Ventilator manufacturers are massively producing more, but still cannot meet demand

Thanks to enormous efforts, the worldwide production of ventilators can at best triple to quintuple to 150,000 to 250,000 this year – however, because of the corona crisis, more than a million such devices are needed. Unconventional solutions are required.

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Because Covid-19 attacks the lungs of infected people, severely ill people need artificial respiration. In the worst cases, a tube is inserted (intubated) through the mouth or nose into the trachea and connected to a ventilator that supplies the patient with oxygen. Since the outbreak of the corona crisis, the demand for ventilators has increased so much that the manufacturers are flooded with orders.

A niche market in focus

A glance at this sector of the medical technology industry is enough to realize the extent of the challenge that manufacturers face. Last year, the production of ventilators worldwide was around 77,000. The devices used for home use against sleep apnea and those with chronic lung disease are not taken into account. On the other hand, these numbers also include the 9,000 devices that are used to care for newborns. Since the Covid 19 sufferers are almost exclusively adults, these devices cannot be used.

The majority of the devices, almost 50,000, are intended for the intensive care units of hospitals for the treatment of acute and subacute cases. Another around 19,000 devices are portable respirators and those used in rescue helicopters and ambulances (see tables).

The sale of ventilators annually generates around $ 2.8 billion worldwide. This also includes the $ 1.3 billion earned from supplies such as filters, tubes, and face masks. It is an economically stable business and a relatively small, but continuously growing market that has so far hardly seen any major swings. Numerous suppliers are involved in the manufacture, who manufacture components according to the manufacturer’s specifications and deliver them on time for final assembly and inspection.

The closely timed supply chain was constantly optimized and trimmed for efficiency. What makes sense in the normal case and has worked well so far, turns out to be a disadvantage in this extreme situation: there is hardly any spare capacity, warehousing, because it is expensive, is scarce, and there are hardly any buffers to increase production quickly could be used. This explains why manufacturers are struggling with this sudden boom in demand.

Doubling at best

Despite difficult conditions – especially because of the prescribed distance – the manufacturers have been increasing production, driving more shifts, hiring people and pulling employees from other areas for the production of ventilators for weeks.

The American family company Hamilton is one of the global market leaders among manufacturers of ventilators, and has recently had state-of-the-art production in Bonaduz, Grisons. The company has already increased the capacities of the $ 5,000 to $ 50,000 devices by more than 50%. The aim is to at least double the production.

Despite the huge demand, prices are currently not being raised, the third-generation company writes in a statement. The other companies also adhere to this principle. The loss of prestige would be immense even if the opportunity for additional income is wasted or at least part of the additional costs could have been covered.

The German manufacturer Löwenstein Medical also started to increase production in February. A few days ago, the company received an order from the German government for more than 6,500 ventilators, a multiple of the previous annual production (around 1,500).

The demand cannot be met

Nevertheless, the efforts are far from sufficient to provide the required amount of equipment. According to Hans von Pfuhlstein, an independent management consultant for strategy and innovation, the number of ventilators for intensive care units worldwide could be increased to 150,000 to 250,000 units in the current year. However, “more than a million are likely to be needed”. In the American state of New York with its 20 million inhabitants, which is currently a hotspot of the corona pandemic, 30,000 devices are needed, according to its governor Andrew Cuomo. In 2019, however, only 7,000 intensive care ventilators were sold across the U.S. Von Pfuhlstein estimates the number of global intensive care ventilators to be between 400,000 and 500,000 units.

Von Pfuhlstein knows the situation of the manufacturers very well, because from 2015 to 2017 he was chief strategist at Hamilton Medical. The company benefits from the fact that, unlike others, it also manufactures consumables such as breathing tubes. If they are not stiff enough, the tube expands instead of the lungs. Thanks to fully automated production, Hamilton manufactures the hoses in the new Swiss factory more cheaply than in other regions of the world – despite the much lower wages.

Suppliers also rotate

The suppliers are of course also affected by the surge in demand: Electromag, the Vaud company, for example, manufactures the small motors for the turbine blowers. This core business generates around 60% of the income of the SME with over thirty employees. This year it would be significantly more because “we produce as much as possible,” says Thomas Borter, who is responsible for sales and marketing at Electromag. The demand has “exploded in the past two weeks”.

Electromag is a subcontractor whose customers are the turbine manufacturers. Around half of the workforce in Ecublens near Lausanne is responsible for the final assembly and control of the drives. At 30,000 to 50,000 revolutions per minute, these ensure the pressure and air supply in the ventilators. The company has sold more than 2 million units since it was founded 16 years ago. The number of pieces was recently increased by 50%, now they are to be doubled again, says Borter. You hire new employees and also try to find additional suppliers for certain parts.

Because ventilators are class 2b medical devices, everyone involved must be certified for safety reasons. This process normally takes months. In the EU there are now efforts to temporarily relax these regulations, for example for industrial companies that manufacture spare parts with additive processes (3D printing).

People from outside the industry have to step in

In order to alleviate the shortage of supply as quickly as possible, the underutilized car manufacturers should now step into the breach: In the United States, companies such as General Motors, Ford Motor and Tesla have announced that they will bring back exempted employees to the factories so that they can manufacture ventilators. It won’t be that easy. At best, car companies can provide device manufacturers with their expertise in procurement, logistics and manufacturing technology. In the opinion of the Pfuhlstein consultant, it is unlikely that Tesla or GM will suddenly produce ventilators on their own. The production of existing models under license is more likely. Apparently, Ford has already requested Hamilton.

Close cooperation between the companies seems more promising. According to von Pfuhlstein, the integrated circuit boards and the screens of the Hamilton devices and the Tesla vehicles are identical. However, the components would also have to be available. Electromag, for example, uses magnets for its motors, all of which come from Asia. This is usually also the case with the electronic parts and the electronic control.

And after the boom?

However, the priorities currently lie in the solutions that can be implemented as quickly as possible. It is being discussed to move the devices that are no longer so urgently needed in Asia to Europe and North America and later to South America and Africa. It would be an unprecedented global measure. However, such initiatives are currently needed in order to get a grip on the emergency.

What comes after the crisis?

Nevertheless, manufacturers would also have to consider what comes after the pandemic. Then you may be sitting on oversized production capacities. Von Pfuhlstein estimates that Hamilton normally generates a good 60% of revenue from ventilators, and this year it would be between 90% and 95%. He fears that the company will slow down after the current rush. Therefore, she had to ask herself today what she would employ her around 350 employees in the future.