Thomas Klein, Bernard Banga, and Alessandra Martelli
Identifying the most important medical technology clusters is, to some extent, a subjective activity, as there are different views on what the purpose of such a cluster is or how its success can be measured. Does it need to generate cost or efficiency benefits for its residents? Is a high concentration of medtech companies in a region sufficient to constitute a cluster, or does it need large-scale cooperation between local companies, research institutes and clinics as well as a rich supply of start-up companies? Certainly, the ideal cluster would have all of these elements: an excellent manufacturer and supplier backbone, access to first-rate clinics, universities and research facilities, a high number of technology start-ups, and easy access to funding.
The Grand Est area of France.
With its 'learning factory' training centres, campuses, incubators, the Grand Est area of France is home to two world-class medtech clusters: the Alsace Biovalley, which specializes in keyhole surgery and medical implants, and the medical micro-techniques cluster in Franche-ComtÃ©. These two regions of the Grand Est area of France alone generate an annual turnover of 932 million euros.
Alsace is home to 150 medtech companies. Five new medtech start-ups a year are set up in this small region of France. “The University of Strasbourg, ranked 17th for chemistry and 51st for life sciences in the latest Shanghai rankings, gives us a world-class research centre,” explains SÃ©verine Sigrist, president of the Alsace Biovalley cluster. The cluster concentrates on research in seveeral strategic fields: robotic keyhole surgery and robotics in general, implantable medical devices, simulation and modelling tools, drug delivery and neuroscience. “Our biocluster helps companies set up collaborative projects, from design to end products, and makes it easier to raise funds and find new business,” continues Sigrist. The Alsace Biovalley has been behind 492 regional collaborative projects, over the past ten years. Eight medetch companies in the region, including five accredited innovation cluster start-ups, have benefited from a 32 million-euro R&D budget, i.e. an average of €1.5 million per medtech company. This, for example, enabled Defymed, which has designed an artificial pancreas, to obtain €1.2 million in 2013.
Many companies in the French region Franche-ComtÃ© owe their micro-techniques’ expertise to traditional watchmaking skills. Some 250 of the region's SMEs, specializing in micro-mechanics, micro-robotics, micro-fluids, optics and IT, are contributing to the worldwide growth of biomedical production, mainly in the fields of prosthetics, implantable medical devices and telemedicine.
Medical Valley Nurnberg, Germany
One of the precursors of Siemens Healthcare was founded in 1877 in Erlangen in Bavaria which is still the location for the company’s headquarter. Ever since, medical technology was one of the most important industries for the area around Nurnberg. After Wilhelm Conrad RÃ¶ntgen had discovered the x-ray technology in the near-by WÃ¼rzburg in 1895, the first medical imaging companies were established in the region. Today, there are 180 medical technology companies active in the cluster employing over 16.000 people. Some of the technology pioneers in computer tomography, magnetic resonance tomography, interventional diagnostic imaging refractive surgery with lasers, lithotripsy, endoscopy treatment systems, sensors, medical information systems, hi-tech implants can be found in the area. A huge number of highly specialized SMEs supply the medtech companies with electronics and microsystems technology, information and communication technology, optical engineering, and new materials for the medical device industry.
According to JÃ¶rg Trinkwalter, a member of the cluster’s executive board, the companies benefit from the close cooperation with the 40 hospitals treating more than 500.000 patients per year and over 60 professorial chairs related to medical technology. Additionally, 20 research institutes such as the Fraunhofer Institute for Integrated Circuits and the Max-Planck-Institute for the Science of Light collobaorate in the currently 45 joint R&D projects in the cluster. The common research so far resulted in 110 patents and over 220 scientific publications.
Additionally, the cooperation helps to save costs for the medtech firms in the area. For example, regional companies can use Fraunhofer’s Medical Technology Test and Demonstration Center (METEAN) or the Imaging Science Institute of Siemens to simulate in an early stage of development how new products function in the regular clinical work flow.
Over the last ten years, over 100 medtech start-ups and university spin-offs were founded in the region, according to Trinkwalter.
Emilia-Romagna is one of the most industrious regions in Italy, and amongst the top 3 areas for concentration of companies operating in the medical technology industry.
By the 1980s, the provinces of Bologna and Modena had become the must-go location for medical technology companies in the region. The former became a reference point for companies working in the field of medical devices for orthopaedics applications; the latter specialised in the engineering and production of disposables for infusion, transfusion, and dialysis.
In May 2012, a series of earthquakes hit Emilia-Romagna, damaging almost 70% of the medical technology companies located in the province of Modena, and causing infrastructural damages for around 500,000,000 €. The disaster, combined with cuts in public spending on medical devices which were approved in the 2013 Stability Law, posed serious challenges to the industry in Emilia-Romagna, and caused a tight economic contraction of the sector over the following year. Domestic sales are still suffering from the economic crisis, but in the first semester of 2014 the sector scored an impressive 4.5% increase in export volumes for the region.
