The value chain, and where the profit sits
The most valuable step an outside supplier can occupy is already occupied, and the step MERIDIAN would enter is the one where entry is a regulatory record rather than a process.
▸Who holds each step, and what characterizes it
- What happens
- Polyimide and PET film, copper foil, gold, silver/silver chloride and carbon inks, liquid crystal polymer
- Who holds it
- Specialist chemical and film makers: Toray, DuPont, Kaneka
- What characterizes it
- Concentrated upstream. A handful of suppliers, and polyimide film alone runs 60% to 70% of a flexible circuit plant's operating cost. This is a supply and input-price risk
- What happens
- Patterning conductors and electrodes onto film by photolithography, plating or printing
- Who holds it
- MERIDIAN today, in non-medical. In medical: Cirtec, MicroConnex, and OEM in-house lines
- What characterizes it
- Contested, and the step MERIDIAN would enter. Entry barrier is regulatory record rather than process capability
- What happens
- Bonding the die, adding battery, sensor chemistry and enclosure to make a working subassembly
- Who holds it
- Device makers for their own core products; specialist contract manufacturers (Phillips-Medisize, Nolato, Jabil) for pharmaceutical and diagnostics customers
- What characterizes it
- The most valuable step an outside supplier can occupy, and it is already occupied. The opening is the part that turns over, not an empty stage
- What happens
- Making the finished device, owning the regulatory clearance and the brand
- Who holds it
- Device OEMs: Abbott, Dexcom, Medtronic, Boston Scientific
- What characterizes it
- Concentrated downstream, which is buyer power. Explicitly out of scope: MERIDIAN is not pursuing finished devices
- What happens
- Selling to hospitals, pharmacies and payers; securing reimbursement codes
- Who holds it
- Device OEMs and distributors
- What characterizes it
- Concentrated. Where most of the device price ends up
What gets made, in order from raw input to the paying customer, and who holds each step.
Two things follow.
Profit concentrates at device integration and at reimbursement, both of which are out of scope by the brief's own constraint. Dexcom, which holds those steps, earned a 60.1% gross margin and a 19.6% operating margin in 2025. Integer, which holds only fabrication and assembly, earned 27.0% and 11.9%. The gap between those two pairs of numbers is what owning the clearance and the brand is worth, and MERIDIAN has ruled out taking it.
Module assembly is the stage where an outside supplier can stand at all, and that is different from a stage nobody holds. Device makers assemble their own core products because that is what they compete on. Pharmaceutical and diagnostics companies do not assemble at all, because electronics manufacturing is nothing they are set up for. That asymmetry creates the demand.
It has also already been answered. Phillips-Medisize manufactures a wearable, electronic-enabled combination drug delivery product for a biotechnology customer, providing final assembly, test and quality control, and reports more than thirteen years of combination product programs. Nolato manufactures wearable on-body injectors from ISO 13485 sites. Jabil, Flex, Sanmina, Benchmark and Recipharm all appear as participants in the same work.
So the opportunity is not an empty stage. It is a stage held by qualified incumbents, where the demand is real and growing and the entry contest is against companies that already have the certificate, the customer and the design-in history. This analysis prices it that way: of the merchant pool, three quarters is treated as already placed, and only the part turning over inside the horizon is treated as available.
Where MERIDIAN sits and where it could sit. Today it holds substrate and electrode fabrication, in non-medical markets. The recommended position is substrate fabrication through module assembly, which is a run of two neighbouring stages. The position this analysis prices and declines is extending into device integration and clearance, which the brief rules out and which the margin analysis says is where the money actually is.
Selling a standard substrate and a customized one at a higher price is one stage, not two. It changes what the stage captures, not where MERIDIAN stands.
Section added · Every judgment about where to participate is read against it, and a reader assembling the chain from scattered mentions assembles a different one each time.