Competitor Analysis

Accellent Inc

MBA Project Team- Freudenberg New Technologies 7/23/2011

This document provides a snapshot about Accellent Inc. and provides analysis about how it is performing in the market and its channels of operations.

Table of Contents
Company Overview: Accellent Inc. .............................................................................................................. 3 History and Growth Pattern ..................................................................................................................... 3 Business Development and Changes ...................................................................................................... ..3 Organizational Structure…………………………………………………………………………………3 Geographical Presence…………………………………………………………………………………...6 USP ........................................................................................................................................................... 7 Financial Performance...................................................................................................................................9 Quality Control……………………………………………………………………………………………12 Marketing Mix ............................................................................................................................................ 14 Competition................................................................................................................................................. 16 Intellectual Property .................................................................................................................................... 18 Sources ........................................................................................................................................................ 20

Page 2

Today. The first part of the following competitor analysis is supposed to provide general information on Accellent Inc. Momtazee were appointed to the Board as a consequence of their respective relationships with KKR.27 Billion USD in 2005 and now KKR holds 71. Business Development and Changes: Accellent Inc had started as a medical device outsourcing company keeping in mind. one of the most comprehensive supply chain solutions in the world which helps its clients in bringing their innovations in the market more quickly and efficiently. The greater the speed to market. History and Growth Pattern: Accellent Inc.. the parent company.Company Overview: Accellent Inc. L. the immense growth potential in this particular market segment and as of now. it has turned more into a strategic business partner for its clients. it has established itself into the global medical device outsourcing market with more than 15 locations across the globe and a gross profit of $137. was established in 1999 and incorporated in Maryland as a surgical and medical instruments company. Not only does Accellent provide its vendors with outsourcing solutions for medical devices.9% Organizational Structure: The board of directors of Accellent Inc are elected to the Board pursuant to a Stockholders’ Agreement. this is called as the “ The Accellent Advantage”. in a transaction value of 1. and certain affiliates of Bain Capital.7% shares of the company and Bain Capital 23. and Chris Gordon was appointed to the Board as a consequence of his relationship with Bain Capital.P. it is perhaps. 2005. Accellent merged with Kohlberg Kravis Roberts ( KKR). among Accellent Holdings Corp. Freeman and James C. and this translates into ROI. the faster is the profit and hence. dated as of November 16. Page 3 . In 2005. Kenneth W. A detailed analysis of “The Accellent Advantage” is summarized in the later sections of this paper. and provide first insights into their business model and how their business evolved into its current state. an affiliate of Kohlberg Kravis Roberts & Co.7 million for the financial year 2010. but also. Pursuant to such agreement.

Operations. Supply Chain and Engineering Kenneth W. the directors possess experience in owning and managing enterprises like the Company and are familiar with corporate finance.As a group. Momtazee 39 Director Chris Gordon 38 Director The structure of Board of directors for Accellent Inc is shown as below Kenneth W. Freeman 60 Chairman of the Board and Director James C. Schau (Operation) James Momtazee Chris Gordon Page 4 . strategic business planning activities and issues involving stakeholders more generally. Freeman (Chairman) Donald J. Farina (CTO) Dean D. Farina 54 Executive Vice President of Technology and Chief Technology Officer Dean D. Donald J. Friedman 57 Chief Financial Officer. Schauer 44 Executive Vice President . Treasurer and Secretary Jeffrey M. Spence 57 Chief Executive Officer. Executive Vice President. Spence (CEO Jeremy Friedman (CFO) Jeffrey M. President and Director Jeremy A.

finance. accurately and fairly reflect transactions and disposition of assets. including the CEO and the CFO. Page 5 . The chief operating decision maker is the chief executive officer in case of Accellent Inc. in reasonable detail. the management. engineering and customer services into a centrally managed organization designed to better serve the customers. Other than this. They have one operating and reportable segment which is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assess performance. quality. This includes policies and procedures that pertain to the maintenance of records that. An evaluation of the effectiveness of internal control over financial reporting is done under the supervision of the management. provide reasonable assurances that transactions are recorded as per US GAAP principles and that receipts and expenditures are being made in accordance with authorizations of the management and directors. Management is also responsible for establishing and maintaining adequate internal control over financial reporting. many of whom service multiple medical device markets.Organizational Controls and Procedures: The management has aligned the Company to reflect the consolidation of their sales. with the participation of the CEO and the CFO evaluate the effectiveness of disclosure controls and procedures.