According to most recent data available (2012-2013), Emilia-Romagna is home to 392 corporations operating in the medical technology industry.
Medtech companies in Emilia-Romagna are mainly active in the areas of medical instruments for diagnostics and treatment (69.2%), technical equipment (10.2%) and IVD (in vitro diagnostics, 4.8%). Over the last three years, there has also been a slight increase (+ 0.4%) in the number of medical IT companies, which now represent the 4.6% out of the regional total. The overall workforce employed in these corporations is around 7,900 people. As of June 2014, the region hosted 45 medical technology start-ups (20% of the national total). Out of these, 49% were created as spin-offs of public research projects, whilst the others generated from corporative spin-offs or from original partnership ideas.
Neuron Guard, for example, is an award-winning start-up working on the development of an integrated infusion and monitoring device for patients with acute brain damage caused by ictus, trauma or cardiac arrest.
Despite the circumstantial difficulties, Emilia-Romagna remains one of the most active and innovative centres for the development of medical technology in Europe. The regional High Technology Network was founded in 2002 in the context of the regional program for industrial research, innovation, and technological know-how; it currently includes 11 technological centres (known as “tecnopoli”) and 35 specialised laboratories and research centres.
The area around Galway in Western Ireland gives a good example of the dynamics that are responsible for the formation of a technology cluster. Compared to the other medical engineering clusters featured here, it is a latecomer. The region was long considered as slow in economic development until a clever government policy centred on a low corporation tax rate (currently at 12.5 per cent) and research incentives attracted much Foreign Direct Investment. Additionally, the country boasts a highly-skilled English-speaking workforce and easy access to EU markets, which made it attractive for the big US medtech companies to start operations in the country.
Today, nine of the world’s top ten medical technology companies have sites in the country. According to a currently still unpublished study of the National University of Ireland in Galway (NUIG), the first investments in medical technology was made in the region only in 1973. The first companies were subsidiaries of the big US firms, such as CR Bard, today part of Medtronic, Abbott, Merit, and Boston Scientific. Those firms were all involved in the area of cardiovascular stents, which today is one of the cluster’s specialisation. Initially, these companies only conducted assembly operations in Galway. However, according to the study, over time the Irish facilities climbed up the company value chain and are now undertaking R&D and product development activities.
Around these cluster anchors, an indigenous medtech industry evolved. By 1990, there were only four homegrown medical technology companies in Galway and three of those were mere suppliers for multinationals. In 2011, of the 59 medtech companies in the region 21 were foreign-owned and 38 were indigenous. Of those, 24 companies are developing their own devices or components. As hoped, the foreign direct investment facilitated a knowledge transfer benefiting the region. The NUIG study found that 53% of the indigenous were established by ex-employees of the multinationals.
The higher education institutes adapted themselves to the growing importance of the medtech sector for the region and the need for specialised labour pool. NUIG introduced its first biomedical engineering degree in 1998. Ever since, one of the research emphasises of the university was medical engineering. While in 1991 only one patent in medical technology was filed in the region, the number reached 31 in 2009, according to the cluster study. Specialised centres like the Regenerative Medicine Institute were established to facilitate the translation of basic research findings into clinical applications. Recently, NUIG has launched initiatives, such as the BioInnovate, to boost the creation of start-ups and spin-offs from the university.
The Golden Triangle, UK
The so-called “golden triangle” between London, Cambridge and Oxford is a hub for world-class academic medical research. Five of the area’s universities are ranked among the top twelve institutions in the world in the university ranking of Times Higher education in the category ‘Clinical, Pre-Clinical and Health’. Important discoveries, such as penicillin, have been made here and Cambridge University alone boasts 90 Nobel Prize winners.
London wants to build upon this tradition and establish itself as the global hub of life science industry. At the center of the effort is the MedCity project that has been opened by London’s mayor Boris Johnson in April 2014. Funded by the city and the Higher Education Funding Council for England, the initiative aims to facilitate the cooperation between the top universities in the region, hospitals, private companies and the National Health Services, and attract further foreign companies and capital.
Currently, the region boasts only the headquarters of a few multinationals such as Smith&Nephew and GE Healthcare while it is lacking the industrial backbone of medtech suplliers compared to the other regions featured here. However, the Golden Triangle hopes to make up for this with the emergence of cutting edge start-ups. According to the Isis Innovation initiative that supports start-ups at Oxford University, every two months one company spins out of Oxford or is at least based on technology that was developed there. One of many examples for breakthrough innovations from the region is the Cambdridge spin-out Owlstone Nanotech developing a device capable of detecting lung cancer at an early stage by analyzing chemicals in the patient’s breath.
