When BeamOne LLC announced last fall that it would open a new electron beam medical device sterilization service center in Butler County, Pa., Medrad Inc.'s officials saw the opportunity to shorten its supply chain. BeamOne specializes in the irradiation of medical devices, pharma products and some tissue products to the required sterility level on behalf of manufacturers. Half of Medrad's products require sterilization, and the presence of a local e-beam sterilizer will create a faster customer response time.
“For us it is a fantastic opportunity to bring on a good partner in an industry segment that we believe is up and coming,” says Jeff Owoc, senior vice president of operations, Medrad, which has a headquarters operation and three manufacturing facilities located in the Pittsburgh metro region. Medrad completed an expansion two years ago, allowing it to double its sterile disposable device manufacturing capacity. After conducting a global site search, the company decided to conduct the expansion in the Pittsburgh region.
Medrad's equipment is used in diagnostic and therapeutic imaging procedures such as MRIs. The company also produces a single-use sterile device, as well as a tubing product.
“Our business has become a very regional business because of the costs of transportation,” says Glenn Thibault, president and CEO, BeamOne. “Our ability to go into the Pittsburgh region is beneficial for many manufacturers in the area because they do not have to ship to Chicago or Upstate New York to sterilize their products. We will be the first contract sterilization service in that area.”
The Pittsburgh region allows BeamOne, with operations in the San Diego region, Denver, and Lima, Ohio, to serve not only a thriving medical device cluster, but also to be located farther east in the country. The company also has a location in San Jose, Costa Rica.
Thibault says the new Butler County 25,000-square-foot facility will open in the fourth quarter. The company has the opportunity to expand another 25,000 square feet at the site. Officials will also be able to tap into the tax advantages found in Keystone Opportunity Zones because the company is located in one of these state-designated zones. “I am excited about the medical device community; and pharma is also growing here,” Thibault adds.
Cleveland is another area of the country with a thriving medical device cluster. The metro area is home to 600 health-care related companies where more than half are medical device firms. Market niches in the medical device space include medical imaging; orthopedics and biomaterials; neurostimulation; and cardiovascular. “This is a community rich in resources and accessibility,” says Baiju R. Shah, president and CEO, BioEnterprise, which assists startup companies in connecting to resources and funding to accelerate development.
In terms of access to resources, medical device companies are able to draw upon organizations such as BioEnterprise for free services. There are also numerous research institutions willing to partner and collaborate. “You have a culture within each of your large institutions, such as the Cleveland Clinic and University Hospitals, where a startup or small firm can easily reach the leading clinicians or administrators that they need to try to convince to become champions of their products or services,” Shah says.
AxioMed Spine Corp., located in the Cleveland metro, is one of the firms collaborating with surgeons from the Cleveland Clinic. Working in concert they have developed the next generation of artificial discs for treating degenerative disc disease. The company's Freedom Lumbar Disc combines stability, compression and motion with an elastomeric and polymeric core. The device for the lower back is approved for sale in Europe, and is in a multi-center pivotal study in the United States. The cervical device for the neck is in development and will be submitted for European approval at the end of this year.
AxioMed finds many advantages to being located in both Cleveland and Ohio. “We work with more than 60 vendors in the state,” says Patrick A. McBrayer, president and CEO, AxioMed. “For example, we have to do considerable testing of a device over millions of cycles. We test the polymer at NAMSA, a testing company in Ohio.”
McBrayer says the company manufactures the device in Garfield Heights. “Our facility was built in large measure due to a loan from the state of Ohio, and BioEnterprise was helpful in that regard,” he says. “Our feeling is the money that has been invested in AxioMed in many ways has flowed to other vendors.”
Venture Capital Is A Startup's Best Friend
Much like AxioMed, medical devices firms in Cleveland will find several ways to access capital programs. A number of entrepreneurs in the area have sold their firms and are banding together to invest in emerging enterprises. “We have more health care funding sources in the region and in the state than anywhere else between San Francisco and Boston,” Shah says.
Additionally, Ohio's Third Frontier program, which goes before the voters this month for renewal, offers grants to assist with product commercialization and development. The fund, working in concert with technology partners in the state, has created a network of funding sources. “A number of funds have received monies from the state, coming in as limited partners and capitalizing health care funding sources,” Shah notes.
Moving west to Utah, the state is expanding its venture capital community, where a number of seed funds have been created thanks to the support of the state's Fund of Funds, which was created to stimulate venture capital in the state. “We have been second only to MIT in terms of commercializing innovation out of the University of Utah, and a major component is medical,” says Spencer Eccles, executive director, Utah Governor's Office of Economic Development. The university has $400 million in grant funding.
Utah is home to 150 medical device companies, including Merit Medical Systems and Fresenius Medical Care, which produces 80 percent of the world's dialysis filters. Edwards Lifesciences Corp., the global leader in the science of heart valves and hemodynamic monitoring, has a manufacturing facility in Draper
Through the Utah Science Technology and Research program the state has invested $300 million to support research efforts in the state, including building two new facilities, one each at the University of Utah and Utah State University, which will mostly focus on medical industry activities. The facilities are under construction.
“We have created research space and attracted professors in order to move technology out of the state's universities,” Eccles says. “In 2009 we attracted 20 top researchers to the state. It is a good partnership between the private and public sectors. When I say private, I am talking about foundations and the venture capital community.”
Another initiative to support the life sciences sector in Utah, of which medical device firms comprise 50 percent of the industry, is the BioInnovations Gateway, which is co-located with a biomanufacturing training facility that is a partnership between Salt Lake Community College and the Granite School District in Salt Lake City. The schools have a shared facility at a technical institute where training is provided to 11th and 12th graders for entry-level biomedical positions. “It segues into a two-year community college to provide additional skills as well as degrees for biomanufacturing,” adds Dr. Tami Goetz, the governor's state science advisor. “There are also accelerated training programs to train incumbent workers with new skills. Classes are being taught by industry partners.”