Massachusetts Aura. New Hampshire Orchard Park.213. England Penang. Footage Location Arvada. Colorado Huntsville. Alabama Laconia. Germany Galway. Virginia Sturbridge. Malaysia Total Own/Lease 45000 Lease 30000 Own 133000 Lease 179000 20000 40000 44000 41000 64000 68000 66000 18000 42000 50000 46000 48000 51000 22000 17000 16000 101000 11000 61000 1. Connecticut Wheeling. Massachusetts Brooklyn Park. Illinois Wheeling. California Watertown. Illinois Wilmington. Minnesota Collegeville. Georgia Upland. New York Pittsburgh. Mexico Manchester. Pennsylvania Salem. Colorado Brimfield.Geographical Presence: Accellent Inc. Massachusetts Trenton. A detailed information about its locations are provided in the table below: Approx Sq. Pennsylvania El Paso.000 Own Lease Lease Own Lease Lease Own Lease Lease Lease Lease Lease Own Lease Lease Lease Lease Lease Lease Own Page 6 . is located in 3 continents across 15 locations with 11 locations in the US and 23 plants worldwide. Texas Englewood. Ireland Juarez.

low cost assembly and overall customer familiarity. In a nutshell. Massachusetts and Minneapolis. In addition. they have come up with a plant in Malaysia to expand their base in Asia-Pacific. very recently. and their manufacturing centers in Galway. This is what they call “The Accellent Advantage”. Device Assemble and Supply chain management. Minnesota. their design. the tightest deadlines and the most ambitious product transfers. For example. They claim to be a strategic business partner for their clients and claim to have the capability to execute the most aggressive product cycles. prototyping and engineering centers near Boston. Mexico.The main focus as of now for Accellent is the United States and Europe. they have a facility at Juarez. as well as a facility in Penang. USP: Accellent Inc claims its expertise in Design and Engineering. prototyping and engineering centers to their major customers and the advantageous location of their manufacturing centers provide them with a competitive advantage. However. Malaysia to provide their customers with low-cost manufacturing and assembly capabilities. Page 7 . rapid prototyping. Precision Component Manufacturing. and near Minneapolis. Accellent Inc believes that the proximity of their design. Their strategic locations allow them to facilitate speed to market. Ireland. Minnesota are strategically located near their major customers. they claim to provide complete supply chain solutions to their clients and this is their USP.

Competitors and Communities. Page 8 . Final Assembly 6. Design and Development 3. QA & Sterilization 7.The business model of Accellent relies on Customer feedback and improvement on speed to market. they help their customers in the following: 1. Clinical Research 2. through its comprehensive supply chain solutions. Raw Material Sourcing 4. Accellent goes on with its mission of being the World’s best provider of comprehensive Supply Chain solutions to the medical device industry in the eyes of their Customers. Component Manufacturing 5. Through constant customer feedback and strategic partnerships along with their supply chain solutions. Employees. Warehousing & Delivery 8. Clinical Selling and Marketing Therefore.

Intangible assets: Accellent Inc’s intangible assets for the year 2010 and 2009 are illustrated as follows: Page 9 .54 This company is an industry which is capital intensive and it is normally assumed that a company which is capital intensive can have a debt to equity ratio of greater than 2.33 2009 2.Financial Performance (5 Years): Balance Sheet Analysis: Debt to Equity Ratio 2006 1. We assume that the financial health of the organization is in safe hands these days.31 2008 2.95 2007 2.23 2010 2.

51% 27.793 506.043 349.074 Gross 28.36% 27. the company also believes in investing in Research and Development as shown in the tables above. All the figures are in ‘000s of US Dollars.Main contributions to intangible assets are made by customer relationships as well as patents and trademarks.476 478. Profitability Analysis: Gross Operating Margin: During the last 5 Years. from 2006 to 2010.681 525.04% margin Cash Flow Statement: Please find below a quick snapshot of the Cash Flow statement for Accellent Inc. Page 10 . has remained at a stable level of between 27% to 29%.783 369.954 Sales Cost of 337.929 386.010 137.752 139.091 121.91% 25.143 347. However.81% 26.134 471. in Thousands 2007 2008 2009 2010 $ 2006 474. operating margins at Accellent Inc.333 131.250 sales Gross Profit 137.