MedCity launched a scheme to facilitate funding for young companies. The new programme ‘Angels in MedCity’ hopes to attract wealthy private citizens who are willing to invest in start-ups. The model for the campaign is the ‘Angels in the City’ initiative that has raised more than £30m for 39 start-ups. Overall, the accessibility of venture capital is better than in most other European regions. In the first three months of 2014, London attracted more than $ 1b of VC. According to Eliot Forster, executive chair of MedCity, funding for life sciences booming in the UK, with a 41% increase in venture capital funding in 2014.
“MedCity will span everything from research to clinical trials to manufacturing, across biotech, med tech and health tech,” Johnson said. “I am in no doubt that having the whole ‘chain’ from small spin-offs to massive companies doing their research, clinical development and manufacturing here in London and the south east can be as important to our economy as the financial services sector is today.” Johnson hopes that the number of employees in the industry will double in the next two decades in the city from currently about 700,000.
Tuttlingen claims to be the world centre of medical technology. The assertion doesn’t seem farfetched when one looks at the numbers. In the district of only 134.000 inhabitants, more than 400 medtech companies employ over 13.000 people. An overwhelming majority of the medtech companies have less than 20 employees, over 90 % of the firms can be rated as SMEs. Surgical equipment manufacturer Aesculap, part of B. Braun Melsungen, and endoscopy pioneer Karl Storz are among the biggest employers in the region. Multinationals, such as Smith & Nephew have production sites in Tuttlingen. Additionally, there are a lot of suppliers located in the region specialising in the manufacturing of special purpose tools, polishing or galvanising but also service providers catering for the medical technology industry.
The companies in the cluster cooperate in a number of areas. For example, they launched a common lobbying initiative regarding the new EU medical device regulation and published a joint position paper. The cluster established a purchasing pool to reduce costs for its members. Additionally, they generate synergies by commonly conducting clinical evaluations for certain standard products.
Several research institutes, such as the NMI Natural and Medical Sciences Institute at the University of TÃ¼bingen, the Hahn Schickard Society for Applied Research or the Fraunhofer Society engage in cluster. One of the areas the companies and researcher cooperate is the growing importance of additive manufacturing in medical technology.
According to the cluster organization Medical Mountains, the number of workers in the sector has been constantly increasing in the last years, which has lead to a distinct lack of skilled workers.
ï»¿Therefore, one of the main challenges for the companies in Tuttlingen is to ensure the provision of junior employees. According to cluster chairwomen Yvonne Glienke, the other major threat for the companies of the region is the possibility of overregulation associated with the expected changes in the EU’s medical device directive.
Canton Zurich, Switzerland
It is not easy to pick a single medical technology cluster for Switzerland, as one could argue that the whole country is one medtech cluster. The decisive factor to choose the ZÃ¼rich canton was the excellent research ecosystem around the ZÃ¼rich universities.
According to the statistical office of the canton, 360 medtech companies are registered in the region employing 4.500 people. The number doubles if suppliers, service companies, and contract manufacturers are included.
The research intensity of Swiss medtech companies is extraordinarily high. According to Medical Cluster Switzerland organisation, manufacturers spent 17 per cent of their turnover for R&D and their suppliers 11 per cent. Typically, the medical technology companies are SME with 94 per cent of companies employing less than 250 people. However, several of the industry’s heavyweights, such as Biotronic, Sonova, Tecan and Zimmer Orthopaedics, are also located in the area.
ZÃ¼rich has some oft he world’s most renowned universities, such as the Swiss Federal Institute of Technology Zurich or the University of Zurich supplying an excellent pool for junior employees. A number of technology transfer organisations and incubators such as BIO-TECHNOPARK Schlieren-Zurich, ETH Innovation and Entrepreneurship Lab, and the Balgrist Campus, which will be launched in November, facilitate the cooperation between research institutions and industry and the emergence of start-ups. The newly founded Wyss Translational Center Zurich conducts science at the interface of medicine, science and engineering. Through an interdisciplinary approach, the new centre aims to develop novel medical therapies and applications for robotic systems in medicine.
Between 2010 and 2013, 15 medtech start-ups were launched in the canton, among those were the winner of the Swiss Technology Award 2014, Aeon Scientific, and the manufacturer of robotic devices for functional movement therapy Hocoma, one of the 100 most inovative companies in the world, according to the “Red Herring 100 Global Award” 2010.
As the majority of Swiss manufacturers, the canton’s medtech firms depend highly on exports to Europe and the US. Therefore, probably the most severe threat to the cluster is the current strength of the Swiss franc after the Swiss national bank unpegged the currency from the euro. According to the Office for Economy and Labor of the Canton Zurich, the ever-increasing costs due to tougher regulatory requirements are another major burden for the medtech companies in the region.