Goetz says because the focus of the operation is workforce development and training education, the idea came about to provide equipped space for startup life sciences firms. “We have a mix of cultures — business and public and higher education — banding together to provide resources,” Goetz says.
“With the classroom experience being co-located with industry experience it gets closer to fine where those synergies wind up impacting the company and the experiences for the students,” says Gary Harter, managing director of business creation, Governor's Office of Economic Development. “In fact, those companies are required to take on interns in order to sign up in the space,” Goetz says. “There is also a limited teaching requirement.”
The BioInnovations Gateway features seven private secure labs with basic equipment, a shared wet lab, a dry lab, a clean room, and a pre-engineering prototype lab.
Physical assets along with access to capital, resources, suppliers and research partners are invaluable to medical device firms. Companies will find locations throughout the country with thriving clusters that are ready and well positioned to help them succeed.
For complete details about the organizations featured in this article, visit:
AxioMed Spine Corp., www.axiomed.com
BeamOne LLC, www.beam-one.com
BioEnterprise (Ohio), www.bioenterprise.com
Medrad Inc., www.medrad.com
Utah Governor's Office of Economic Development, www.business.utah.gov
Singapore: Medtech Companies' Strategic Base in Asia
By Kian-Teik Beh
Asia's fast-growing health care markets, which are expected to expand from $246 billion in 2009 to $349 billion in 2012, according to Frost & Sullivan, present tremendous growth opportunities for global medical technology companies. As companies look for a strategic base in Asia to drive their business expansion in the region, Singapore presents a choice location with its base of globally-oriented talent who are attuned to Asia's needs, strong track record in high-quality medical device manufacturing, and commitment to drive medical technology innovation to address Asia's unmet health care needs.
Today, more than 20 leading medical technology companies that include all of the top 10 medical technology companies have established regional and international headquarters in Singapore. Notably, Siemens Medical Instruments has established its global headquarters that also includes its global supply chain control tower in Singapore. Most recently, Medtronic opened its international and regional headquarters in Singapore in October.
Singapore has a strong industry base with 30 global medical technology companies investing in global and regional manufacturing facilities. They manufacture about S$3 billion worth of medical devices and life science instruments. Leading companies such as Becton Dickinson, Siemens and Medtronics have also co-located regional/international headquarters offices at their manufacturing facilities, thereby establishing Singapore as a strategic home-base to drive business expansion in Asia and global markets.
In addition, companies are extending into innovation activities that include value engineering (e.g., AB Sciex) and product development (e.g., Welch Allyn), as they seek to leverage Singapore's scientific and engineering capabilities to address Asia's unmet health care needs. Singapore is committed to grow its capabilities in medical technology innovation through key initiatives such as the Singapore-Stanford Biodesign Program, which was launched in January and will leverage Stanford University's pioneering biodesign program and Singapore's network of local/regional institutes, to nurture next-generation Asian medical device innovators.
Kian-Teik Beh is the director of biomedical sciences, Singapore Economic Development Board. Visit the organization at www.sedb.com.
North Louisiana Well Positioned To Serve Medical Device Firms
The Monroe and Shreveport-Bossier regions of the state of Louisiana are ideal to support medical device company activities, based on a number of factors. “We are off the coasts but located on corridors that serve the Midwest and much of the country effectively,” says Kurt Foreman, president, North Louisiana Economic Partnership, which markets 14 parishes.
The region has also been consistently recognized as being among the cost competitive locations in the country, based on cost of operations, for example. “That is the key to why we have a significant number of manufacturing prospects even in the midst of an economic climate like we are in now,” Foreman says.
Foreman says the size of the region and distinctiveness of the market is not just another midsized market, but rather is a nuanced area with a lot of capabilities that people would find suitable, as well as allow them to recruit talent.
“We are starting to see spin offs from the medical and pharmacy schools in the area, and the region has a heritage of pharmaceutical manufacturing,” Foreman says. Assets are found in Monroe at the University of Louisiana's pharmacy school. Louisiana State University has a medical school in Shreveport, and one in New Orleans. And the region is home to the nation's fourth-largest nursing program at Northwestern State University, which is within walking distance of the medical school in Shreveport.
To learn more, visit North Louisiana Economic Partnership, www.nlep.org
Medical Devices
Based on number of establishments, first quarter 2008 to first quarter 2009.
Startups
1. California
2. Texas
3. Florida
4. New York
5. Maryland
6. Pennsylvania
7. Illinois (Tie)
7. Ohio (Tie)
9. North Carolina
10. Georgia (Tie)
10. Michigan (Tie)
New Branches
1. California
2. Texas
3. Florida
4. Pennsylvania
5. New York
6. Minnesota (Tie)
6. Michigan (Tie)
6. Ohio (Tie)
6. Arizona (Tie)
10. Illinois (Tie)
10. Maryland (Tie)
Employment
1. California
2. Minnesota
3. Massachusetts
4. Pennsylvania
5. New Jersey
6. Texas
7. Florida
8. New York
9. Illinois
10. Missouri
43-835 Diagnostic substances
43-836 Biological products, except diagnostic
44-823 Process control instruments
44-824 Fluid meters and counting devices
44-825 Instruments to measure electricity
44-841 Surgical and medical instruments
44-842 Surgical appliances and supplies
44-843 Dental equipment and supplies
44-844 X-ray apparatus and tubes
44-845 Electromedical equipment
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