The Medical Device Industry

BEACON Report Cover FINAL

5/7/04

10:42 PM

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The Medical Device Industry in Southern New England’s I-91 Corridor

Potential for

growth

Conducted by BEACON in cooperation with the Regional Technology Corporation of Western Massachusetts and its affiliate network, the BioEconomic Technology Alliance (BETA)

Sponsors


5/7/04

10:42 PM

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Researcher, Analyst & Technical Writer Project Advisors

Editor Sponsors

Loren W. Walker, M.S.

Dr. Joseph D. Bronzino, President & Executive Director - BEACON Robert Miller, Executive Vice President & Chief Operating Officer - BEACON Regional Technology Corporation (RTC) BioEconomic Technology Alliance (BETA) Dr. Joseph D. Bronzino Connecticut Light & Power Western Massachusetts Electric Company Yankee Gas BEACON – Biomedical Engineering Alliance & Consortium MetroHartford Alliance June 2004

CONTENTS: List of Figures, Maps & Tables

ii

Summary

v

Introduction

1

1

The Medical Device Industry

3

1.1 What is a Medical Device? 1.2 Device Design, Development & Production

5 6

1.3 Industry Status and Trends

2

3

8

1.4 Scientific Research Base

17

1.5 Manufacturing Technology Base 1.7 Major Companies

20 23

1.8 Site Selection Criteria

25

1.9 Industry Enclaves in the United States

27

Medical Device Industry Assets & Resources of Southern New England’s I-91 Corridor 2.1 The Higher Education Community

31 40

2.2 The Health Care Services & Biomedical Research Infrastructure 2.3 Medical Device Manufacturing

50 58

2.4 A History of Precision Manufacturing Excellence 2.5 Supporting Infrastructure for the Life Sciences & Medical Device Industry

69 73

The Southern New England I-91 Corridor Medical Device Industry in a National Context

75

3.1 Comparative Analysis

86

Conclusion

88

Works Cited

89

Additional Sources

93

Appendix A. B.

Descriptions of U.S. Metropolitan Areas Chosen for Comparative Analysis Industry Codes (NAICS & SIC)

A-1 B-1

C. D.

Medical Device & Supply Manufacturing U.S. Statistics Medical Device Industry Resource List

C-1 D-1

I-91 Corridor Medical Device Industry Assessment

i

FIGURES, MAPS AND TABLES: Figures

Page

1.1 1.2

The Rapidly Aging U.S. Population U.S. Medical Device and Supply Manufacturing Industry Growth 1999-2004

1.3

Relative Stock Market Performance of Medical Device & Supply Indices

10

1.4

Major Medical Device Industry Sectors

11

1.5 1.6

Median R&D, as Percent of Revenue, Quarterly Trends, 2000 to 2003 Medical Device Manufacturing Employment in U.S. States & Territories

12 28

1.7

Medical Device Manufacturing Employment in U.S. Metro Areas

28

1.8 1.9

U.S. States with More Than 100 FDA-Registered Medical Device Manufacturers U.S. States with More Than 90 FDA-Registered Medical Device Contract Manufacturers

30 30

2.1 2.2

Medical Device Manufacturing Employment in New England Metro Areas Change in Overall Medical Device & Supply Manufacturing Relative Employment Concentration in Selected New England Areas

33 33

2.3

Change in Combined Medical Device & Supply Manufacturing Industries in Selected New England Areas: 1996 to 2004

35

2.4

Change in Total Employment in Selected New England Areas: 1996 to 2004

35

2.5 2.6

Median Home Sale Price in Selected U.S. Metropolitan Areas Cost of Living in Selected U.S Metropolitan Areas

38 38

2.7 2.8

U.S. Healthcare Industry Distribution I-91 Corridor Medical Device & Supply Industries Employment Concentration

50 60

2.9 2.10

I-91 Corridor Medical Device & Supply Industries Growth 1996-2004 I-91 Corridor Precision Manufacturing Industries Employment Concentration

60 71

3.1

Total Workforce in Selected U.S. Metropolitan Areas

76

3.2

Total Manufacturing Industries Workforce in Selected U.S. Metropolitan Areas

76

3.3

Health Care and Higher Education Industries Employment Concentration in Selected U.S. Metropolitan Areas Hospitals and Higher Education Institutions Employment Concentration in Selected U.S. Metropolitan Areas

