GOVERNMENTAL & LEGAL AFFAIRS
Long ago, site selection became a very sophisticated and highly strategic decision for most companies. Recent advances in geographic information selection software packages enable companies to meld important factors in site selectionsuch as population, income taxes, airport accessibility, highway conditions, and even nearby employers and collegeswhen evaluating prospective sites. Additionally, several large real estate organizations, including Trammell Crow Co. (Dallas) and the Staubach Co. (Addison, TX), have formed industry-specific teams to further their business development efforts in fast-growing, innovative industries such as life sciences.
However, missing from most typical site selection processes is a thorough examination of the elements that underscore innovation in life sciences segments such as medtech: inventors and the intellectual property (IP) they produce. Numerous studies have linked high-quality patents to market success. Therefore, if a company manages its IP as a core asset, innovationparticularly high-quality, patent-driven innovationis a repeatable process that can lead to such market success.
In this MX exclusive, intellectual property research and advisory services firm ipIQ (Chicago) examines how IP analytics can enhance site selection for medtech companies.
Medtech Inventor Contributions by State
To identify hot spots in terms of industry-specific patenting activity, ipIQ examined inventor contributions in the medical device field by geographic region. Inventor contribution is defined as the number of contributions made to an issued patent by an individual inventor in a specific geographical area. For example, if three inventors from the Chicago area were to collaborate on five different patents, Chicago would be credited with 15 contributions. For the study, ipIQ focused on U.S. utility patents issued from 2003 to the present.
At the national level, the number of inventor contributions to medical device patents declined at an annual rate of 14% between 2003 and 2005. The decline in contributions is prevalent among the top 10 states, with only Pennsylvania showing an annual decline of less than 10% in this time frame. Shrinking by more than 19% in 2004 and 27% in 2005, Ohio experienced the greatest reduction in annual contributions among the top 10 states.
Even though the medtech industry is generally thought to be less concentrated geographically than other life sciences segments such as biotech and pharma, the degree of inventor concentration in the medical device field is worthy of note. About half of the inventor contributions to medical device patents issued since 2003 originate from only four statesCalifornia, Massachusetts, Minnesota, and New York (see Table I).
State
|
Medtech
Inventor
Contributions (no.) |
%
of U.S. Medtech
Contributions |
Unique
Medtech
Patents (no.) |
California |
18,497
|
28.6
|
9124
|
Massachusetts |
5335
|
8.2
|
2803
|
Minnesota |
5235
|
8.1
|
2803
|
New York |
3369
|
5.2
|
2162
|
New Jersey |
2438
|
3.8
|
1538
|
Ohio |
2323
|
3.6
|
1332
|
Pennsylvania |
2217
|
3.4
|
1406
|
Florida |
2069
|
3.2
|
1596
|
Illinois |
2064
|
3.2
|
1156
|
Texas |
1850
|
2.9
|
1372
|
Table I. The number of inventor contributions to medical device patents and unique medtech patents produced by the top 10 U.S. states, January 2003-June 2006. Source: iplQ. |
Not surprisingly, California leads all states with more than a quarter of the nation's medtech inventor contributions, yielding more than 9000 patents.
When looking beyond the lump sum of patents produced in each state, some interesting observations come to light in terms of the quality and productivity of the patents produced in each state. They are as follows.
While these data points may not necessarily dictate that a medical device company should relocate to North Dakota, they may cause medtech executives to consider locations that might otherwise not appear on their list of prospects. For example, low-cost locations in close proximity to both Minneapolis and eastern North Dakota would situate a company between a major medtech hub and a region of the nation producing exceptionally high-quality patents. Similarly, with the insight that inventors living in Kentucky have discovered some potentially seminal patents in the medical device field, some companies might consider the Cincinnati-Northern Kentucky region a more attractive site.
