Transfer Pricing and Contract Manufacturing for Medical Devices: A Practical Model for Global OEMs
For global OEMs, manufacturing in India is not only an engineering decision. It is also a commercial structure decision. A transparent transfer-pricing or contract-manufacturing model can separate tooling investment, recurring production cost, IP ownership, assembly cost, sterilisation cost, regulatory support and distribution margin. This clarity helps both the OEM and the manufacturing partner scale without confusion.
Separate CAPEX from OPEX
Tooling, fixtures, welding horns, validation batches and special gauges are one-time or project-specific investments. Moulding, assembly, packing, sterilisation and inspection are recurring costs. OEMs should avoid mixing these into one unclear per-piece price at the development stage. Separate pricing makes the project easier to approve and easier to scale.
Use transfer pricing when multiple operating units are involved
In a CDMO group, one entity may face the customer while specialised units handle moulding, cleanroom assembly, textile work or latex products. A transfer-pricing logic allows internal execution at defined rates while the customer receives one coherent commercial proposal. This is useful when an OEM wants a single accountable partner but the work naturally spans more than one facility.
Commercial model elements OEMs should request
A mature proposal should show what is fixed, what is variable, what is dependent on volume, and what will be finalised only after design freeze or regulatory gap analysis. This protects both sides from unrealistic early commitments.
Tooling and validation CAPEX separated from recurring unit cost
Production cost shown by volume slabs where possible
Assembly, packing and sterilisation listed as separate cost heads
Market entry, distribution or regulatory support treated as separate scope
Clear ownership of moulds, drawings, IP and customer-specific know-how
How Medevis Healthtech supports OEMs
Medevis Healthtech can structure proposals where customer-facing responsibility stays with one CDMO interface while specialised operating arms execute tooling, moulding, cleanroom assembly, textile or latex-related work at defined internal transfer rates. This is helpful for global OEMs that want a clear India manufacturing model.
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