77

3.4 3.5

3 8

77

Medical Device and Supply Manufacturing Employment Concentration in Selected U.S. Metropolitan Areas Employment Concentration of Selected Medical Device and Supply Manufacturing Industry Sectors in Selected U.S. Metropolitan Areas

78

3.7

Medical Device and Supply Industry’s Share of Total Manufacturing Employment in Selected U.S. Metropolitan Areas

79

3.8

% of Total Manufacturing Businesses Registered with the FDA to Produce Medical Devices and Components in Selected U.S. Metropolitan Areas Total Number of FDA-Registered Medical Device Manufacturers and Contract Manufacturers in Selected U.S. Metropolitan Areas

79

Employment Concentrations of Precision Manufacturing Industries in Selected U.S. Metropolitan Areas Change in Combined Medical Device & Supply Manufacturing Industries in Selected U.S. Metropolitan Areas

80

3.6

3.9 3.10 3.11

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78

80

81

Figures

Page

3.12

Change in Medical Instrument Manufacturing in Selected U.S. Metro Areas

81

3.13

Change in Medical Appliance & Supply Manufacturing in Selected U.S. Metropolitan Areas Change in Dental Equipment & Supply Manufacturing in Selected U.S. Metropolitan Areas

82

3.15

Change in Irradiation Apparatus Manufacturing in Selected U.S. Metro Areas

83

3.16

Change in Electromedical Apparatus Manufacturing in Selected U.S. Metropolitan Areas

83

3.17

Change in Ophthalmic Goods Manufacturing in Selected U.S. Metro Areas

84

3.18

Change in Optical Instrument & Lens Manufacturing in Selected U.S. Metropolitan Areas Change in Total Employment for All Industries in Selected U.S. Metro Areas

84

3.14

3.19 3.20

Change in Medical Device & Supply Manufacturing Relative Employment Concentration (LQ) in Selected U.S. Metropolitan Areas

Maps

82

85 85

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1

Medical Device Manufacturing Industries: Northeastern U.S. to California Comparison

32

2

Southern New England’s I-91 Corridor

39

3 4

I-91 Corridor Medical Device & Supply Manufacturing Businesses I-91 Corridor Precision Metal, Plastics & Electronics Businesses

61 70

Tables 1.1

Medical Device & Supply Manufacturing Industry Codes

1.2

Services Commonly Outsourced by Medical Device Companies

13

1.3

Medical Device Industry Venture Capital Investments by Region – Q3 2003

16

1.4

Biomedical Engineering Research Focus Areas & Specialties that Inform the Design and Development of Medical Devices

18

1.5

19

1.6

Featured Themes of 2004 Biomedical Engineering Conferences: A Glimpse into the Future of Medical Devices Examples of Components and Services Required for Medical Device Production

21

1.7 2.1

Largest Medical Device & Supply Companies Colleges & Universities in the I-91 Corridor

23 40

2.2

41

2.3

Medical Device Industry-Related Departments & Programs at Higher Education Institutions in the I-91 Corridor Biomedical Engineering Courses Offered in the I-91 Corridor

2.4 2.5

Hospitals and Medical Centers in the I-91 Corridor I-91 Corridor Medical Device and Supply Manufacturing Industry Statistics

51 59

2.6

Examples of I-91 Corridor Medical Device Manufacturers & Contract Manufacturers

63

2.7

I-91 Corridor Industry Executives Comment on the Pros and Cons of Operating a Medical Device Company in the Region Precision Manufacturing Industries Employment Concentrations in the I-91 Corridor

66

2.8

Page


44

69

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Tables 3.1

Selected U.S. Metropolitan Areas

A1 A2

Atlanta MSA: Medical Device and Supply Manufacturing Industry Data Austin MSA: Medical Device and Supply Manufacturing Industry Data

A-1 A-2

A3 A4

Baltimore MSA: Medical Device and Supply Manufacturing Industry Data Boston MSA: Medical Device and Supply Manufacturing Industry Data

