Steribite Announces Merger With Precision Manufacturing Group
Cleveland-based medical device company Steribite, LLC has announced it has merged with Wooster, Ohio-based contract manufacturer Precision Manufacturing Group, LLC (PMG).
“We are extremely pleased with this merger with our critical manufacturing partner. It will allow us to move additional manufacturing steps in-house, and with all the problems associated with the supply chain and manufacturing overseas, we think a completely U.S. manufactured product is critical to our success. It will enhance our value by reducing costs, manufacturing time, and improve our quality control. It will also give us another revenue source since PMG manufactures spinal implants and instruments for other companies, an area we want to grow,” said Steribite CEO John A. Redmond.
“We are excited to become part of the Steribite team. We’ve had a close relationship, as one of their key suppliers for the last few years and it is a natural fit to combine the two organizations,” said PMG CEO Casey Zace, who will become COO of Steribite.
New, privately held company Steribite develops surgical instruments and spinal implants and surgical instruments for patients and surgeons. Precision Manufacturing Group makes stainless-steel shafts used in Steribite’s kerrison rongeur, the company’s reusable bone removal instruments, used in spinal procedures.
Steribite received FDA clearance for its disposable kerrison rongeurs in 2018. Reusable kerrison rongeurs are difficult to clean and keep sharp, as well as being expensive. Disposable kerrison rongeurs eliminate these issues and decrease risk of surgical infection.
Redmond told OTW, “For 2022, we will be adding an 11-inch version of the Steribite kerrison and are developing other disposable products that are critical to the successful outcome of spinal procedures. Prior to our merger, PMG was making spinal implants and related products for other companies. We plan on growing that business as well.”
Redmond explained how the merger took place. “When we were looking for a manufacturer to make our stainless steel shafts, we tried to find a U.S. manufacturer, but we could not get anyone to give us the price we needed for a disposable instrument. We then tried China and the price was right, but the quality was inconsistent. Plus, the logistics were problematic in terms of shipping time, costs and communication. We also got quotes from a couple of German manufacturers, but again the cost was too high. Since the parts require very tight tolerances and needed some adjustments during the development stage, we realized we needed a small manufacturer that we could work closely with. An industry friend introduced me to PMG.”
Redmond continued, “We came to an agreement on the shaft cost, which was in-line with what we needed. We then made an initial investment in PMG that gave us a 20% stake and a board seat. Later, we made another investment that gave us a controlling interest with 51%. Steribite is a very complex product to make, with six different companies involved in the various stages. This was causing us time delays and no consistent production schedules we could count on. We came to the conclusion that we needed to bring more of the production steps in-house. To do that, it just made sense to completely merge with PMG.”
Redmond emphasized, “The benefits are tremendous, from increased profits, shorter production times and better quality control. With all the problems associated with the supply chain, and geopolitical uncertainties, we think owning a U.S. manufacturing facility is a great strategic move that increases our value tremendously.”