A family-run business, Spectra Medical Devices Inc. manufactures needles for pain management procedures such as epidurals and peripheral nerve blocks, as well as other medical products.
For decades, the company has sold inventory including injection needles, syringes, scalpels, disposable surgical instruments and pharmaceuticals through large distributors such as Owens and Minor Distribution Inc. and Cardinal Health.
But now Spectra is also relying on direct sales to end customers through its recently launched B2B ecommerce site, as well as through its sales force.
In medical device manufacturing, it is not uncommon for manufacturers to sell to distributors under white-label contracts in which the distributor brands the manufacturer’s product and sells to resellers and end customers. That in large part is because obtaining approval from the U. S. Food and Drug Administration to sell branded products is a lengthy and expensive process that can cost several hundred thousand dollars and take more than a year and a half to receive approval.
In addition, such distribution contracts can make sense for small and mid-sized medical device manufacturers that may lack the marketing, logistics, and sales resources to sell directly to end customers.
But now, responding to new market demands and an increase in its own resources to sell directly to end customers, Wilmington, Massachusetts-based Spectra Medical is beginning to sell its own branded products through its ecommerce site and sales force. As a result, it’s developing new relationships with customers who prefer the online channel.
“Demand for our needles is growing, and we also reached a point in size where we have the engineering, manpower and resources to sell direct,” says CEO Tony Arrigo, whose son, Anthony Arrigo, leads marketing and sales.
Handling both large and small orders
Spectra continues to sell to the large distributors under the white-label high-volume contracts. But its direct-to-customer business is meeting an increasing demand among customers who need to place smaller orders more frequently.
Spectra Medical’s decision to sell direct to healthcare facilities and other end customers follows an increase in demand for its needles, as more physicians rely on injections of pain killers in the wake new government regulations restricting prescriptions of pills to curb opioid abuse.
At the same time, however, Spectra’s ecommerce site is meeting the needs of physicians and healthcare facilities ordering products on an as-needed basis, including a box or two at a time, rather than in bulk quantities.
Launched in February, Spectra Medical’s website is integrated with the manufacturer’s enterprise resource planning platform from Oracle NetSuite. The website allows qualified buyers to see available inventory in real time and make purchases without submitting a purchase order. The website automatically calculates shipping costs at checkout based on a customer’s order value and destination.
Once an order ships, buyers receive an email with tracking codes and expected delivery dates.
While it took Spectra less than two months to develop the website, the company held off launching the site while awaiting approval from the FDA and regulators in Europe to sell medical devices under its own brand. The company also needed time to build sufficient inventory for the website, which took about six months.
Banking on more online orders
Currently, Spectra Medical has about 10% of its catalog available through the ecommerce site, at Store.SpectraMedical.com. The site uses ecommerce technology from WooCommerce and a content management system from Oracle NetSuite, according to Builtwith.com. But the manufacturer plans to increase the products available as it builds the inventory to support ecommerce sales, says Anthony Arrigo, Spectra’s director of global sales and marketing.
In addition to needles, Spectra’s website also carries face masks and hand sanitizer, prescription drugs such as single-dose vials of Lidocaine Hydrochloride Injection, disposable surgical instruments, syringes and scalpels.
“Now that we have the website and our own branded products, we can direct buyers, especially those looking to purchase small quantities, to the website, which we couldn’t do in the past,” says Anthony Arrigo. “Most of these purchases are five thousand dollars or less. We still sell to large buyers through our sales force, but the ecommerce site is a way to augment those sales and sell direct under our own brand.”
Spectra’s direct-to-customer online channel also provides the manufacturer with more control over pricing and its own profit margins, helping it to be competitive in the market, the company says. Spectra declined to comment on whether the new DTC channel has led to channel conflict with its distributors, who continue to serve the high-volume, while-label contracts.
In addition to experiencing growth in demand for its needles, Spectra Medical has also invested in expanding its manufacturing and warehouse capacity, changes that helped pave the way to sell direct to buyers. A new automated manufacturing plant is scheduled to open by the end of the second quarter that will improve consistency and shorten lead and delivery times internationally.
Looking ahead, Spectra Medical intends to continue adding more products to its website, as well as developing new products based on industry demand. The company recently launched a needle that incorporates ultrasound technology to help physicians know where the needle is in relation to the target area to improve delivery of the medication. For example, a physician injecting a corticosteroid to a patient’s knee can see that he is delivering the medication to the inflamed part of the knee joint, as opposed to a broader area within the knee joint.
“Every buyer has different product needs, and we manage our product offerings to meet those needs,” says Anthony Arrigo. “Our website is another way to meet buyers’ needs.”
Peter Lucas is a Highland Park, Illinois-based freelance journalist covering business and technology.
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