Friday, 08 May 2020 00:56

Point of care diagnostic manufacturing. Three key ways to reduce the cost of goods.

Written by Dieter Cronauer

Taking a long-term view at the outset of the cartridge development program is critical for reducing the cost of goods (COGS) when the time inevitably comes to ramp up manufacturing volume. Key decisions made in the first few months of a development program will determine later manufacturing costs and the ultimate COGS. For this reason, the development of a point-of-care system needs to happen within a proven development framework with a strong design for manufacturing focus right from the start.

Achieving the target COGS for a cartridge is critical to the commercial success of the system. According to the Yole report, ‘Status of the Microfluidics Industry 2019’, the contribution of cartridges to overall revenue varies from 66% to 82% for major market players. This is because the commercial model for most systems is to place instruments in the market at low prices. In many cases these low instrument prices are even subsidised and supplied below cost by the system developer. This business strategy removes market barriers by facilitating strong market uptake of the system. The model then relies on the sale of disposable cartridges to generate a profitable return. Reducing the manufacturing COGS of the disposable is therefore critical to commercial success. This is particularly important in the longer term as sales volumes increase.

Cost of goods is determined at cartridge design stage

There is often considerable pressure at the outset of a development program to focus on shorter term targets and objectives such as speed to market and investment milestones. Whilst these factors are crucial to success it is also important to give equal focus to the longer-term COGS plan at these early stages. This is because the design decisions made in the first few months of the development program will determine the manufacturing COGS over many years as production is scaled up and the real opportunities for profit are realised. Addressing critical manufacturing design factors from the beginning of the program is the key to strategically managing the manufacturing COGS in both the short and long term.

 Cost of goods design for manufacture


Reducing the manufacturing cost of goods – the three key factors

There are many things which contribute to a cartridge price, however the three main manufacturing factors are:

  1. Lean cartridge architecture
  2. Materials selection
  3. Processing cycle times

 

Lean cartridge architecture

An adherence to lean architecture design principals leads to a number of manufacturing efficiencies and cost savings. Lean architecture means minimising the number of components, or layers as they are sometimes referred to, within the cartridge. An example of how this is achieved is by using state of the art replication processes such as co-moulding where hard and soft materials can be combined in one injection moulding tool. The result is an extra functionality of the moulded part, where, for instance, required gaskets are integrated at manufacture.

Another example of lean cartridge design is to combine macro 3D-features with micro features such as channels in the µm range. Modern moulding techniques such as vario-thermal tooling enables the designer to include both features into the one same part. Again, this results in fewer layers.

Lean cartridge architecture leads to a reduction in the number of assembly steps, resulting in higher overall yields and a reduction in engineering costs (NRE). It also reduces the complexity of the automation equipment, which lowers the investment cost (CAPEX) and reduces the effort to set-up processes. Finally, this approach also significantly reduces the workload for process validation and periodic re-validations which has a positive effect on the overhead cost for manufacturing.

 microfluidic lean design

Materials selection

The material selection process is critical to reducing the COGS, especially at higher manufacturing volumes. Cartridge material costs include reagents and the related reagent processing and stabilisation required and in most cases a mix of hybrid materials such as polymers, glass, silicon and aluminium. Material selection is driven by the assay and by the best mix of materials to achieve a lean cartridge architecture to reduce processing and assembly costs.

At low and medium manufacturing volumes, labour is a more significant component of the COGS and the contribution of materials does not play a dominant role. However, this changes dramatically at full automation with quantities of produced cartridges in the millions. At this stage, material costs become a dominate COGS factor. For this reason, the long-term view must be taken with regards to material selection early on during the cartridge development program.

 microfluidic polymer COP COC

Processing cycle times

Processing cycle times for the selected assembly processes impact manufacturing production efficiencies and, therefore, the COGS. Manufacturing process cycles must meet the following criteria to maximise efficiencies:

  • All processes must be robust and stable under production conditions with a broad process window.
  • It should be possible to monitor critical parameters and have the means to react.
  • Similar cycle times in the whole process chain are required. The bottleneck process determines the cadence at which all other processes can be run.
  • In order to achieve cost-effectiveness with production volumes of 5 million cartridges per annum, for example, cycle times of 3 seconds are required.

The most important consideration with regards to manufacturing and assembly processing cycles is that to achieve efficiencies and minimise the COGS, the cartridge must be designed and developed by a team which is very tightly integrated with the manufacturer. In the most optimal scenario the product development team, bio scientists and the manufacture team are all operating under one roof. It is only through a holistic development and manufacturing approach that target COGS can be reliably achieved.

 microfluidic manufacturing injection molding

 

Planning for success

Successfully focusing on these three factors – lean cartridge design, optimised material selection and processing cycle times – leads, in most cases, to the required manufacturing COGS targets often in the order of around 2-5€ per unit, being met. This is for fully packaged cartridges, including reagents, produced at millions of cartridges per annum. For most companies in the POC field, figures of this magnitude comply with their targets for transfer pricing and allows them to have a large enough margin between the transfer price and the end-user price in the market to ensure all partners in the supply chain are financially motivated for success.

The key to achieving these sorts of results lies in the earliest design and development decisions made in the first few months of product development. It is critical to plan for manufacturing and cost efficiencies at volume, even at the proof of concept and low volume manufacturing phases of the program. This sets up the product for commercial success by establishing the pathway to achieve the right COGS, at volume, from the very outset.

 

SCHOTT MINIFAB is the world’s Number 1 contract developer and manufacturer of polymer microfluidic devices for point-of-care life science applications. We have a well-established and proven track record of successful commercialisation outcomes and high-volume manufacture capabilities.

About the Author: Dieter Cronauer

Dieter Cronauer is the General Manager of SCHOTT MINIFAB’s Excellence Centre in Europe. He has a broad technical and commercial background, with over 12 years’ experience in the medical diagnostic field. Dieter has a Diploma in Technical Physics from Kaiserslautern University.

CONTACT SCHOTT MINIFAB

Dieter CronauerDieter Cronauer
General Manager, Europe
Edward WilkinsonEdward Wilkinson
VP SCHOTT MINIFAB USA & Head of Strategy

Andrew CampitelliAndrew Campitelli, PhD

VP Business Development


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