Pacemaker and Ultrasound Companies Seek Priority Amid Flea Shortage

0


[ad_1]

In the race to secure computer chips in a context of global shortage, manufacturers of medical devices claim to have found their trump card: their products save lives.

While only a tiny fraction of the chips in the world are found in medical equipment compared to cars and consumer electronics, components are essential to a range of vital devices such as MRI machines, pacemakers heart and blood sugar monitors for diabetes. To gain priority over big buyers, medical device makers say their most effective tactic is to educate the leaders of chip suppliers.

“No one wants to be the person who shuts down critical medical devices in the midst of Covid,” said Mike Arena, vice president of operations for Fujifilm SonoSite, which makes portable ultrasound devices. “When we meet a CEO or a senior vice president, they really want to help. “

A global computer chip supply crisis, fueled by growing demand for electronics as the pandemic spreads working from home, has disrupted auto production and pushed up prices for laptops and printers. Medical device makers are also feeling the pinch. In a recent Deloitte survey of medical technology companies, every respondent reported supply issues. The most frequently cited issues were delays, reductions and cancellations.

“Week to week we go through different shortages,” said Arena, adding that his company recently paid a broker $ 65 apiece for a coin which typically costs $ 1.49 due to its shortage. , for an order of 3,000 pieces.

For Fujifilm SonoSite, a subsidiary of the US-based Japanese tech giant, chip shortages have been exacerbated by growing demand for its products amid the spread of the Delta variant. Portable ultrasound machines are used in emergency rooms and intensive care units to diagnose respiratory illnesses. “Right now we have more demands than we can get for material to meet,” Arena said.

Manufacturers of medical devices are sought-after customers for chip suppliers. They are resistant to recessions, and because their products are heavily regulated, they don’t get updated as frequently as consumer electronics, which means they generate reliable business. Manufacturers of medical devices also generally pay a little more than companies in other industries because of the quality they require.

But despite all of these strengths, the medical tech industry is tiny compared to the giant auto and consumer electronics industries. In 2020, total medical semiconductor revenue was $ 5 billion, or just 1.1 percent of the overall chip market, according to Omdia, a technology data company.

Caring for a patient on a ventilator. In a recent survey of medical technology companies, every respondent reported supply issues.


Photo:

Jon Cherry / Getty Images

“We compete for parts with companies that generate hundreds of millions of dollars in revenue,” said Mr. Arena of Fujifilm SonoSite. “Here, we are someone who represents $ 50,000 to $ 100,000 a year. It’s very difficult to be on their radar.

To secure supplies, medical device manufacturers appeal to suppliers’ higher sense of duty. When a vendor recently told Fujifilm SonoSite that an order for 9,000 chips would arrive more than 60 days later than expected, Arena quickly tracked down the GM using LinkedIn. Guessing their email address, he wrote to the CEO to let them know that the chips were for medical equipment. In response, the vendor reassigned chips from other customers and 9,000 semiconductors arrived in three separate shipments over the next two weeks.

“What I’m asking them to do is take some components from your most profitable customers and give them to me so that you can do something good for the world,” Mr. Arena said. It helps that the volume of chips it is asking for would barely dent an automaker’s allocation, he added.

Boston scientist Corp.

, one of the world’s largest medical technology companies, has also persuaded suppliers to prioritize it on the basis that its products improve people’s health, according to Brad Sorenson, its senior chain vice president of supply.

“One of the biggest levers we have is this relationship,” he said. “What we do for patients and to make sure they understand it. “

This post helped Boston Scientific secure supply as typical delivery times for components quintupled from three to 15 months. The company has also integrated its own manufacturing engineers at some key suppliers to speed up production and keep lines of communication open. So far, it has met demand for its products, which include pacemakers and brain implants for the treatment of Parkinson’s disease, but barely. “There are times when we fly closer to the sun than we would like,” Mr. Sorenson said.

ResMed, which makes ventilators and other products like this sleep monitor, expects production to be limited at least until late spring next year.


Photo:

Chris Ratcliffe / Bloomberg News

Mick Farrell, Managing Director of ResMed Inc.,

which manufactures ventilators and other respiratory aids, uses the same tactics with suppliers. “I lead with the human element,” he said. “People listen to this a lot. “

His pitch: “Every chip you give me breathes a choking person.” This argument helped ResMed keep control of orders until recently, when a huge recall of its main competitor Royal Philips NV triggered a surge in demand for the devices it manufactures to treat sleep apnea.

Mr Farrell said under normal conditions the company would have been able to respond to this new request within six to nine months. With the supply crunch, he expects production of ResMed to be limited until late spring next year, at the earliest.

Germany’s Infineon Technologies is a chipmaker that has publicly supported manufacturers of medical devices. AG

. Last year, it supplied millions of chips to help ResMed ramp up ventilator production at the start of the pandemic. A spokesperson said Infineon has since given priority to medical device makers in some cases when supplies are tight.

Running out of crisps

More WSJ articles on the global chip shortage, selected by editors.

Some hospitals are experiencing long order delays due to semiconductor shortages, according to Mike Schiller, senior director of supply chains at the Association for Health Care Resource and Materials Management, an industry group. He said some members have reported delays of several months for new CT scanners, defibrillators and telemetry monitors, machines that track patients’ vital signs.

But efforts by medical device makers to entice suppliers appear to have prevented widespread shortages. Ed Hisscock, senior vice president of supply chain management at Trinity Health, which operates 90 hospitals in 22 states, said his team was on “high alert” for shortages of thousands of items containing semi -conductors in the past six months, but none have yet materialized.

“We are in a decent position,” said Mr. Sorenson of Boston Scientific. “But the repercussions here could be really significant.”

Write to Denise Roland at [email protected]

Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

[ad_2]

Leave A Reply

Your email address will not be published.