Contract med device maker expects continued growth with more space, new capabilities

04/14/2013

Contract med device maker expects continued growth with more space, new capabilities 

Companies able to develop a medical device from concept design to manufacturing and even delivery may be a rarity in Michigan, but that’s exactly how industry experts position the Kalamazoo-based Keystone Solutions Group.

“I can’t think of any companies in Michigan I would compare them to,” said Hank Brown, the former CEO of Tangent Medical Technologies in Ann Arbor. The company, a University of Michigan spin-off, hired Keystone to help develop NovaCath, a peripheral intravenous catheter.

“There are several companies on the west and east coasts that compete with them because that’s where the big medical technology companies are based,” Brown said. “Keystone is a unique brand in the Michigan market.”

A product development and contract manufacturer based in Kalamazoo, Keystone performs services normally only found in major medical device hubs such as in California, said Don Beery, director of the West Michigan Medical Device Consortium, a group of 22 medical device makers that includes Keystone.

“Keystone’s secret sauce is they have two business units,” Beery said. “Some of our members do product development. Most of our members are manufacturers. Keystone does both.”

And Keystone does its job well enough to generate revenue growth of more than 30 percent in each of the past three years, a heady growth rate that co-founder Jim Medsker expects to continue for the next several years. Medsker said Keystone’s revenue should exceed $5 million this year.

In February, the company announced it would consolidate its two facilities — one in Grand Rapids and the other in Kalamazoo — into a much larger 25,000-square-foot leased plant in Oshtemo Township, near Kalamazoo. Medsker said the new space will be twice the size of his two plants combined. Keystone has invested about $500,000 in the facility, working closely with Olech Construction Co. and Corrion Technology LLC. He expects to move in around mid-year.

“It’s always been our intent to streamline operations and put everything under one roof,” said Medsker, who noted the Grand Rapids facility resulted from an acquisition five years ago. “We’ll also have the ability to expand to meet growing customer demand.

Everything will be air-conditioned, including the warehouse. We’ll have fiber optics everywhere, an expanded office and a laboratory. It’s a big growth step for our infrastructure on a lot of levels.”

Currently, Keystone employs 15 skilled workers. Medsker expects that with the products in development, his company will need to hire more employees over the next year. He said he’ll be looking for mechanical and electrical engineers along with cleanroom technicians.

The cleanroom facilities helped Keystone earn its ISO 13485 certification, which signifies the company has developed a comprehensive quality management system for the design and manufacture of medical devices.

But you’ll never see Keystone’s name on any of the products it builds.

“We’re not an OEM,” he said. “Anything that goes out the door has our customer’s name on it. We ship directly to hospitals on behalf of our clients so we also handle distribution.”

The company only builds medical devices right now, while also working with the automotive and aerospace industries to design products for their needs. Medsker said he is keeping his eyes open for new business opportunities.

For instance, Keystone may soon make a move into electro-mechanical products and devices, he said. These programs tend to be larger, longer term and integrate user interfaces, software controls and mechanical systems. Medsker predicts this segment will evolve into a new revenue line for the company in the future.

As the company explores potential new lines of business, it can leverage positive sentiments from its base of customers, who say they’ve been satisfied with the company’s work.

“Keystone is very good at what they do,” said Brown, the former Tangent CEO. “We saved a lot of time on the product development side, and our product required FDA approval. If we had developed that product ourselves, it could have been very expensive. Keystone was very responsive and on time with the deliveries. They are really good problem solvers. We encountered a number of problems along the way. Product development is never that easy. Keystone was very creative about coming up with solutions working closely with our own engineers. “

Alison Keutgen, president of Tiger Lab LLC in Grand Rapids, also worked with Keystone to create a medical device. In her company’s case, it was an Oxygen Flow Diverter, a device that assists respiratory therapists and nurses in reducing patient risk as a result of oxygen interruption. The product allows the health care professional to toggle between treatments, she said.

“We just started our product launch in January,” said Keutgen, who said her company has fewer than five employees and is generating less than $1 million in revenue. “We have trials in the works with several hospitals. We’re bringing on additional sales partners for areas of the country where we have gaps.”

Tiger Lab is new to the medical device manufacturing world, Keutgen said, so having a seasoned partner like Keystone to show the company the ropes has been critical to its initial success.

“They are great on the project management side,” she said. “With Keystone, you can take a breath and know one of your partners knows the process. They are talented on the front-end engineering and on back-end for manufacturing. We’ll continue working with them as we develop other devices.” 

Mike Brennan is senior technology writer at MiBiz. His day job is editor and publisher of MITechNews.com.