A-3 A-4

A5

Minneapolis MSA: Medical Device and Supply Manufacturing Industry Data

A-5

A6 A7

Orange County MSA: Medical Device and Supply Manufacturing Industry Data Philadelphia MSA: Medical Device and Supply Manufacturing Industry Data

A-6 A-6

A8

Raleigh MSA: Medical Device and Supply Manufacturing Industry Data

A-7

A9

Seattle MSA: Medical Device and Supply Manufacturing Industry Data

A-8

A10 A11

Silicon Valley: Medical Device and Supply Manufacturing Industry Data I-91 Corridor: Medical Device and Supply Manufacturing Industry Data

A-9 A-9

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SUMMARY: Southern New England’s I-91 Corridor, as defined for this report, runs through the New Haven and Hartford metropolitan areas of Connecticut and the Springfield metropolitan area of western Massachusetts. At least 15% of New England’s total medical device manufacturing employment is consolidated within these three metro areas. The I-91 Corridor also supports a concentration of industries – higher education, health care services and precision manufacturing of metals, plastics and electronics – that are essential resources for the design, development and production of medical devices. Because of the agglomeration of industries already present in the region, Southern New England’s I-91 Corridor has great potential to significantly expand its existing medical device manufacturing industry. This report provides an assessment of the broad medical device industry in the Interstate91 Corridor region of Connecticut and Massachusetts placed in context with the medical device and technology industry of New England, the greater Northeast and the nation as a whole. The first section describes the medical device industry in the United States – its financial and technological trends, major companies, scientific research base, and geographic distribution. The second section describes the medical device industry assets and resources of the New Haven, Hartford and Springfield metropolitan areas – the biomedical research community, higher education institutes, and precision manufacturing capabilities as well as the trade and economic development organizations that are in place to support the region’s medical device industry. The third and final section provides a comparison of the medical device industry in Southern New England’s I-91 Corridor with that of other U.S. metropolitan areas. _________________________________________ National Outlook: The United States is the global leader of the medical device and technology industry. Over the past ten years, the value of the medical device industry stock market index has grown at an average annual rate of 9%. Financial analysts describe the industry as “robust” and “healthy” with “strong top-line growth across the board.” The estimated $43 billion medical device industry adds more than $6 billion to the U.S. trade surplus each year. When combined with medical supplies, annual sales for the broad medical device and supply industry are approximately $88 billion. Analysts predict that the “graying of America” coupled with the rapid pace of scientific and technological innovation is positioning the medical device industry for “double-digit growth for years to come.” Furthermore, the aging population’s demand for ever-better and safer health care products favors medical devices made in the U.S. because the stringent FDAapproval process is internationally recognized as the “gold standard” of product quality and effectiveness. Device Definition: According to the FDA, a medical device is an instrument, apparatus, implement, machine, implant, reagent or other related article intended for therapeutic or diagnostic


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use with humans and animals that does not achieve its primary intended purpose through chemical action or metabolization. A medical device, therefore, is anything used for diagnostic or therapeutic purposes other than a drug. Some examples of medical devices are: reusable and disposable instruments used in a clinical setting; surgical instruments; catheters; thermometers, general purpose biomedical lab equipment; diagnostic products, reagents and equipment; coronary stents; orthopedic implants (e.g. artificial hips, knees); electronic implants (e.g. cardiac defibrillators); and electronic/irradiation diagnostic or therapeutic devices such as X-ray machines, MRIs, CT scanners, ultrasound machines and medical lasers. Medical device manufacturing, as defined for this report, includes the production of: surgical, medical and dental instruments, supplies and appliances including irradiation and electromedical equipment; ophthalmic goods; and optical instruments and lenses. It does not include the production of laboratory furniture, thermometers or in-vitro diagnostic substances. The classification systems employed by the U.S. Census Bureau Current Population Survey and Foreign Trade Department as well as previous reports on the industry provide the basis for this definition of the medical device manufacturing industry. Location Factors: The design, development and production of modern medical devices requires inputs from a variety of manufacturers, researchers and service providers. The broad medical device manufacturing industry is really an agglomeration of industries that includes: medical device and supply manufacturers and contract manufacturers; higher education/scientific research institutions; health care/biomedical research institutions; mechanical and electrical engineers; precision metal, plastics and electronics manufacturers; and processing, packaging, and testing companies. To make medical devices, companies purchase components and services from other industries. Because of these supply chain linkages, the medical device manufacturing industry produces an economic ripple effect beyond the employment and earnings of medical-device workers. Medical device industry “hotbeds” tend to be located in accessible metropolitan areas that have several major medical centers, research-driven universities and high-precision manufacturing facilities. Over 28% of the industry’s total U.S. workforce of approximately 400,000 is consolidated in the northeastern states where there is an abundance of world-class research institutions and teaching hospitals. New York, New Jersey, Massachusetts, Pennsylvania, Connecticut, New Hampshire, Delaware and Rhode Island each support an above-average concentration of medical device manufacturing employment, which means that the medical device industry employs a greater part of the total workforce in each of these states than it does in the nation as a whole. In the six states of New England, approximately 36,000 residents are directly employed in the production of medical devices. As many as 28,000 additional jobs in the region may be indirectly associated with the industry because of the linkages between medical device manufacturing and other industry sectors.

