device manufacturing costs.
Negotiating with suppliers and leveraging economies of scale will also have a huge impact on the manufacturing cost of a medical device. For all the reasons that making the product more often and in larger quantities makes it cheaper for you, the same applies to your suppliers. With effective negotiation, planning and order size increases, you may save around 50% on the materials and components of the device.
As you have read, there are a significant number of factors to be considered when calculating medical device manufacturing costs. The actual parts and assembly of the device is only one small part of the total manufacturing cost of a medical device. Many of these costs are fixed and do not change even as the number of items manufactured increases. Understanding the estimated annual sales is very important to ensure that all development, manufacturing and sales activities can be paid for.
There is not a single-one-size-fits-all formula for costing and cost optimisation when it comes to manufacturing medical devices, but understanding the whole process can provide insights as to where the costs are and how they can be improved upon.
Having manufactured more than 1,500 different medical devices since we began, Meridian Medical has built up a wealth of knowledge and expertise. Please contact us if you have any questions relating to medical device manufacturing costs, or require any help with any aspects of your medical device production.
The importance of working with a GMP (Good Manufacturing Practices) manufacturer is immeasurable in the world of dietary supplements. The FDA’s regulations for quality control state that all products marketed in the United States must meet very high standards for:
One may ask “What does this have to do with me?” If you are thinking about starting your own pharmaceutical company or dietary supplement company, or even buying and selling private label supplements, then these regulations may affect you greatly.
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There are three primary areas of regulation. The level of regulations will vary depending on what industry a company belongs to. The first is prescription drugs, which demand the most stringent requirements and must only be dispensed by a doctor’s prescription. The second area of regulation is that of over-the-counter (OTC) medications. For this, the requirement is that the product meet certain standards for identity, purity, strength, and quality. Other countries have their own regulations for OTC medications. However, manufacturers must guarantee these meet US standards when imported or exported into the USA. Lastly, there are dietary supplements.
Dietary supplements do not include any substances beyond what normally occur in food.
Not only are GMPs necessary, but are crucial for dietary supplement manufacturing. This is because people can have allergic reactions to certain food colorings or additives. There are also “natural” substances that may be beneficial in smaller quantities but cause harmful side effects if taken in excess.
GMP stands for Good Manufacturing Practices. These are guidelines that state how processes should be carried out to ensure a high level of quality. These practices are the application of FDA regulations at the highest level of quality possible. This ensure the safety and efficacy of all products produced by a manufacturing facility.
GMPs consist of three separate areas: general manufacturing practices (GMP), design controls (DC), and equipment design and maintenance (ED&M). The GMP guidelines focus on the facility, which include all equipment and structures as well as quality control operations. A facility is regulated based on the type of substance it produces. For example, a facility making antibiotics must follow different GMPs than those used to make analgesics.
The DC (design control) guidelines cover design specifications such as ventilation, temperature, etc., while ED&M cover information such as calibration of instruments and personnel qualifications.
Not only do these practices directly save lives by ensuring that medications are pure and properly dosed, but they also save money and time in the long run. A correctly produced product will not result in lawsuits or damage to brand image. This can potentially save companies thousands by preventing or limiting an inferior product from harming someone or a recall. Furthermore, production costs decrease if companies do not ever have to destroy those inferior products.
GMP guidelines are necessary for any industry where mass production occurs. They ensure that products are consistently well-made and can be trusted by their consumers. They are vital for nutritional supplement manufacturers as well as pharmaceutical companies. The FDA mandates GMP guidelines in order to ensure quality. Ultimately they end up helping any facility save time and money. And that is good for everybody.
Dietary supplements are no exception. GMP guidelines have been developed over decades for the pharmaceutical industry and were later adapted for dietary supplement use.
These practices outline how a product should be manufactured, from raw materials and components, to finished goods. Specific requirements include:
There are two main reasons why the dietary supplement industry needs to be concerned with and following GMP:
Every company has a unique philosophy regarding the production methods they use to create dietary supplements, but there are many commonalities among them. For example, all manufacturers need equipment suited to their particular processes. They require ingredients whose composition is well understood through analysis. They must have adequate personnel training in standard operating procedures (SOPs). Established protocols must exist for equipment cleaning and sanitization during crucial steps of the manufacturing process. Storage facilities for raw material ingredients and finished products should be clean, orderly and well-maintained. Lastly, one must follow well-documented procedures for processing batches of dietary supplements.
When all these crucial factors are performed and implemented according to these recognized standards, they can be referenced in the marketing of a product, helping to establish an identity with consumers. Essentially, it is the difference between saying that a supplement is “made at home” versus “very carefully produced according to strict guidelines recognized internationally.”
GMP facilitates an open relationship between manufacturers and regulatory agencies, which make certain practices (e.g. testing of every lot of finished goods manufactured) possible on an ongoing basis without having long interruptions due to noncompliance issues or unexpected surprises. Dietary supplement GMP manufacturing also ensures consistency among lots of finished products, creating marketplace confidence in the continuity of supply and quality, which is important for retailers and customers.
