Summary of Cambashi and FDANews Research Report - Risk Management
By Marci Crane
Report Findings Identify Industry Weaknesses, Best Practices, Productive Mindsets, Potential Investments, and Current Themes
Every day the ebb and flow of invisible and unorganized data remains untamed and unanalyzed. For the medical device industry that influx and efflux of information is most valuable when captured—in a brief still shot—and organized into analyzable information.
"Risk management takes multiple forms. The most obvious view of risk management involves risk to the patients using the device, but the risk to the business itself is also a critical consideration. In theory, risk management for patient safety should also reduce the overall risk for the company and lead to a higher probability of profits."
-Cambashi and FDANews Research Report
The recent Cambashi/FDANews report Risk Management: Best Practices for Medical Device Profitability 1 provides valuable data that is well organized for the medical device industry. This article summarizes the basic tenets of that data by identifying the report’s most important points. Points to Consider The report focuses on the identification of risk management weaknesses, best industry practices (identified via the observation of growth companies), possible investment opportunities and current industry themes.
The Main Message The overarching message of the report is to remind industry experts that risk management and profitability aren't likely to be mutually exclusive and that positive results in risk management will inevitably lead to positive results in profitability.
Strengthening Industry Weakness The identification of industry weaknesses is the first step toward the development of greater industry strength.
The Risk Management: Best Practices for Medical Device Profitability report found a variety of areas in which medical device companies are currently vulnerable to risk management errors and thereby vulnerable to profitability vacuums. These weaknesses are listed as follows:
Poor Product Development Processes
Inadequate Design Transfer Processes
Inadequate Low Visibility between Operations
Inadequate Incomplete Analysis
Inadequate Burdensome Corrective Action Processes
Inadequate Inconsistent Information
Inadequate Manual Processing of Compliance Paperwork
Inadequate Isolation between Business Structures
Inadequate Isolated Groups (and Mindsets) for Quality, Regulatory, Manufacturing, Product Lifecycle and Risk Management Processes
Unwillingness to Outsource
Inability to Justify Standards (Six Sigma)
Post-Market Product Surveillance is not Applied to First Stage Product Issue Prevention
FMEAs (Failure Mode and Effects Analyses) are not Focused on Design
Regulatory Affairs Groups View Change (any form of change) as a Risk
Design Validation, Regardless of its Accuracy, is not Sufficiently Adequate
"Mitigating risk and containing costs should be what drives innovation. If it does not do that, it’s a mistake. Most companies increase risks and costs because they are not willing to make risks and costs constraints to designs."
-Quality Professional Interviewed
by the Report's Research Team
How were these weaknesses identified?
They were identified in two ways:
Through the standardized research methodologies used by the report’s research team, AND
By comparison with growth companies (i.e., those companies that have experienced growth in both revenue and profitability).
Growth Company Success: Identifying Best Practices Cambachi/FDANews researchers noticed common threads and practices among growth companies in the medical device sector. These commonalities led to the identification of best practices for the industry.
Best practices and productive mindsets include the following:
A Focus on Product Quality
A Focus on Customer Service
A Focus on Manufacturing Flexibility
Utilization of Processes that will Ensure Collaboration within Departments and between them
Utilization of Processes that Ensure Collaboration between Company Sites as well as with Customers, Trading Partners and Suppliers.
Utilization of Software for the Support of Essential Business Processes (e.g., Enterprise Management Software, Supply Chain Management Software, Quality Software, Regulatory Software and Document Management Software, Product Lifecycle Management Software, and Manufacturing Execution Software)
Multi-Disciplinary Risk Management
Holistic Risk Management
Use or Risk Management Based on Sound Information
Aligned Risk Management Processes
A Mindset that is Oriented Toward Risk Management
Standards for Risk Management are Continually Improved
Early Analysis at the Concept Phase
Participation in Root Cause Analysis
Participation in Trending so Re-occurrence can be Prevented
Participate in Standards Committees
Have a Participating Clinician Staff
"…not all companies are truly focused on what their customers care about–which inherently raises the risks to the business of hitting internal metrics without gaining market share."
-Cambashi and FDANews Research Report
Have QMS Software to Manage Complaints
Opportunities for Investment The weakness and best practice information identified in the Cambashi/FDA report leads medical device companies to ask the obvious questions:
What should we do differently? Should we invest in new areas?
In answer to these questions the report offers no definite answers but does—via their study respondents—offer some potential investment advice. The most popular “investment leanings” include the following:
Quality Process (especially in the Design Control process)
Correction & Prevention (invest in less complexity))
Collaboration & Information Exchange (often related to an investment in appropriate software)
Software Use & Value
Additional Themes Additional themes current to the medical device industry will also play a part in risk management investments and improvements.
Globalization – 65 percent of respondents sell products on a global scale.
Recommendation2: Those companies that sell products on a global level are likely to benefit from increased collaboration, information
"Companies experiencing growth in both revenue and profits] are more likely to support these processes with application software for quality, regulatory, enterprise, manufacturing, and product management. As a result of these practices, they are more likely to make gains against quality, operations, and financial metrics."
-Cambashi and FDA News Research Report
exchange and appropriate software.
Device Class – 70 percent of respondents make more than one class of device.
Recommendation: Companies in this category will benefit from Bill of Materials software, document version control, etc.
Product Lines – Over 25 percent of respondents work for companies that produce 16 or more product lines.
Recommendation: Companies with numerous product lines will also benefit from Bill of Materials software, version control for documentation, and solutions that speed collaboration.
Product Complexity – 33 percent of respondents have 50 or more direct materials and three (or more) bill of material levels.
Recommendation: Companies that utilize 50+ materials and 3+ bill of material levels will benefit from Bill of Materials software that provides version control and speeds collaboration.
Mergers and Acquisitions – Mergers and acquisitions generally lead to additional product lines which usually result in additional product complexity.
Recommendation: Companies that have recently experienced mergers should determine their new levels of product complexity and consider additional risk management investments
Conclusion The results of the report are clear. If a medical device company is not increasing both its revenue and profits there is room for improvement. Also according to the report's data, improvement is likely to stem from investments in quality processes (especially design control), correction and prevention, collaboration, information exchange and software use.
References 1 Please refer to the download section below to view the full text of the Cambashi/FDANews report on Risk Management: Best Practices for Medical Device Profitability 2Recommendations are made by the author of this article and do not necessarily reflect the opinions of Cambashi or FDANews researchers.
MasterControl Inc. and its partner, i4DM, are expanding their FDA project, serving as the QMS providers for a second FDA division. The two companies have been the QMS providers for the FDA's Office of Regulatory Affairs since 2009. Now they will also serve as quality providers for the Division of Pharmaceutical Analysis, which is part of the FDA's Center for Drug Evaluation and Research.