Survey: Investors Optimistic about Midwest Device Opportunities

December 1, 2006

3 Min Read
Survey: Investors Optimistic about Midwest Device Opportunities

Investors rate medical device opportunities in the Midwest as being stronger than regional opportunities in biopharmaceuticals and healthcare services and software, according to recent data from BioEnterprise (Cleveland).

Now in its second year, the annual BioEnterprise survey collects venture firms' perspectives on the environment for Midwest healthcare start-ups and sources of Midwest investment opportunities. The survey included responses from 54 active U.S. healthcare technology investors. Compared to national deals, investors said Midwest healthcare deals perform as well (78% of respondents) or better (10%) than opportunities elsewhere.

Compared to national deals, investors responding to the survey rated the Midwest highly for medical device opportunities, with 52% of respondents calling the opportunities strong or very strong. In contrast, 56% of investors rated opportunities in healthcare services and software as average, and 58% rated opportunities in biopharmaceuticals as weak. One respondent noted, “There is a strong network of experienced management and technical expertise, especially in medical devices. . . . The lack of biopharmaceutical management talent continues to be a hindrance to biopharmaceutical investing in the Midwest.”

“The Midwest is headquarters for a number of leading medical device companies across a range of therapeutic sectors,” says Baiju Shah, president of BioEnterprise, an organization that supports the growth of the region's bioscience companies. “These include cardiovascular companies such as Medtronic, St. Jude, and Guidant; orthopedic companies such as Biomet, DePuy, and Stryker; surgical device and supply companies such as Cardinal, Baxter, Abbott, and Ethicon Endosurgery; medical imaging companies such as GE Medical Systems, Philips, and Hitachi; and home healthcare device manufacturers such as Respironics and Invacare. The presence of these industry giants has aggregated significant medical device management and development talent across the region.”

Shah says the perceptions of medical device opportunities expressed in the 2006 survey are similar to the opinions expressed in the 2005 survey. “Of note in the free responses, more venture capitalists noted the growth in the Midwest's entrepreneurial infrastructure to support medical device companies,” he says.

“In addition to a steady stream of financings for cardiovascular and surgical device companies, the highlight in 2006 has been several significant neurostimulation company financings, including Enteromedics (Minneapolis), CVRx (Minneapolis), and Synapse Biomedical (Cleveland),” Shah adds.

For the second year in a row, investors active in medical device ventures ranked Minneapolis, Cleveland, and Pittsburgh as the Midwestern areas harboring the greatest investment potential.

“The regions attracting the most investment are those rated highest by investors,” Shah says. “Clearly, investors are finding good opportunities in the Midwest, especially in medical devices.”

Midwest healthcare start-ups reported $564 million in total investments through the first three quarters of 2006, according to BioEnterprise. Of this, $225 million was allocated to medical device investment opportunities within 45 companies.

For more coverage of geographic trends in the medtech industry, look for articles in the new MX series, “Regional Development Opportunities.” The first three articles in the series appeared in the November/December 2006 issue of MX: Business Strategies for Medical Technology Executives and can be accessed at Future installments are slated for the upcoming January/February issue.

© 2006 Canon Communications LLC

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