Badger State's Southeast Boasts Robust Medical Device SectorBadger State's Southeast Boasts Robust Medical Device Sector
November 15, 2009
In Wisconsin--America's farming heartland--cows, corn, and cheese meet catheters, cannulae, and cardiac devices.
REGIONAL FOCUS: Wisconsin
Badger State's Southeast Boasts Robust Medical Device Sector
In Wisconsin--America's farming heartland--cows, corn, and cheese meet catheters, cannulae, and cardiac devices
Wisconsin is famous above all for its agricultural and dairy products. Ask people what they know about the state, and they'll often come back with "Holsteins, Guernseys, and Jerseys." And because of its longstanding German heritage, this wedge of land south of Lake Superior and west of Lake Michigan is also synonymous with beer. And don't forget about the Green Bay Packers.
But the Badger State is more than just beer and cheese. It's also an important hub for the biotechnology and medical device manufacturing industries. Boasting a plethora of medical-related companies--from device makers and an array of contract manufacturers to pharmaceutical companies and suppliers of laboratory equipment--the state is a rising player in the nation's healthcare trade.
In 2008, there were 608 biotechnology firms in Wisconsin employing nearly 20,000 people, according to BioForward (Madison, WI; www.wisconsinbiotech.org), whose mission is to foster public and private research and product commercialization in the biotech, pharmaceutical, and medical device sectors in Wisconsin. With
73 degree-granting higher-education institutions and branches, the state was ranked the 11th highest in the United States in conferring higher education degrees in the biotech fields. At the same time, it ranked
13th in total academic R&D expenditures, 15th in biotech R&D expenditures, and 16th in receiving NIH funding. In addition, between 2002 and 2007, the biotech sector received investments totaling an average of $50 million annually.
Patents often follow investments: As of May 2008, 2400 biotech-related patents were issued in Wisconsin, including 128 in biotechnology, 141 in medical equipment, 466 in biochemistry, and 795 in surgical and medical instruments. Hence, the state was the 14th-highest recipient of patents in the country.
If bio is big in Wisconsin, it's biggest in the state's southeastern corner, with Milwaukee at its heart.
In the Thick of Things
Multicolored micromolded strain-relief components belong to MRPC's product line.
Southeastern Wisconsin is well situated to serve the needs of the U.S. medical device industry. "We're located right on Lake Michigan and not far from Chicago, which is sort of like an industrial heartland," remarks Mark Brandstaetter, VP of sales and marketing at MRPC (Butler, WI; www.mrpcorp.com). "Traditionally, the whole Midwest has been a central area of manufacturing for our country. Because of our location, we're able to service customers on the East or West Coast."
A custom manufacturer specializing in silicone molding, plastic molding, and silicone extrusion, MRPC has been around for nearly 90 years. One of the contract manufacturer's main endeavors is to fabricate long-term implantable orthopedic and cardiac rhythm-management products from thermoplastic materials. In addition, it offers secondary processes such as printing, bonding, cutting, in-house plasma processing, and laser machining, as well as final packaging. To complement its growing business, the company has completed construction of two new cleanrooms for molding medical components, including a 3000-sq-ft Class 100,000 cleanroom and a 2000-sq-ft Class 10,000 cleanroom for molding implantable products.
"One of the reasons that device manufacturing became popular in this area is that going back many years or generations, Wisconsin has traditionally been known as a good environment for general manufacturing," Brandstaetter says. "There's a skilled workforce here and deep toolmaking capability." Over the generations, many of the area's toolmaking experts have branched off into manufacturing companies such as MRPC.
John Whynott seconds Brandstaetter's view that the region's medical device manufacturing sector benefits from its location. "We draw talent from the Chicago land area due to our close proximity," remarks Whynott, technical product manager at Mikrotech (Kenosha, WI; www.mikrotech.com). A full-service micromanufacturer of custom-designed components and subassemblies for medical devices used in minimally invasive surgery, the company's capabilities include plastic micromachining, micromolding, micro insert molding, and design and manufacturing engineering assistance. "In addition to location," Whynott stresses, "southeastern Wisconsin has a strong work ethic; a large manufacturing base; abundant transportation options via water, air, rail, and road; and lower-cost, reliable energy."
Several small companies in the area have been created from larger ones, Whynott says. Employees from large firms in Wisconsin and other states such as GE Healthcare (Waukesha, WI; www.gehealthcare.com), Beere Medical (Kenosha, WI; www.beeremedical.com), Baxter Healthcare (Deerfield, IL; www.baxter.com), and Abbott Laboratories (Abbott Park, IL; www.abbott.com) have contributed to or helped spur new businesses in the Madison-Milwaukee-Kenosha corridor.
