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EMS providers see rising prospects in medical industry

Posted: 17 May 2013 ?? ?Print Version ?Bookmark and Share

Keywords:Frost & Sullivan? medical industry? OEM? EMS?

Original equipment manufacturers (OEMs) have begun to take advantage of the capability of electronics manufacturing service (EMS) providers to streamline operations especially with regard to meeting the increasing demands of the medical industry. With opportunities for high-level product assembly and complete build projects expected to rise, the potential for EMS in the medical industry will escalate steadily in the coming years, predicted Frost & Sullivan.

The market research firm said the market earned revenue of more than $16.43 billion in 2012 and estimates this to reach $34.38 billion in 2019.

"The challenge in maintaining certified, state-of-the-art manufacturing facilities and complex supply chain operations is that it strains OEMs' profit margins, compelling them to adopt EMS," said Frost & Sullivan electronics and manufacturing equipment research analyst Lavanya Rammohan. "EMS providers, with their exposure to various verticals, are the ideal solution to manage the electronics boom in healthcare brought about by the use of wireless communications, robotics and software."

Rising demand for engineering support as well as improving EMS competencies in product introduction, manufacture design and value-add services will boost EMS growth in the medical industry.

However, despite EMS providers' growing expertise, the risk of liabilities prevents OEMs from outsourcing several services. Stringent regulations place medical OEMs under huge scrutiny, thereby limiting their outsourcing to tactical operations such as PCB assembly and sub-system assembly.

Strict regulations also lengthen the outsourcing cycle, as OEMs are cautious in decision-making and favour EMS vendors with proven expertise. Manufacturers' preference to retain IP and strategic customer touch points reduces revenue possibilities for EMS dealers.

"EMS suppliers need to focus on developing strong relationships with OEMs to build trust and capability, as OEM-EMS partnerships require long-term commitment in order for outsourcing to increase," concluded Rammohan. "Service providers must be aware of industry trends, including financial models, long sales realisation cycles, manufacturing challenges, supply chain complexities, certifications and audits, to offer all-round services."

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