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At least 5,200 of New England’s medical device manufacturing industry employees are based in the three metropolitan areas of Southern New England’s I-91 Corridor. Perhaps another 4,000 area residents are employed in jobs associated with the production of medical devices. The New Haven, Hartford and Springfield metropolitan areas of Interstate 91 in Connecticut and Massachusetts constitute a major economic corridor in the northeastern United States with a total combined economy that places it ninth in the U.S., just ahead of Dallas, Detroit and Minneapolis-St. Paul. The approximately 95,000 businesses operating in the Interstate-91 Corridor of Southern New England employ a highly productive workforce of more than one million. The Corridor’s 43 universities and colleges, including some of the country’s elite higher education institutions, support a student population in excess of 150,000. In addition to nationally-renowned universities, the region is home to several top-ranked medical schools and teaching hospitals that provide the foundation for a thriving biomedical research community. Southern New England’s I-91 Corridor, therefore, is an integrated, but polycentric region composed of several urban centers and a host of smaller cities and towns with a critical mass of precision manufacturing, an abundance of higher education institutions, a concentrated health care services industry, and transportation infrastructure that is well-suited to distribution industries. Regional Industry Profiles: Within Southern New England’s I-91 Corridor there is an above-average concentration of medical device and supply manufacturing business. According to U.S. Food & Drug Administration records of registered medical device manufacturers and the Dun & Bradstreet Marketplace™ database of medical device manufacturing businesses, there are at least 314 medical device companies currently operating in the region. Furthermore, the Corridor supports more than 18% of New England’s FDA-registered medical device manufacturers, and 31% of the FDA-registered contract manufacturers. From 1996 to 2004, when the size of the total I-91 Corridor workforce decreased by more than 15%, employment in the region’s medical device and supply manufacturing industry was also reduced by approximately 2,000 jobs. However, the total number of medical device companies increased over that same period and the concentration of medical device and supply manufacturing employment in the I-91 Corridor is still above-average. At the beginning of 2004, the “location quotient” (LQ), or relative employment concentration, for the medical device and supply manufacturing industry in Southern New England’s I-91 Corridor was 1.9, compared with the national LQ of 1.0. In other words, the proportion of the regional workforce directly engaged in medical device manufacturing was nearly twice that of the United States as a whole. In fact, the concentration of medical device manufacturing employment in Southern New England’s I-91 Corridor is higher than it is in 85% of the nation’s 333 metropolitan areas. Furthermore, the region’s higher education, biomedical research and precision manufacturing resources are well-suited to support increased growth of the medical device manufacturing industry.