Location and skill sets--those are the qualities that distinguish southeastern Wisconsin from other regions, according to Jeff Gubbins, co-owner of Xact Wire EDM Corp. (Waukesha, WI; www.xactedm.com). "We have a lower average shop rate than the East or West Coast," Gubbins comments. "Generally speaking, even with shipping time factored in, our delivery times are better than those of other areas. Many medical parts are small and light and can be easily shipped overnight." Southeastern Wisconsin is an area with many highly skilled machinists and a deep network of capable materials suppliers and services for medical device-related manufacturing, Gubbins maintains. "Our area is also an easy drive to other large medical markets located in the Midwest, such as Minneapolis and Warsaw, IN--the heart of the U.S. orthopedics industry."
Founded in 1984, Xact operates 34 wire EDM machines 24 hours a day. Since its inception, the company has partnered with other precision machine shops that either have EDM capabilities and need more capacity or have decided to focus on other machining services and subcontract EDM applications to Xact.
Many Schools, Few Incentives
From the flagship campus of the University of Wisconsin, Madison (www.wisc.edu) to sister campuses located throughout the state, Wisconsin boasts many institutions that offer biomedical engineering programs. "The University of Wisconsin, Madison, is a real hub for biotech engineering," Brandstaetter notes. "There's a lot of R&D and new development coming out of there." In addition to the University of Wisconsin, the state has a host of other institutions, including Gateway Technical College (Kenosha, Racine, and Walworth counties, WI; www.gtc.edu), Milwaukee School of Engineering (MSOE; www.msoe.edu), and Marquette University (Milwaukee; www.marquette.edu).
Because of its proximity to Milwaukee, MRPC has closer relations with area schools such as MSOE. "We are a longstanding member of MSOE's Rapid Prototyping Center (www.rpc.msoe.edu), which conducts product development activities," Brandstaetter says. The company also maintains ties with Marquette University and the University of Wisconsin, Milwaukee (www.uwm.edu). Although situated at the other end of the state, the University of Wisconsin, Platteville (www.uwplatt.edu), is active in the Milwaukee region's biotech industry, playing an energetic role in the local branch of the Society of Plastics Engineers (www.milwaukeespe.org).
"Wisconsin leverages universities to establish intellectual property to create new jobs," Whynott explains. "And the University of Wisconsin has one of the biggest research facilities in the country." For the state's colleges and universities, an aspect of educating and training students for careers in the medtech industry is collaborating with local companies. For their part, many companies collaborate with the universities on specific projects.
If Wisconsin lays claim to many universities and colleges specializing in biomedical engineering, it is not known for offering abatements and tax incentives to induce medical-related manufacturers to set up shop in the state. Whynott, for one, emphasizes that Wisconsin ranks among the bottom half of states for venture capital investments and is weak in seed capital. "To give an example, Minnesota receives over six times as much venture capital as Wisconsin, despite their similar size.
However, the state is trying to rectify the problem to spur more economic growth. To that end, it has designated certain areas as economic development zones or industry clusters, including for medical device manufacturing. And it has also reinforced the Accelerate Wisconsin Program, an initiative designed for growing start-up businesses, according to Bryan Renk, executive director of BioForward. One of the program's initiatives is to enact a 25% tax credit for qualified investors and to encourage the flow of venture capital and angel investments to qualified new manufacturing enterprises.
From Traditional Manufacturing to Medtech Cluster
While traditional manufacturing companies continue to dominate in Wisconsin--producing heavy machinery, tools, engines, vehicles, and metal products--the fabrication of medical instruments has taken off. With 7000 employees in Dane, Waukesha, Washington, Ozaukee, and Milwaukee counties, GE Healthcare dominates the landscape, Renk remarks. And at the western edge of the state, Phillips Plastics (Hudson, WI; www.phillipsplastics.com), the state's largest medical device-related supplier, believes that the Milwaukee area is the core of its future growth.
In response to the decline of such traditional manufacturing sectors as the automotive industry, firms have been shifting over to the medical device arena. "This trend has added new competitors," Brandstaetter notes. "People that aren't in tune with meeting the requirements for medical device manufacturing are now trying to enter that marketplace." But he is convinced that companies such as MRPC that maintain quality systems and are certified to ISO 13485 standards enjoy an advantage over firms entering the space anew. "As some traditional nonmedical manufacturing companies enter or try to enter this market, there are some significant learning curves and investments that they need to make in their businesses to come up to speed," Brandstaetter says. "We're thankful that we're well ahead of them on that curve.".
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