Medical Moulders Look Forward to Double-Digit Growth

Undaunted by economic turmoil, medical device manufacturers expect another year of double-digit growth in 2009, and several are looking to expand capacity, writes Plastics News reporter Mike Verespej in an article published on 12 January. But at the same time, manufacturers are placing a greater emphasis on efficiency, and some mergers and acquisitions activity may be put on hold.

Verespej writes:

“The U.S. appears to be more cautious than Europe, but we still have high expectations of growth,” said Kevin Andrews, president and chief executive officer of Moll Industries Inc. (Dallas, TX, USA). Last year Moll expanded cleanroom capabilities at its medical components plant in Seagrove, NC, and added a third cleanroom at its plant in Empalme, Mexico. “I don’t see a significant slowdown in the medical business,” Andrews said. “Much of what we do is in fluid delivery and that business has been steady. Six months ago, we were projecting 11% growth with confidence. Today, we are still targeting 11% growth in 2009, but with caution. We have the investments in place to support that. There are some inventory adjustments as companies try to manage their capital, but the adjustments are far less” in medical devices than other industrial sectors.

The outlook and approach are similar at injection molder United Plastics Group Inc., a contract manufacturer in Oakbrook, IL, USA, that grew its medical business from $18 million to $25 million in 2008, and expects medical sales of $35 million in 2009. During that same time frame, medical has grown from 11% of UPG’s total sales to a projected 27% for 2009.

“We are cautious and watching business closely,” said Matt Langton, vice president of sales and marketing, as customers are cautious about capital spending. “But we expect our medical business will grow in double digits again, around 15%, based on business we have already won,” he said. “We haven’t seen a huge impact from the economic downturn because whether the economy is good or the economy is poor, there is a need for medical care.”

With that in mind, UPG is adding a cleanroom that it will have up and running this quarter at its Minneapolis plant; doubling the size of its Suzhou, China, operations after adding a cleanroom at UPG EPZ Co. Ltd in Suzhou last quarter; and making upgrades to its cleanroom in Fremont, Calif.

“We stepped up our sales effort at the end of 2008, and have as much activity now as we did at the beginning of 2008,” he said. “One of the keys for us is to find ways to grow customer business and markets.”

Global injection moulder and contract manufacturer Nypro Inc. (Clinton, MA, USA) also foresees double-digit gains in its healthcare business in 2009, and plans to grow its healthcare footprint 20% with expansions that are likely to be announced by the end of the first quarter. “The expansion will include bricks-and-mortar, people, infrastructure, and plant and equipment,” said Brian Payson, vice president of business development at Nypro Healthcare.

“We are projecting growth in the coming year, and our projections are to maintain margins through operational improvements and leverage of existing assets,” Payson said. That includes building on the strength of its drug-delivery products, he noted. “We are expecting mid-double-digit growth between 15 and 18% in Pan-Asia, 6 to 8% in Europe and 9 to 11% in the Americas. “But we are looking at tightening our belts across the board, and operational efficiency will be a core focus because health care is not immune to cost pressures,” Payson said. “We are hedging that the economic downturn is not at the bottom yet and [are] forecasting that way. We are doing more than a lot of companies are doing to assume things could get worse.”

Tags: Business News, moll medical, Moulding, Nypro, UPG