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The health care services industry is a major regional employer in the I-91 Corridor and some of the region’s hospitals are ranked among the very best in the nation. More than 8% of the region’s total workforce is employed in the health care services industry. The proportion of hospital and medical center employment in the I-91 Corridor is 60% higher than the national average, exceeding that of Baltimore, Boston or Minneapolis-St. Paul. This extensive health care infrastructure also supports a research community that is active in a wide array of clinical and biomedical engineering research projects. Southern New England’s I-91 Corridor has a long history of precision manufacturing excellence in metals, plastics and electronics. The precision manufacturing and machine tooling industries are key components of the region’s industrial sector and important components of the its economic base. The concentration of precision metal manufacturers, plastics processors and electronics manufacturers exceeds the national average for these industries. The proportion of the regional workforce employed in precision metalworking industries – more than three times the national average – is among the highest in the northeast. Of the 66 metropolitan areas in the northeastern U.S., the I-91 Corridor has the third highest employment concentration in metal forging, machine turning, electroplating and metalworking machinery manufacturing. Additionally, many of the region’s manufacturers have had years of experience producing components for the aerospace industry, which requires a level of precision and quality control that is compatible with the rigorous standards the FDA has set for medical device manufacturing. In fact, there are already as many FDA-registered medical device contract manufacturers operating in the I-91 Corridor as there are in the entire state of New Jersey, where medical device and supply manufacturing employment exceeds 20,000. Higher Education and Research: The region’s workforce is highly educated. Southern New England’s I-91 Corridor supports one of the largest concentrations of universities and colleges in the U.S. Many of the I-91 Corridor’s higher education institutions have programs and departments representing disciplines that apply to the design, development and production of medical devices including: biomedical engineering; medical and dental schools; materials science; biomedical imaging technology; neuroscience; and precision machining. Biomedical research at universities, colleges, medical centers and private companies in Southern New England’s I-91 Corridor is vibrant and well-funded The region’s hospitals, health centers, universities, colleges and private companies collectively received more than $392 million in National Institutes of Health awards in 2002 – more than what was granted to institutions in either Chicago, Ann Arbor or Atlanta. Collaborative biomedical research projects between area universities and hospitals are ongoing. Research partnerships involving medical device companies are supported by industry liaison and outreach offices within the region’s major universities and medical centers. Additionally, several I-91 Corridor-based industry support organizations, such as the Biomedical Engineering Alliance and Consortium (BEACON) and the Bioviii


Economic Technology Alliance (BETA), play a critical role in facilitating technology transfer from the region’s research centers to local industry. Through these and other efforts, the region’s medical device companies have enhanced access to a variety of innovative, university-developed technologies. The I-91 Advantage: There are significant advantages for medical device manufacturers in Southern New England’s I-91 Corridor. Medical device industry executives currently operating businesses in the region confirm that access to area universities and hospitals for R&D support, testing facilities and consultants is an asset. Among other I-91 Corridor location advantages cited by industry executives: access to “top-quality” precision manufacturing personnel and facilities; access to the “vital resources” of skilled labor and raw materials; location ideally suited to serve major northeast markets like New York and Boston; less costly than other locations with an above-average concentration of biomedical device companies; access to transportation networks; and a high quality of life. The region’s medical device companies are growing. Many I-91 Corridor medical device industry executives report that their manufacturing or contract manufacturing companies are experiencing strong fiscal growth; some by as much as 25-30% annually. Several executives commented on plans for expanding their facilities. Included among these businesses are precision manufacturers that have successfully repositioned their business from aerospace component manufacturing to medical device manufacturing. Finally, the area is accessible and affordable. The New Haven, Hartford and Springfield metropolitan areas are located at the center of the economically and culturally rich Atlantic Triangle formed by New York, Albany and Boston. This part of Interstate 91 is bisected in Massachusetts by the Massachusetts Turnpike (I-90) and in Connecticut by Interstates 84 and 95. With Bradley International Airport at its center, the region offers easy access to major northeast, U.S. and international markets. The cost of living in Southern New England’s I-91 Corridor is also significantly lower than it is in many U.S. metropolitan areas including nearby New York and Boston. Conclusion: This assessment of the New Haven, Hartford and Springfield metropolitan areas reveals that there is a concentrated medical device and supply manufacturing industry along the Connecticut-Massachusetts I-91 Corridor. Moreover, the region possesses sufficient biomedical and scientific research resources and precision manufacturing capabilities to support expansion of the medical device and supply manufacturing industry. It is notable that the current state of this industry in the I-91 Corridor has developed without a coordinated effort to build it. Yet, in the combined resources of the region there is great potential to grow the existing medical device and supply manufacturing industry, thus propelling job creation and broad economic development throughout Southern New England’s I-91 Corridor.