Medtech Inventor Contributions by Region
Similar to the state-by-state breakdown, an analysis of inventor contributions at the core-based statistical area (CBSA) level paints a highly concentrated picture. In fact, since 2003, the top 10 CBSAs have generated 51% of the nation's inventor contributions to medical device patents (see Table II). CBSAs encompass both metropolitan and micropolitan statistical areas as defined by the U.S. Office of Management and Budget. A look at ipIQ's patent quality indicators reveals the following information at the CBSA level.
Core-Based
Statistical Areas
|
Medtech
Inventor Contributions (no.) |
%
of U.S.
Medtech Contributions |
Unique
Medtech Patents (no.) |
San FranciscoOaklandFremont, CA |
5159
|
8.0
|
3215
|
MinneapolisSt. PaulBloomington, MN- WI |
5129
|
7.9
|
2232
|
San JoseSunnyvaleSanta Clara, CA |
4881
|
7.5
|
3027
|
Boston-Cambridge-Quincy, MA-NH |
4797
|
7.4
|
2617
|
Los AngelesLong BeachSanta Ana, CA |
4548
|
7.0
|
2707
|
New YorkNew JerseyLong Island, NY- NJ-PA |
3467
|
5.4
|
2264
|
Chicago-Naperville-Joilet, IL-IN-WI |
1878
|
2.9
|
1009
|
San DiegoCarlsbadSan Marcos, CA |
1826
|
2.8
|
1247
|
Philadelphia-Camden-Wilmington, PA- NJ-DE-MD |
1439
|
2.2
|
900
|
Seattle-Tacoma-Bellevue, WA |
1306
|
2.0
|
771
|
Table II. The number of inventor contributions to medical device patents and unique medtech patents produced by the top 10 U.S. core-based statistical areas (CBSAs), January 2003June 2006. Source: iplQ. |
Patent Quality by State
In addition to analyzing the quantity of patents produced in an individual region, it's also important to determine the relative quality of a region's patents. In examining the top 10 states in terms of medtech patent qualityas measured by ipIQ's technology strength indicatorthe following observations come to light (see Table III).
State
|
Inventor
Contribution Rank |
Technology
Strength Rank |
Technology
Strength |
Issued
Patents |
Current
Impact
Index |
Science
Linkage |
Technology
Cycle Time |
California |
1
|
1
|
2692
|
2264
|
1.19
|
7.7
|
9.3
|
Massachusetts |
2
|
2
|
710
|
660
|
1.08
|
10.0
|
9.1
|
Minnesota |
3
|
3
|
564
|
596
|
0.95
|
4.3
|
8.2
|
New York |
4
|
4
|
406
|
509
|
0.80
|
5.0
|
7.7
|
Pennsylvania |
7
|
5
|
361
|
373
|
0.97
|
5.4
|
10.2
|
Florida |
8
|
6
|
330
|
405
|
0.82
|
3.6
|
9.9
|
Ohio |
6
|
7
|
313
|
298
|
1.05
|
3.8
|
9.6
|
New Jersey |
5
|
8
|
283
|
364
|
0.78
|
6.2
|
9.1
|
Texas |
10
|
9
|
258
|
309
|
0.83
|
6.7
|
10.1
|
Illinois |
9
|
10
|
238
|
293
|
0.81
|
6.2
|
11.1
|
Table III. The medical device industry's top 10 states, ranked based on the technology strength of their patent portfolios, 20032005. The green and red highlighting indicates notably strong and weak performances, respectively, as outlined in the article. Source: iplQ. |
Conclusion
Although the site selection process has evolved to include numerous factors, such as traffic density, tax rates, and projected population growth, many of the forces that drive innovationintellectual property, patents, and researchhave historically not been a significant part of the site selection algorithm. In order for a medical device company to best align its need for continued market-leading innovation with its need for an appropriate location, fact-based analytics regarding high-quality patenting within geographies is a key component.
Consideration of numerous quality-of-life inputs is undeniably important when choosing a location. However, without understanding an area's ability to produce innovation, a medtech company's site selection process might not lead to the best possible location to meet the company's long-term needs. Scott Kratzer is vice president of advisory services for intellectual property research and advisory services firm ipIQ (Chicago). Jorge Diaz is an analyst in the firm's advisory services division.