Med Device

Endius' Way Forward

The medical device industry is driven largely by innovation, with new products comprising a substantial portion of sales and profits in the sector. This does not mean that good ideas are instantly saleable or marketable, however, and although the minimally invasive surgical tool developed by the two physicians that started the company Endius shows a great deal of promise, it takes someone with the leadership capabilities, the strategic knowledge, and the connections of Thomas Davidson to really drive this company and its product(s) forward. Davidson has joined the company, but must decide whether to pursue commercial product development as an in-house endeavor or if utilizing the services of Project Genesis, a consultancy firm, would be better. There will be in-house and outsourced personnel, components, and costs regardless of which avenues is selected, and Davidson will likely have to loan the company the necessary funds to see it through the development and initial manufacturing phases, and a full determination of the project scope is necessary to reach a valid conclusion.

Project Area

In-house

Outsourced

Costs

Human resources

$212,500

$276,331

Parts

n/a

$11,500

Facilities

$48,000

n/a

Equipment

$50,000

n/a

Fabrication

$67,500

$67,500

Total

$378,000

$355,331

Knowledge base

Limited Inflexible/non-expandable Self-contained Integrated

Broader Greater flexibility Dispersed/less focused Removed from company

Timeline

Wide estimate of 6-12 mos Highly uncertain Ultimately unaccountable

Firm 6 mos estimate Reliable Accountable to others

Conclusion/Recommendations

Using the simple Checklist Model to evaluate the two potentials, the decision should be fairly clear: outsourcing the project leads to advantages in all areas, even with some slight negatives to this choice factored in. There is a cost savings of over $20,000, and more importantly there is a shorter more certain time-to-market, which means the company will be able to generate revenue sooner and thus develop further products and increase its profitability. The knowledge base at the company even if it hired in-house engineers could never match what's currently available at Project Genesis, and though a move to in-house development would certainly be wise in the future it is simply not viable at this stage of the startup.