Research and Development Expenses: In thousands R&D costs 2006 3. expenses related to research and development have decreased in the last 5 years.607 2007 2.924 2009 2. Accellent believes a lot in doing research and development for its services offered to the customers. however. Page 11 .565 2008 2.064 2010 2.393 Although.

Lot Release Testing: Accellent has a plethora of expert engineers who are always rigorously testing the devices under the widest variety of conditions. systematic monitoring and continuous improvement throughout Accellent.Quality Control: Since Accellent is a part of Medical Devices industry. learning to improve efficiency. To ensure proper quality. the issue of quality control is paramount to them and they have assured to be compliant with as many quality checks as possible. Their exhaustive testing ensures that the medical product hits the market with the highest level of quality. The Accellent Quality System outlined in the Quality Manual complies with the following standards: International Standard ISO 13485 International Standard ISO 9001 FDA Quality System Regulation (QSRs) 21 CFR 820 European Community Medical Device Directive (MDD) 93/42/EEC The Accellent Quality System ensures customers receive the same high standards with respect to quality results. Accellent follows following processes: Lean Engineering/Six Sigma: The Six Sigma process followed in Accellent would ensure its clients that they are partnering with individuals devoted to improving the quality of their work. Page 12 . regulatory compliance. Accellent engineers have the opportunity to develop their vision through six-sigma training. eliminate waste and sustain quality. While remaining in compliance with FDA and ISO requirements. we maintain flexibility within our system to accommodate our customer's quality needs.

their engineers are adept at providing industry-standard sterilization validation solutions for their customers. Page 13 .Sterilization and Management. Accellent leverages multiple partner relationships to provide a complete sterilization management solution. Further.

DHL or common carrier. Accellent allows its customers to choose the shipment method based on the size of the shipment and the time available for delivery. FedEx.Marketing Mix: Products on Offer: Focus areas and target market of Accellent are as follows: Target Market Cardiology Market Segment Cardiac Rhythm Management Cardiovascular Cardiac Surgery Joint Spinal Arthroscopy Trauma Gastrointestinal Urology Laproscopy Orthopaedics Endoscopy Distribution Methods: With so many locations across the globe. Accellent Inc. Pricing Policy: Most of the raw material that are used in the products are subject to market fluctuations and their availability in the market. They most frequently ship products via UPS. has pass-through firm-pricing arrangement in which its customers purchase raw material components with the help of Accellent experts or Page 14 . Accellent also has a huge sales force network that includes regional distributors. Therefore. The warehousing services of Accellent also plays a very important role in it as it provides a VMI solution for all the warehousing and distribution needs for the client. Accellent does not have any problems with distribution of the products as per the clients demands.

Jude Medical. Medtronic. Also. endoscopy and orthopedics. Smith & Nephew.there may be established firm-pricing arrangements with their suppliers to minimize their exposure to the market. St. During 2008. blanket orders and long term contracts with major raw material suppliers. Its customers include many of the leading medical device companies including Abbott Laboratories. Johnson & Johnson. Page 15 . Accellent’s 10 largest customers accounted for approximately 62%. Customers: Accellent primarily focuses on leading companies in large and growing markets within the medical devices industry including cardiology. 60% and 64% of net sales with two or more customers each accounting for greater than 10% of net sales. 2009 and 2010. Stryker and Zimmer. Boston Scientific. to manage these fluctuations. Accellent utilizes competitive pricing methods such as bulk purchases.

