Benefits of a Vertically Integrated Contract Manufacturer

 At Nextern, we are committed to continuously expanding our expertise to better serve the medical device industry. By enhancing our vertically integrated capabilities, we take greater control over the manufacturing process, providing our partners with increased visibility and efficiency throughout the supply chain. This strategic approach adds value and ensures a streamlined path to market for their products.

So, what exactly does Vertical Integration mean?

Vertical integration is a business strategy that allows a company to streamline its operations by taking ownership of multiple stages of production thereby cutting out external contractors and suppliers. This allows companies to be completely in control of all or most components of the supply chain from raw material to finished good.

How is Nextern a Vertically Integrated company?

At Nextern, we continuously seek opportunities to expand both upstream and downstream, reducing reliance on suppliers and contractors while enhancing control over our operations. Forward vertical integration extends our capabilities closer to the commercial or consumer end of the supply chain. A key example is the addition of full sterile packaging capabilities at our Costa Rica facility, allowing us to deliver market-ready inventory directly to our collaborators. Backward integration, on the other hand, brings more of the manufacturing process in-house by moving closer to raw material production. Recently, we achieved the ability to form and bond balloons to catheters, eliminating the need for external suppliers and giving us full control over the balloon catheter manufacturing process.

Why is working with a Vertically Integrated Medical Device Manufacturer an advantage?

Reduced Margin:

Every supplier and contractor adds a profit margin to their time and materials, leading to multiple layers of markups throughout the manufacturing process. With each additional company involved, these costs compound, driving up the final unit price. By working with a vertically integrated partner, these extra margins are minimized, significantly reducing overall production costs. While there is still a margin on the actual cost of production, it is a single, streamlined markup rather than multiple, compounding price increases.

Lead Time Efficiencies:

Vertically integrated companies are highly favorable in medical device manufacturing because they streamline lead times and improve overall timeline efficiencies. By controlling multiple stages of the supply chain, from material sourcing to component production to final assembly and packaging, dependency on third-party suppliers is minimized and delays caused by external disruptions are reduced. This level of control allows for faster iteration cycles, improved quality management, and more efficient coordination between design, development, and manufacturing teams.

Additionally, vertical integration enables quicker responses to regulatory requirements and market demands, ensuring that products reach commercialization faster while maintaining compliance with industry standards. In a field where time to market is critical, this operational efficiency provides a significant competitive advantage.

Quality Assurance:

Quality control is a critical advantage of vertical integration in medical device manufacturing, ensuring consistency, reliability, and compliance throughout the production process. By keeping key component manufacturing and assembly stages in-house, companies can enforce stringent quality standards, reducing variability and the risk of defects that could lead to product recalls or regulatory issues.

Integrated operations also enable real-time monitoring, quicker identification of potential issues, and seamless coordination between design, engineering, and production teams to address quality concerns proactively. Maintaining control over sourcing, assembly, and testing ensures full traceability and adherence to FDA, ISO, and other industry standards. This level of oversight not only improves patient safety but also enhances the company’s reputation and long-term market success.

Nextern’s Vertically Integrated Processes:

Nextern acts as a collaborator to bring concepts to commercialization using a vertically integrated approach. From design and development work to supply chain and manufacturing optimization, we deliver end-to-end solutions that empower innovation and elevate patient care.