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EMS benefits from growing medical sector demand

Posted: 17 May 2013     Print Version  Bookmark and Share

Keywords:EMS  OEMs  medical industry 

The rising demand for electronic devices to be used in the medical industry is boosting opportunities for both original equipment manufacturers (OEMs) and electronics manufacturing service (EMS) providers. To be able to keep up with the demand OEMs are employing the help of EMS suppliers. With the expected increase in high-level product assembly the EMS sector will slowly make headway over the next few years.

Research from Frost & Sullivan revealed that the medical industry raked in more than Rs.89,293.48 crore ($16.43 billion) in revenues in 2012, a growth trajectory that is seen to top Rs.1.87 lakh crore ($34.38 billion) by 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 printed circuit board 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 intellectual property and strategic customer touch points reduces revenue possibilities for EMS dealers.

"EMS suppliers need to focus on developing strong relationships with original equipment manufacturers 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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