October 29-30, 2013
Minnesota has a long history of life science activity and development. While much of this activity is concentrated in the Twin Cities of Minneapolis and St. Paul (MSP) and their suburbs, a strong foundation exists in outstate Minnesota, anchored by the world-renowned Mayo Clinic in Rochester. Minnesota has long been recognized for its medical device community. However, it is perhaps unique in the overall "ecosystem" that exists to support the development of products, the care of patients, and even the payment for that care. This infrastructure greatly facilitates the conception, creation, development, and delivery of innovative devices and procedures for treatment of medical conditions.
While Minnesota has its beauty, natural resources, and "10,000 lakes" (actually 11,842), it boasts an economic vitality that extends far beyond those attributes, which makes many of its communities routine top 10 finishers in Money magazine's annual "Best Places to Live" list. The MSP region possesses a diverse business base and an economy that is "knowledge-based, globalized, entrepreneurial, IT-driven and innovation-based," says Forbes. The Twin Cities area is home to 19 Fortune 500 public companies (the second highest per capita concentration in the United States) and seven of Forbes' largest private firms, including Cargill, the nation's largest privately held corporation based on revenue. With approximately 3.25 million of the state's 5.2 million people located in the Twin Cities, it also provides an unusually concentrated and close-knit educated work force.
Life Science Expertise
According to Newsweek in 2010, 22% of the employees in the greater Twin Cities work in the medical technology sector, a larger percentage than technology workers in the Bay Area (21%). With almost 27,000 medical technology jobs, Minnesota is second only to California in total employment and is first per capita, with almost three times the national average in this area (The Lewin Group, 2010). Estimates by trade association LifeScience Alley put the total life science employment at over 300,000.
However, Minnesota's contribution to the medical device industry is much more than just the number of jobs. Minnesota has a history of clinicians who have been involved in medical device development, beginning with the Mayo Clinic, located in Rochester, Minnesota, 90 miles southeast of the Twin Cities. The growth of the Mayo Clinic from the world's first private integrated group practice in 1889 to the largest integrated medical center in the world (Mayo Clinic, Saint Mary's Hospital, and Rochester Methodist Hospital). The state's largest private employer (with 32,000 employees) demonstrates Minnesota's leadership in the investigation and treatment of diseases worldwide. In January 2013 the Clinic announced the Destination Medical Center (DMC), a $5 billion economic development initiative to secure Minnesota's status as a global medical destination center now and in the future. The DMC public and private investment is estimated to include approximately $3.5 billion in new Mayo-financed capital investments on its Rochester campus over the next 20 years, combined with an estimated $2.1 billion in additional leveraged private investment. "This bold economic development initiative is driven on the proof of growth in the private sector and not the promise of growth," says John Noseworthy, MD, Mayo Clinic president and CEO. "Ten years from now, there will emerge just a few medical centers with the reputation for healthcare excellence and patient-focused outcomes that will attract patients from all over the world to their flagship medical center. Mayo Clinic not only intends to protect its current status as one of the world's premier medical institutions but to significantly expand our highly-effective practice model and medical assets to be clearly recognized as a global destination medical center for decades to come."
A Legacy of Medtech Innovation
In addition to patient care, Minnesota's history in research, development, and manufacturing of medical devices dates back to 1949 and includes a number of significant medical "firsts," including the bubble oxygenator; the wearable external battery-powered pacemaker; the implanted cardiac pacemaker; innovative mechanical heart valves; implantable infusion pump; the Hemadyne blood pump; cystic fibrosis air-clearing vest; cortisone therapy; and many others. Many of these developments were a result of the collaboration (and sometimes competition) between two of the world's leading institutions in life science and technology research. The University of Minnesota (ranked ninth in the world as a public research institution) and the Mayo Clinic (ranked third as an overall hospital) form one of the most powerful partnerships in the industry, in turn generating ideas that spawn new companies to commercialize these inventions. With more than $1 billion in combined research dollars with over another billion from private industry, the commitment to research in Minnesota is strong, positioning the state to remain a leader well into the 21st century.
However, it takes more than research to turn ideas into real solutions. The University of Minnesota's Medical Devices Center (MDC) is an interdisciplinary program that sits within the Institute for Engineering in Medicine and combines basic research, applied and translational research, education and training, and outreach and public engagement all related to medical devices. The Medical Devices Center moved into its new 8000 sq-ft home located in the Mayo Building on the East Bank Campus in April 2013. It serves as a location to connect engineers and scientists, clinical physicians, and surgeons to develop solutions to healthcare problems, according to Art Erdman, director of MDC. This new space will continue the legacy of medical innovation in Minnesota.