Competition: The medical device outsourced manufacturing industry has traditionally been highly fragmented with several thousand companies. and suppliers that have. delivery. the redesign of existing products and transfer of mature product lines to outsourced manufacturers. Currently. We are not aware of a single competitor that operates in all the target markets or offers the same range of products and services that Accellent offers and hence. are developing. suppliers that concentrate in niche markets. breadth of capabilities. Accellent competes for new business at all phases of the product lifecycle. price. Accellent occupies around 12% of Medical Device outsourcing market share. broad manufacturing capabilities and related services. Accellent competes with different companies depending on the type of product or service offered or the geographic area served. Accellent’s existing or potential competitors may include suppliers with different subsets of our manufacturing capabilities. Henceforth. quality. very few companies offer the scope of manufacturing capabilities and services that Accellent provides to medical device companies. Competition is generally based on reputation. including design and engineering support. we believe that the company may have to compete in the future against companies that provide broad manufacturing capabilities and related services. Page 16 . many of which have limited manufacturing capabilities and limited sales and marketing expertise. which includes development of new products. however. As of now. or may in the future develop. responsiveness.

instruments and cases to orthopedic device manufacturers. Main Competitors as of now: Symmetry : Leading provider of Implants. as well as provide specialized products and services to the aerospace market. laparoscopy. spinal and other segments of the medical device market. develop and produce these products for companies in the arthroscopy. Wilson Greatbatch: Greatbatch is another company which is considered a big competitor to Accellent. Page 17 . We also design. dental. A detailed analysis of Greatbatch is provided in the other competitor analysis document related to Greatbatch. Major Markets are the US and Europe.customer relationships and increasingly the ability to provide complete supply chain management rather than individual components. osteobiologic. endoscopy.

Although we do not believe that any of our products. Accellent also develops intellectual property for the purpose of licensing certain technologies to its medical device customers. trade secret and trademark laws. the company is a party to several license agreements with third parties pursuant to which it has obtained. The steps they have taken or will take to protect their proprietary rights may not adequately deter unauthorized disclosure or misappropriation of its intellectual property. component or material solution results in royalty revenues which are recognized at the time the product is shipped. copyright.Intellectual Property: The products that Accellent manufactures are made to order based on the customers’ specifications and may be designed using Accellent’s design and engineering services. confidentiality procedures and contractual provisions to protect its intellectual property. on varying terms. polymer micro tube manufacturing. customers retain ownership of and the rights to their products’ design while the company retains the rights to any of their proprietary manufacturing processes. practice or procedures. The use of these technologies by its medical device customers in their finished design. Their intellectual property enhances their production capabilities and improves margins in their manufacturing processes while providing competitive differentiation. Examples of licensed technologies include improvements to catheter based applications. gastrointestinal surgical devices and vascular stents. Accellent relies on a combination of patent. historically. In addition. services or processes infringe the intellectual property rights of third parties. They continue to develop intellectual property primarily in the areas of process engineering and materials development for the purpose of internal proprietary utilization. technical knowledge. Examples of technologies developed include improvements in micro profile grinding. non-exclusive rights to utilize patents held by third parties in connection with precision metal injection manufacturing technology. Generally. patent applications in the United States and some foreign countries have not been publicly disclosed until the patent Page 18 . metal injection molding and surface enhancement methods for surgical implants.

even if not substantiated. They may also be subject to significant damages or injunctions against development and sale of our products. The failure to obtain necessary licenses or other rights or the occurrence of litigation arising out of infringement claims could disrupt their business and impair their ability to meet the customers’ needs which.is issued (or as of recently. Page 19 . If patents later issue on these applications. could result in significant legal and other costs and may be a distraction to management. which occurs eighteen months after filing). In the event of infringement of patent or other intellectual property rights. and may end up in litigation. and the company may not be aware of currently filed patent applications that relate to its products or processes. they may in the future be notified of the infringement of patent or other intellectual property rights of third parties and may be liable for infringement at that time. in turn. until publication. Infringement claims. if at all. they may not be able to obtain licenses on commercially reasonable terms. could have a negative effect on their financial condition and results of operations.

shtml Page 20 . http://www.com/c/mmyj5p5/accellent-inc 2. http://www.pdf 3. http://www.accellent.com/download/Forecast%20for%20The%20Medical%20Devic e%20Outsourcing%20Market_%20Growth%20and%20Consolidation. http://www.org/sec-filings/110325/ACCELLENT-INC_10-K/ 4.accellent.com/about_accellent/strategic_focus.com/why_outsourcing/accellent_advantage.accellent.shtml 6.shtml 5.Sources: 1. http://www.com/solutions/qa_and_sterilization.manta. http://www.faqs.accellent.

Sign up to vote on this title
UsefulNot useful