Nitinol Devices and Components, A stint of success

Manufacturing in Action, Source : The Manufacturer US

Nitinol Devices and Components has slowly but surely makes its mark in the medical supply industry. Holly Aguirre takes a look

Tom Duerig founded Nitinol Development Corporation in September 1991 along with the funds of a small group of outside private investors. The company’s strategy was to produce super-elastic Nitinol material and components with the focus originally being on optical frame bridges and temples.

Nitinol is an alloy of nickel and titanium that has the ability to return to a predetermined shape when heated. In certain temperature ranges, the alloy also exhibits enormous elasticity, some 10 times greater than spring steel.

While technically successful in meeting objectives, NDC’s business model was initially flawed in that frame distributors liked the technology but only bought finished frames, while frame manufacturers were unwilling to become involved in a disruptive technology such as this. This led to the obvious re-chartering: to make finished frames. Taking on this endeavor proved exceedingly difficult in the United States due to a lack of infrastructure; consequently a partnership with an Italian manufacturer was formed.

In 1993, it became clear that the original target market lacked several key financial attributes required to launch the business; working capital requirements were burdensome, the IP landscape complex, gross margins poor, and there was a great dependence upon brand recognition. Attention turned to medical applications, especially self-expanding stents: a slender thread, rod, or catheter inserted into a tubular structure, such as a blood vessel, to provide support during or after angioplasty.

According to Duerig, NDC president, Dieter Stoeckel and Alan Pelton were hired to “re-found” the business along these new directions. Break-even cash flow was achieved through extensive consulting agreements, and prototyping of small, complex medical devices.

“Our ultimate success depended upon the fact that Nitinol was an exceedingly difficult manufacturing technology, and expertise around the world was limited,” explains Duerig.

By 1994, NDC identified superelastic tubing as a key material of the future and invested in a joint venture with G. Rau, GmbH (Pforzheim, Germany) to produce the tubing. NDC became the world’s first supplier of quality tubing, bringing stent designers from all over the world to NDC for their needs. They also recognized that laser cutting was going to be critical to these new fields, and invested in another joint venture with Karlsrühe Forschungszentrum to develop new laser cutting methodologies.

In 1995, the company was re-capitalized, bringing in an infusion of cash from Teledyne-Wah Chang. The cash allowed NDC to dissolve their existing debt and to make some key investments in new manufacturing capabilities, particularly highly advanced laser-machining techniques. This allowed NDC to become the first fully integrated supplier of Nitinol stents, a market that was expanding at a frightening rate, with nearly all major medical companies racing to get the first devices on the market. NDC quickly became an OEM supplier to most major companies.

“Stents became an important medical innovation and fortunately, one that was based on a material that we were in a unique position to supply. This allowed us to integrate downstream, getting closer and closer to finished product.” says Duerig.

NDC quickly became a well-known medical device prototyping house with leading-edge capabilities in a host of areas. Production volumes were still very low because of FDA approval times. Johnson & Johnson, in an effort to accelerate their own self-expanding stent program, acquired NDC in early 1997. NDC continued to supply goods and services to other medical device companies, but initiated a separate dedicated effort to design and manufacture components for its new parent company.

“Partnering with Johnson & Johnson was like a dream come true. We needed each other. We needed them to provide marketing and distribution channels, they needed us to provide the self-expanding implant technology itself. Within four years we had the world’s number one self-expanding stent,” Duerig explains.

By the end of the year 2001, NDC/J&J had the market-leading self-expanding stent, and the leading vena cava filter (used to prevent pulmonary embolisms).

With operations located in the heart of Silicon Valley, which boasts some of the most expensive real estate in the world, Duerig says they are able to push the envelope because manufacturing and R&D are under the same roof. “This allows us to design devices that that push the envelop of manufacturing, rather than making product design a slave to existing manufacturing know-how. The market we’re in is not a high volume arena. In our market we win through the quality, and how quick can we get new products to market. Market life of a new product can be as short as two years, so speed to market is critical,” he says.

NDC has recently adopted many Six Sigma and lean manufacturing techniques though Duerig refers to the principles as “buzz words, modern day terms for well-established and sound business techniques.”

“Our industry still relies heavily on 100 percent inspection due to the criticality of our products. Still, SPC techniques and a lean manufacturing philosophy allow us to identify issues early, minimize yield losses, and respond to process variations in a timely way,” he explains.

On this line of thinking, Duerig says that NDC’s first responsibility is to the doctors, nurses, and patients as well as to the mothers and fathers and all others who use their products and services. “In meeting their needs everything we do must be of highest quality. Our second priority in servicing our customers is to make sure we deliver product to them quickly-high quality without delivery is useless. Finally, we must constantly strive to reduce our costs in order to maintain reasonable prices,” he explains.

Secondly, NDC is responsible to their employees. The company reports a very low turnover rate. Compensation must be fair and adequate, and working conditions clean, orderly, and safe. “Everyone must be considered as an individual. We must respect their dignity and recognize merit. They must have a sense of security in their jobs,” says Duerig. “Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified.”

Duerig states that NDC’s final responsibility is to their stockholders. Business must make a sound profit. Research must be carried on, innovative programs developed, and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times.

These tenants and priorities are well-stated in Johnson & Johnson’s credo, which plays a very active role in dictating the policies of NDC.

Today, NDC remains a supplier of Nitinol material and components to the world at large. That part of the business resides in separate quarters and is fully separate from the still successful Johnson & Johnson activities that include substantial R&D activities, and a high-tech, flexible manufacturing operation. “We’ve grown very quickly in the past 5 years. In 1997, for example, we were only 30 people in some 10,000-square-feet of space. We’re now 400 strong utilizing about 100,000 square feet. Growing is success. If you’re afraid of that, then you shouldn’t be in business,” Duerig states.

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