Several countries have recognized good manufacturing practices specifically designed for the dietary supplement industry, including the United States; Canada; Israel; Australia; New Zealand; Taiwan and most of the European Union. Manufacturing practices that meet these guidelines help prevent contamination factors like those outlined previously.
There is an increased focus on safety by regulatory agencies worldwide, particularly in light of high-profile contamination incidents involving tainted supplements leading to liver injuries or even deaths. All dietary supplement manufacturers must adhere to GMP principles if they want their products sold legally in many countries. Complying with good manufacturing practices is required by law for virtually all retailers selling dietary supplements.
Manufacturers must also ensure the safety of dietary supplements. GMP principles help to make this possible by minimizing exposure to risk factors such as:
For example, there are many ways that poor hand-washing could contaminate a supplement. A worker failing to wash their hands before taking breaks even five times during a shift may easily cause thousands of products to be contaminated.
Manufacturers must know the identity and purity of ingredients before processing begins. Whether they make supplements in bulk or they repackage bulk supplements into tablets, capsules, or other finished products, this includes:
Ingredients may be tested individually or through an integrated program that tests each as they come into the facility.
Completed product testing is vital because dietary supplement manufacturers get one chance to get it right for each lot of finished goods. Whether it’s a simple multivitamin or a complex proprietary blend, the probability of problems decreases when documentation and testing are done at all steps of the process. Knowing initially the makeup of ingredients will lead to better decisions about how to process them and what types of tests can to use to best verify identity, purity, and the absence of contaminants during intermediate steps in the manufacturing process.
As an example, if you know your botanical starting material has been tested for microbial contamination by independent laboratories using culture-based methods (which have a very low probability of false negatives), then you may not need to test every lot of bulk ingredient with expensive DNA testing techniques which can result in false negatives if not done properly.
The final step in GMP Manufacturing is generally the release of a finished batch, or lot, of dietary supplements always based on laboratory testing that confirm it meets pre-determined identity and purity specifications that set up by the manufacturer.
In some countries, testing to confirm the absence of contaminants like heavy metals is also legally required. The U.S., Canada, and Australia all follow guidelines to test for at least 10 different metals and their compounds in finished dietary supplements. These guidelines however only specify limits for total contaminants rather than speciation (the identification of species) of each metal present. So testing beyond the quantity limits to confirm whether a heavy metal is lead or mercury or one of several other types may not be legally required.
Testing to confirm the absence of pathogenic bacteria such as Salmonella and E. coli requires additional consideration. There are no widely accepted reference standards for these microorganisms in dietary supplements. The FDA has not set an allowable limit that manufacturers can rely on.
Deciding at what step in processing to test ingredients and finished batches of dietary supplements depends on the manufacturer’s approach to good manufacturing practices. What we know about testing and contamination risks associated with specific processing steps comes from published literature or surveys by regulatory agencies, while what we don’t know comes from the FDA’s limited resources for inspecting dietary supplement manufacturers. There is also the factor that the public has little insight into how well (or poorly) industry-funded inspections are conducted.
When it comes to locating unsafe processing conditions, the biggest offender is probably proprietary information agreements required by contract manufacturers. They may make products under contract for other companies like retailers, distributors, and brand owners. Oftentimes, these contracts typically include confidentiality clauses that prevent these third parties from sharing inspection findings with each other. So if a problem arises with contamination or some other product safety issue, the only individuals who can share that information and work together to prevent similar problems in the future are their contract manufacturer and regulators.
In general, the steps used in pharmaceutical GMP manufacturing are also followed by supplement manufacturers, but with some key differences because of the lack of an official list from the FDA as required under section 501(a) of the Federal Food Drug and Cosmetic Act (FD&C Act). This includes requirements for written procedures, employee training, equipment validation, and preventive maintenance, documenting all activities including complaint handling, and other areas not typically included in GMPs for pharmaceuticals. Dietary supplements are a different matter.
Some 3rd party certification programs will also provide a compendium with general chapters on compounding ingredients and finished drug products, along with specific details on ingredients used in dietary supplements such as vitamins and minerals. These certification programs and educators will also provide official reference standards in GMP Manufacturing for heavy metals in dietary supplements which manufacturers can use to conduct testing. This is useful when there are concerns about harmful levels of these elements in raw materials or finished batches. [NOTE: This does not mean that heavy metals can be at any concentration, because they have been found to cause organ damage over long-term exposure.]
These parties will also provide a guide for packaging and labeling supplements, which often include information on required label statements, nutrition facts panels, warning statements, and Good Manufacturing Practices in general.
Here are a list of links that provide additional data on GMPs and in-depth definitions and examples you should be familiar with for regulatory information.
What is COA? GMP? Recall? Lingo of The Supplement Business Explained
Tips From a Regulatory Professional
Good Manufacturing Practices for the 21st Century
Good Manufacturing Practice Resources
What is GMP?
Introduction to GMPs
The supplement industry is making great strides and is actively developing its own standards for good manufacturing practices. However, more needs to be done to ensure manufacturers are following them, thus protecting the public from defective products.
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