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INTRODUCTION: “Is Southern New England’s I-91 Corridor, in fact, a significant and competitive center of medical device industry activity?” This question, put forth by the Economic and Business Development department of Northeast Utilities, provided the impetus for an in-depth assessment of the medical device manufacturing industry along the Interstate-91 Corridor of Connecticut and Massachusetts extending from New Haven through Hartford and Springfield to the Massachusetts-Vermont border.1 In order to answer this question, it was necessary to explore various aspects of the medical device industry – its trends, distribution, supply chain linkages with other industry sectors, and scientific research base – both in this region and throughout the United States. The following report provides an overview of the broad U.S. medical device industry and a description of the I-91 Corridor’s place within it. Southern New England’s I-91 Corridor parallels the Connecticut River from the Pioneer Valley of western Massachusetts to the Connecticut coastline. With 95,000 area businesses currently employing 1.2 million workers, the region is a major economic corridor in the northeastern United States (BLS, 2003). According to futurist and metropolitan regional development expert Michael Gallis, “the combined total economy of [the] region including Springfield, Hartford and New Haven, places it ninth in the U.S., just ahead of Dallas, Detroit and Minneapolis-St. Paul” (Gallis, 2004). The communities of the I-91 Corridor have a common heritage, culture, population mixture and a shared economic history that dates back to the nation’s first industry cluster – the machine tool industry. Today, there is still an above-average concentration of metalworking companies and other precision manufacturers, a number of whom produce components for medical devices. (Gallis, 1999; Blodgett, 2002; Johnson, 2003) According to U.S. Food & Drug Administration records of registered medical device manufacturers and the Dun & Bradstreet Marketplace™ database of medical device manufacturing businesses, there are at least 314 medical device manufacturing companies currently operating in the I-91 Corridor (CDRH, 2004; Dun & Bradstreet, 2004). The proportion of the regional workforce directly engaged in medical device manufacturing, as determined through analysis of D&B Marketplace data, is nearly twice that of the United States as a whole. In fact, the percentage of the region’s total workforce directly involved in medical device manufacturing in the I-91 Corridor is higher than it is in 85% of the nation’s 333 metropolitan areas. Furthermore, the region has a high employment concentration in industries that are favorable to the production of medical devices, such as health care services, higher education, and precision metal, plastics and electronics manufacturing (Clayton-Matthews, 2001; 2004). 1

The I-91 Corridor region is defined for this report as the counties of Hartford, Middlesex, New Haven and Tolland and a portion of Litchfield county in Connecticut as well as Franklin, Hampden and Hampshire counties in western Massachusetts.

1


For the purposes of this report, medical device manufacturing is defined as the production of surgical, medical and dental instruments, supplies and appliances including irradiation and electromedical equipment; ophthalmic goods; optical instruments and lenses (Table 1.1). It does not include the production of laboratory furniture, thermometers or in-vitro diagnostic substances. Medical device companies design, develop and manufacture the tools, equipment, apparatus and systems that health care professionals use to diagnose disease and treat patients. The kinds of medical devices are many and varied, ranging from surgical instruments and catheters to magnetic resonance imaging machines and artificial hearts. Consequently, the expertise, technologies and skill sets required to design, develop and manufacture medical devices are equally diverse. Scientists, engineers, physicians and precision manufacturers all play an integral role in the development of a medical devices. Table 1.1 Medical Device & Supply Manufacturing Industries with Corresponding North American Industrial Classification System (NAICS) Codes and Standard Industry Code (SIC) numbers: NAICS: 339112

Description: Surgical and Medical Instrument Manufacturing Orthopedic, Prosthetic and Surgical Appliance and Supplies 339113 Manufacturing 339114 Dental Equipment and Supplies Manufacturing 334517 Irradiation Apparatus Manufacturing 334510 Electromedical and Electrotherapeutic Apparatus Manufacturing 339115 Ophthalmic Goods Manufacturing 333314 Optical Instrument & Lens Manufacturing Sources: NAICS, 2002; SIC, 1987

