As part of its strategy to become a global solutions provider to the medical device industry, Elos Medtech acquired U.S. based Onyx Medical in 2015, effectively establishing a presence in the largest orthopaedic market. More than two years have passed since the announcement, and Memphis-based Onyx has had a considerable impact on the Swedish company’s profit and its ability to penetrate the orthopaedic market, specifically in trauma, extremities and spine. Elos Medtech secured revenue of $62.5 million in 2016, with the orthopaedic business accounting for one-third of the company’s revenue. Elos Medtech considers its business structure to be a defining element of its ability to serve customers. While it is a global company with the proper scope and scale to focus on several medical industries, each operating unit acts as an individual entrepreneurial business which affords strong local decision making, efficiency in execution and nimbleness with customer service. We asked Jan Wahlström, Group Chief Executive Officer for Elos Medtech, to expand upon that strength and offer insight on the company’s orthopaedic business.
BONEZONE: How does the acquisition of Onyx elevate Elos Medtech?
Wahlström: Onyx is a great company that is very well-run, very professional. They have injected energy and enthusiasm into the Elos Medtech group and are serving as a catalyst for many of our strategic initiatives. Onyx’s customer relationships are extremely strong, and the company has a clear competence and focus in their niche. This has helped us to become more focused and get a better understanding of the opportunities within the global orthopaedic market. More specifically, Onyx will serve as our U.S. platform for growth and expansion within the orthopaedic market and allow us to expand offerings (such as milling, injection molding, assembly and kitting) to complement Onyx’s own core competencies and better serve the market needs.
BONEZONE: In the last 12 years, Elos Medtech has made acquisitions that have allowed it to expand geography and capabilities. Can you share insight into future acquisitions?
Wahlström: We have a strong foundation. Having orthopaedic manufacturing locations in China, Europe and the U.S. and offering a robust set of core competencies allows us to grow organically through our focused strategy as a contract development and manufacturing organization. Our primary emphasis will be to continue serving the orthopaedic and dental markets, where our goal is to be a trusted partner to market leaders and innovators within the field. We are open to potential future acquisitions, provided they fit well within our clear focus and vision to serve these markets.
BONEZONE: What sets Elos Medtech apart from its competitors?
Wahlström: Elos Medtech is differentiated because of its business structure. As a group, our company is a truly global, mid-sized contract manufacturer in the medtech field. We have a very lean and cohesive executive leadership team. At our operational core, we comprise five strategic business units located in all of the major geographies. Each business operates independently and with a distinct focus, and is sized to remain less bureaucratic than other organizations. Ultimately, we believe that this allows us to serve our market and our customer needs on a more personal basis.
BONEZONE: You’ve stressed Elos Medtech’s ability to remain efficient and nimble. I assume business structure plays a part?
Wahlström: We believe that each of our business units should be best in class in their field. Each site has a particular competence and we aim to support and grow this competence through technology development and investments. Our orthopaedic business has the independence and freedom to continue developing within its niche, while also collaborating within other groups to share best practices and team up across sites wherever needed for customer projects. Our focus on centers of excellence, combined with our relatively flat and streamlined organization of independent business units, allows us to execute projects and maneuver the business in a more entrepreneurial fashion.
BONEZONE: To dive further into orthopaedics, what do you find attractive about the market?
Wahlström: First of all, serving the orthopaedic market helps to transform and make life better for many people. I appreciate that orthopaedics is a high technology market with tough demands, where constant improvement is essential and where strong partnerships between supplier and customer are embraced. Finally, I genuinely enjoy learning and meeting with all the talented people who enable this market to develop and thrive.
BONEZONE: OEMs seek solutions from their manufacturing suppliers today. Elos Medtech promotes its Complete Performance™ service; can you describe that service for our readership? What should our OEM readers know about it?
Wahlström: We want to work with our customers from design and R&D, through project management and production and finally, finished packing and logistics. When we work very closely with our customers and leverage our talented teams, we can give our customer the highest total value and help them solve their problems—help them with their pain points. That is where we really shine.
BONEZONE: What market opportunities do you see in the next five years?
Wahlstrom: Regulatory demands will continue to increase, as well as demand for even higher quality and performance products at a reasonable and commercially viable cost. As the market continues to consolidate, we see an opportunity for those companies that are able to operate in multiple regions around the globe while also maintaining a more efficient and agile business structure.
BONEZONE: What is the greatest challenge your customers face? How are you helping them to overcome that challenge?
Wahlström: To penetrate more of the global market and expand, it will be essential for OEMs to have regionally tailored product offerings and be able to deliver solutions with a lower total cost. We also see challenges associated with time to market, ever-increasing demands on regulatory requirements, and logistics/distribution. These are all areas where Elos Medtech is focused, so that partnering with us will help to simplify development, production and logistics of getting your product to market. Every day we are collaborating to identify areas of improvement and opportunities for cost reductions and sharing those ideas with our customers.
BONEZONE: Can you provide a specific example?
Wahlström: Onyx introduced an innovative concept: during a development project, it offers customers a tool to make better decisions about what they need, what they want and how that might ultimately impact the resulting cost of manufacture. The goal is that when the various stakeholders such as sales, marketing, R&D and advanced sourcing get into a room and are working on the early phase design and development requirements for their system, they can easily determine through addition and subtraction which features are driving expense in order to make optimal cost/benefit decisions and achieve their commercial success requirements. If certain features do not translate into improved performance for the end user or generate added value for the OEM, those features may not be worth the added cost. That is just one example of how we work closely with customers’ R&D and marketing teams early in the product development process. Learning commercial requirements and primary goals early on in the project allows us to support and balance design for performance, design for manufacturability and design for long term cost. We help our customers from idea to finished product—from optimizing design, quality and risk management to cost effective manufacturing and delivery of dock to stock finished products. That is accomplished by mutual investments early in the project and partnering closely with our customers at all times.
Elos Medtech is the OMTEC 2017 Premier Sponsor.