Case Study

Design in business | Aerogen

The company

Aerogen designs, develops, manufactures and markets aerosol drug delivery devices. An integral part of its drug delivery systems is patented vibrating mesh (VM) aerosol technology. This allows drugs to be nebulised into a fine particle mist that can be absorbed through the lungs to treat a broad spectrum of patient respiratory conditions and to deliver medication in intensive care settings. It is covered by over forty patents and forms the core of all the Aerogen products. It is a world leader in acute care drug delivery for ventilated patients.

The company is headquartered in Galway and has offices in Europe, America and China. Aerogen employs over 100 staff in Ireland. Exports account for 99% of Aerogen’s sales and its products are shipped to 70 countries worldwide.

Manufacturing is mostly outsourced while the company focus on the design, development and marketing of its products.

Aerogen’s operating model involves licensing and royalty arrangements as well as making strategic alliances with key custom manufacturers. The company’s customers are either Original Equipment Manufacturers (OEMs) of ventilators for clinical use such as Covidien, Hamilton Medical or Maquet, or independent hospital distributors and thereby acute care consultants who will specify and recommend specific products.

All product and process design activity at Aerogen takes place in Ireland and the whole company is strategically built around design evolution. Adopting a ‘Blue Ocean’ philosophy of creating new markets and opportunities in uncontested areas, Aerogen works closely with customers to identify gaps and opportunities in the whole continuum of care.

Design activity in Ireland

Focussing the development effort on unrecognised clinical needs means that the customer / patient experience is at the centre of all innovation. Design principles allow the company to give the customer something that they did not realise they wanted.

Process design is also necessary to establish a robust supply chain that has a low carbon footprint and minimises business risk. Aerogen products are supplied to clinical ventilator OEMs who will not be able to ship their products if the supply of nebulisers isn’t guaranteed. Eliminating unnecessary cost, effort and waste is also vital, since being able to offer products based on the Vibrating Mesh technology at an appropriate price point is key to the success of Aerogen’s Blue Ocean philosophy.

This means that Aerogen needs to adopt an integrated design approach where the product is designed with the process in mind and vice versa, inclusive of regulatory needs. This depends on innovative and creative staff who are able to challenge both customer needs and expectations and the company’s own products, processes, systems & structures.

Almost all Aerogen staff are qualified up to PhD level in Science, Engineering or Technology and 20% of the operating expenditure is invested back into R&D. Designers at Aerogen have backgrounds in mechanical, electronic, software and control engineering design. Others are specialised in ergonomics and aesthetic design which are required for product development. Extensive use is made of cross functional teams working in a stage-gated process. The design approach is so integral to Aerogen’s product development approach that it is not possible to identify the specific cost of this aspect.  According to Brendan Hogan, Aerogen’s Vice President of Engineering:

“Ascertaining, quantifying and validating unmet clinical needs as a basis to create value for all involved is one of the key challenges in using design in this way.”

This helps to ensure that all design inputs are identified upfront which prevents late changes. Understanding the user and patient needs in as much detail as possible is therefore paramount.

To do this, Aerogen recreate the clinical situation and practices for their products in the development lab. This is challenging, however, since there is considerable variation between hospitals in different countries and even between different hospitals in the same country. To resolve this, the company pursue opportunities that match significant customer needs and develop related products and services that are fit for purpose quickly.

Design in focus

The Aerogen® Solo is a compact, disposable, single patient use nebulizer for aerosol therapy. Customer research in the US market identified a preference for disposable nebulisers to avoid sterilising them for reuse. A key challenge therefore, was to find the most appropriate price point for a disposable nebulizer incorporating vibrating mesh technology, which is more expensive than common alternatives. A fully FDA compliant pilot product was subsequently developed and launched at a price offering virtually no margin to Aerogen in order gain direct market intelligence.

With that knowledge in place, Aerogen then embarked on a complete redesign process focusing on the product itself and the manufacturing process. The vibrating mesh technology sub-assembly forms the ‘heart’ of all Aerogen products. The focus in redesigning the product therefore rested on the manufacturing process in order to make a product with the same functional performance as the pilot disposable nebulizer, but at much lower manufacturing cost. This involved extensive re-engineering of the components and the electromechanical assembly by changing materials and optimising the manufacturing process as a whole. The team focused on component and process step elimination and substitution of the respective materials, as well as automated manufacture, assembly and test.

As the team was cross functional with staff responsible for clinical science, process development, materials science, design assurance, aerosol science, regulatory affairs, manufacturing, quality engineering and marketing, the overall project took around two years.

The final product was initially launched in 2007, however, there have been some relaunches as a result of continually refining the design and manufacturing processes. Recently, Aerogen worked with suppliers in Switzerland to develop new automation equipment at a cost of €2 million. This will further reduce the manufacturing costs, increase the output capacity and generally enhance manufacturing performance. The resulting increased product margin is then reinvested into addressing new markets facilitating the treatment of patients through effective aerosolised drug delivery.

Impacts from design

The innovative design of market leading products is the foundation on which Aerogen is built. Over the last 8 years there has been a more than 30% increase on sales growth each year and employment numbers have grown from around 20 to more than 100. Almost 3 million patients have been treated with Aerogen technology since they launched.

The impact of the design focus is felt through the success of the products in the market place, the quantities sold and the margins secured. Other advantages have been a shortened supply chain which reduces complexity of multiple suppliers and enhances business continuity with a lower risk of product supply. In addition, design has reduced the carbon footprint and enhanced the level of IP protection in the area of product and process where outcomes have been inventive and novel.

The focus on manufacturing processes is particularly beneficial for Aerogen. In the past manufacturing was mostly undertaken in the far West (California) and the Far East (China & Taiwan), much of this has since come back to Ireland. This is the result of the process redesign effort which has resulted in largely automated production runs and higher volumes which can be delivered cost effectively in Ireland.

http://www.aerogen.com/