Medical Device Firms Up R&D Spending

In the face of pervasive economic woes, some Minnesota medical device manufacturers and suppliers are increasing R&D spending while continuing to downsize and lay off staff. Topping a list of the 25 public companies in Minnesota with the largest R&D budgets are well-known players in the medical device sector such as Medtronic Inc. (Minneapolis) and St. Jude Medical Inc. (St. Paul, MN).All medtech companies on the list increased R&D investment over the past four quarters. Dominating the Top 25 was SurModics Inc. (Eden Prairie, MN), a developer of coatings and drug-delivery technologies for medical device and pharmaceutical companies. The company upped its R&D investment by 51%, which represents approximately 30% of its sales.The firm used most of its increased R&D spending to expand its staff at SurModics Pharmaceuticals (Birmingham, AL). Formerly called Brookwood Pharmaceuticals, SurModics purchased the company in 2007. Since then, the subsidiary has hired 40 employees, increasing its personnel level to 100. According to chief financial officer Phil Ankeny, the expansion reflects biotech companies‘ demand for innovative research. “It‘s a tough economy, but fortunately, we have a pretty strong customer base that believes R&D is the key to their future.”According to a study released in February by the Industrial Research Institute (Arlington, VA), U.S. companies will invest roughly the same amount in R&D in 2009 as they did the year before, despite the ongoing recession. Many Minnesota companies say that they will follow suit, partly to better position themselves with strong products when the recession ends.