According to one medical device manufacturer, there is growing demand from original equipment manufacturers (OEMs) for contract manufacturing partners that are vertically integrated.
Sonoco Plastics, a division of packaging manufacturer Sonoco, is a provider of packaging, assembly and injection molding services to the medical device industry. Kevin Ludlow, the company’s director of strategic business development, says vertical integration is proving to be a strategic differentiator in the market.
Ludlow made the comments during a conversation at the MEDICA convention, which took place in Dusseldorf, Germany, Nov. 17-20.
Some contract manufacturers now offer vertically integrated solutions (spanning design, cleanroom assembly, packaging and global distribution) because OEMs increasingly value full-cycle partners.
“We are seeing an increasing number of large medical device manufacturers looking for partners like us who are vertically integrated, end-to-end,” Ludlow said.
Ludlow’s comments reflect broader research by the medtech industry into current trends. A 2025 report from McKinsey highlighted that many companies involved in the medical device industry remain in the process of resetting the cost base of their manufacturing and supply chain and returning to the discipline of “continuous cost optimization” following the dislocations caused by the Covid-19 pandemic.
According to Alira Health Global Medical Technology Contract Manufacturing and Development Report 2025Vertical integration is the main strategic driver of M&A activity. The report notes that acquirers focused on core competencies such as design and development and assembly services, followed by machining services.
Meanwhile, a report from contract development and manufacturing organization (CDMO) Intricon highlights that OEMs are reducing their approved supplier lists; in essence, moving to make their supply chains less fragmented and more secure, one of which is partnering with manufacturers that can offer vertically integrated services.
Ludlow continued: “Many of the large medical device manufacturers want to focus on the design, development and sales, marketing and sales of their finished devices.
“Therefore, speed, time to market and cost are likely to be key evaluation metrics around the growing interest in vertical integration that we have witnessed in recent years.”
“Medica 2025: Vertical integration gains importance for medical technology OEMs” was created and originally published by Medical Device Network, a brand owned by GlobalData.