Johannes Lind-Widestam was recently appointed as the new president and CEO of Elos Medtech. With previous experience in purchases and strategic sourcing, he is now ready to take on Elos Medtech and its new challenges. For Johannes, change is not a negative thing, but a way to move forward and make things happen.
Hi, Johannes! What are your expectations for your new job as CEO of Elos Medtech?
A lot is happening in the medtech industry right now, especially within the orthopedic and dental segment, which creates great possibilities. Ownership structures are changing; many small medtech companies are acquired by larger companies due to financial profit. Elos Medtech’s acquisition of the US-based Onyx Medical is one example.
Also, rules and regulations for medical devices are becoming increasingly stringent. This creates a pressure on the producers, meaning that smaller suppliers will be facing a hard time meeting these new rules and regulations. Consequently, customers will look for larger and more capable suppliers. As a result, the consolidation of medtech companies leads to higher demands on suppliers, which, in turn, leads to another consolidation of the suppliers. In other words; as the medical device industry consolidates, so does the supply base serving them. In this transformation, Elos Medtech is very well positioned to gain more business.
To sum it up; my expectations are that we should continue to grow and become increasingly important to our customers. I would also like to see further investments in our own orthopedic and dental products.
That sounds very exciting. Which part of the job are you looking forward to the most?
There are several things that I am looking forward to. I am a very result-oriented person. For example, I am looking forward to the day we reach the annual turnover of one billion SEK. I am also excited about when our own products constitute a targeted share of our total sales. Another milestone would be when our brand is so well known that we do not longer have to advertise. It would mean that we have gone from being an anonymous producer to being a well-established medtech brand.
You mentioned capable suppliers earlier. It seems like contract manufacturing is quickly turning into contract development in the medtech industry. Why is that?
There is a trend in Europe by which the financial institutions for healthcare put pressure on surgery costs. Surgery costs include three different parts: the cost for implants and instruments, the cost for sterile facilities and the cost for performing surgery. Out of these three, products are the main target for cutting costs. This puts pressure on the medtech companies’ design engineers who need to develop products that are designed to be easier to implant into the body and instruments that help reduce surgery time. Instead of doing this in-house, many medtech companies leave it to a development and production partner. This way, the medtech companies can focus on their main products.
But how much responsibility can a development and production partner actually take?
A whole lot, I would say. At Elos Medtech, for example, we have a complete performance™ offering. We have the necessary knowledge, expertise and capabilities for the entire process to develop, manufacture and distribute the products according to regulatory requirements. We have all the in-house equipment and resources required to take care of the products throughout the entire lifecycle. We understand the quality system requirements for complex medical devices. Also, the fact that we register and patent our own products creates legitimacy and builds credibility among our customers. It takes a long time to build this entire competence and it is difficult to copy, but ultimately, your development and production partner complements you.
What are the primary advantages for medtech companies of working together with a development and production partner?
Medtech companies only have so much capital to invest in their own business. Instead of buying new machines to keep the production running, it is often more profitable to leave parts of the production to a capable development and production partner. Doing so, the only capital the medtech companies have tied up is what is in stock. Capital is released for other things such as research, development and marketing and the medtech companies can focus on their own core products. The results are cost efficiency, improved key figures and reduced time-to-market.
At what stage should a partner be involved in the manufacturing process?
The earlier the better and dialogue is key. If the production partner is involved already in the development and design phase, and production engineering challenges are put into the equation, production costs will be cut by approximately 20 percent. The responsibility of product development as well as regulatory approval often leaves the medtech companies with small margins, forcing them into long production cycles in order to get the right margins. The outcome is often a lot of scrap. By working closely with a production partner in the development and design phase, it is much easier to ensure successful design adaptations and achieve optimal performance and cost effectiveness by design-for-manufacturing. At Elos Medtech, we can also handle customers’ material supply and make sure that the central warehouses hold the required level of inventory, which gives the customer more control over their costs.
Continue to read Part 2 – Profile in Focus: “We should not be afraid of changes in neither the medtech industry nor in life”.