In addition to the University of Minnesota, the state also has a strong state college system (MNSCU), which is the fifth largest system of higher education in the country, with seven state universities and 24 two-year colleges. A number of these institutions create content intended to support the development of personnel associated with local companies, including medical specific regulatory, quality, and manufacturing programs. Minnesota also boasts 17 private colleges and universities, providing a diverse educational infrastructure to support a diverse set of companies and as well as establish the Twin Cities with the second highest rate in the nation of adults 25 years and older that earn a bachelor's degree and with the second highest retention rate of college graduates.
More than 600 life science and medical companies currently work in Minnesota to build on this history of innovation, including Medtronic, Boston Scientific, 3M, Bayer Interventional Solutions, Smiths Medical, Hawkins Pharmaceutical, St. Jude, ev3 (Covidien Vascular), Perrigo, Upsher-Smith, Tonrnier, and Beckman Coulter. An analysis reported in "Minnesota's Competitive Position in the Biobusiness Technology Industries" revealed that Minnesota is the most competitive of the eleven states analyzed in generating employment in the medical devices industry. Minnesota's competitiveness (i.e., its productivity in generating employment in the medical devices industry, taking in to account the relative size of the state's economy, the size of the national economy, and the aggregate size of the medical devices industry throughout the nation) is roughly double that of California. Its lead over California increased during the second half of the past decade.
The partnership between the healthcare system, universities, and industrial companies has created a center of innovation, with the Twin Cities recently ranked as the sixth most inventive city worldwide, according to Bloomberg Businessweek and eighth in the country for new utility patent awards. In the medical device space specifically, the USPTO list of medical patents from 1998-2012 is topped by Medtronic, Cardiac Pacemakers, Sci-Med Life Systems, and Boston Scientific Sci-Med.
LifeScience Alley, a Minnesota-based association serving over 680 member organizations, is the largest life science trade association in the nation. It provides access to industry leaders, education, and networking opportunities, analysis of current trends, regulations, research and emerging technologies, and the power of a legislative voice. The organization's influence extends well beyond Minnesota's borders with ties to activities in other states and countries. In December 2012, LifeScience Alley announced the formation of the Medical Device Innovation Consortium (MDIC), a public-private partnership with FDA's Center for Devices and Radiological Health (CDRH). The Consortium brought leaders of industry, academia, and government agencies together to advance medical device regulatory science. LifeScience Alley provided leadership and support to the initial phase of the MDIC, which is now transitioning to an independent organization.
The state's talent in medical innovation and technology is reflected in its medical care. The state has the nation's best healthcare system, according to a 2012 report by the federal Agency for Healthcare Research and Quality. As a state, Minnesota ranks sixth in United Health Foundation's annual listing of the healthiest states and is typically in the top three states with regard to longevity. In addition, Minnesota-based United Health Group is the most diversified healthcare company in the United States and a leader worldwide in helping people live healthier. With operations in all 50 states in the United States and 20 other countries worldwide, 2012 revenues of $110.6 billion, and as Fortune's World's Most Admired Company in the Insurance and Managed Care sector (2010 - 2012), United Health Group's capabilities in clinical care resources, information and technology are helping to meet the needs of a changing healthcare environment.
However, with all of these attributes, Minnesota medical device companies do face some challenges. LifeScience Alley calculated, based on their best estimates of revenues for Minnesota device companies, that Minnesota's device cluster would pay approximately 25% of the total U.S. device tax. In addition, it is also certainly a bit more difficult to come by venture and investment capital in the state than in Silicon Valley. In 2012, the state saw $320 million of life science investment across 119 deals tracked and a long term average of around $150-200 million/year. However, an angel tax credit was created by the state legislature in 2012, proving so popular that it ran out of its funding in May of this year. Such investment will be critical to the creation of innovative new companies that are up for the challenge of addressing ongoing healthcare concerns.
In any case, the future looks bright for life science activities in the state of Minnesota. The life sciences industry grew 20% in the state compared to 6% nationally from 2000-2010 (Battelle Report), and the Bio/pharma sector grew 54% in the state while declining nationally 3% from 2000-2010. The unique ecosystem that has contributed over the years to Minnesota's rise to medtech powerhouse status positions the state well to continue to be a force as we deal with an aging population that needs to manage chronic diseases longer.
"Minnesota's life science sector is among the largest and best organized in the world," states Dale Wahlstrom, president and CEO of LifeScience Alley. "We have an incredible high-knowledge talent base, the largest medtech cluster in the country per capita, and one of the world's best and most advanced healthcare delivery systems. At the foundation of it all, we have one of the most diverse and specialized industry support infrastructures anywhere in the world, making it possible to bring an innovative idea to fruition through a broad choice of strategic partners."
William (Bill) Betten is a member of the MD+DI editorial advisory board, an author and lecturer, and is currently a consultant to the medical device industry. He most recently served as Medical Technology Director at TechInsights, has broad product development experience in a wide range of medical and other high technology fields. He resides in Minnesota.