SIC: 3841 3842 3843 3844 3845 3851 3827

Therefore, to assess the medical device industry in a given region, it is necessary to evaluate not only those businesses that exclusively manufacture medical devices, but also the region’s health care and higher education institutions as well as other related industries, including precision metal, plastics and electronics manufacturers. Many of the companies and organizations in these related industries, while not classified as medical device manufacturers per se, make components and develop technologies that are directly applicable to the production of medical devices. A wide variety of sources were consulted to prepare this report, including: medical device and biomedical engineering industry literature, economic and census data, the FDA database of FDA-registered medical device manufacturers and personal communication with area biomedical engineering experts and medical device company executives. Although some conclusions are drawn based on the factual information compiled in this report, no recommendations are made. The purpose of this study is to provide a detailed and quantitative description of the current state of the medical device and supply industry along the I-91 Corridor. It will be left to the reader to further interpret and use the information presented in the following sections.


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1. THE MEDICAL DEVICE INDUSTRY The United States is the leader of the global medical device industry. Each year, export sales of medical devices add $6 billion to the U.S. trade accounts (CMS, 2003). A handful of large, publicly held corporations dominate the industry financially, but more than 80% of all medical device companies are small firms with fewer than 50 employees (AdvaMed: Lewin Group Reports 1). The medical device industry has seen strong and consistent financial growth over the past ten years. And, the industry is expected to continue growing over the coming years due to scientific advances that fuel new medical technologies and the increased health care demands of an aging U.S. population (Figure 1). Heart disease treatment devices, orthopedic implants and minimally-invasive surgical devices are currently the most active areas of product development in the medical device industry (UBS, 2002; CMS, 2003). While the market for cardiovascular applications continues to grow, neurology, especially in the area of neurostimulation devices, is projected to be the focus of new medical technology development in the coming years. Significant technological advances in medical devices focusing on the brain and central nervous system are likely to be achieved during the first quarter of this century (Clayton-Matthews, 2001; Swain and Conroy, 2004). Figure 1.1 The Rapidly Aging U.S. Population

Source: U.S. Census Bureau in Bell,2002

However, the medical device industry depends as much on manufacturing productivity as it does on advanced technology. Microelectronics, high-performance computers, biomimetic materials, and high-resolution imaging systems are some of the exciting new technologies that will shape the future of the medical device industry, but most devices are still made from precision crafted metal or plastic components and use standard electronics. Therefore, industrial manufacturing continues to be an essential part of the medical device industry (Clayton-Matthews, 2001).

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Medical device companies and manufacturing facilities are spread throughout the country, but metropolitan areas with top-tier medical centers are industry magnets. The biomedical infrastructure of major metropolitan areas provides medical device companies with access to testing facilities, biomedical expertise and a large customer base. The metro areas of the West Coast and Northeast support more than half of the nation’s total medical device manufacturing employment. Businesses located in the northeastern states from Maryland to Maine employ approximately 28% of the total medical device and supply manufacturing workforce. Nearly 17% of the industry’s approximately 400,000 employees are based in the metropolitan areas of coastal California from San Francisco to San Diego. California is also the destination for the preponderance of medical device industry venture capital followed by New England (PricewaterhouseCoopers, 2004). California is the top-ranked medical device manufacturing state, in terms of total employment, but Minnesota is the top medical device producing states per capita. Of the New England states, Massachusetts ranks third in the nation, based on medical device production per capita. (Clayton-Matthews, 2004; Dun & Bradstreet, 2004).


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1.1 What is a Medical Device? There are more than 87,000 medical devices in the FDA database of approved products including instruments, apparatus, machines, and implants used for the diagnosis and/or treatment of disease (CDRH, 2004). There is such a variety of medical device products that it may be more useful to define what a medical device is not. A medical device is not a drug, which is to say it does not achieve its primary intended therapeutic or diagnostic purposes by chemical action or metabolization. More specifically, the FDA defines medical devices as follows: A medical device is an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is: § § §

recognized in the official National Formulary, or the United States Pharmacopoeia, or any supplement to them, intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of it's primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes.

This definition provides a clear distinction between a medical device and other FDA regulated products such as drugs. If the primary intended use of the product is achieved through chemical action or by being metabolized by the body, the product is usually a drug. (CDRH, 1998)

Some examples of medical devices are: reusable and disposable instruments used in a clinical setting; surgical instruments; catheters; thermometers, general purpose biomedical lab equipment; diagnostic products, reagents and equipment; coronary stents; orthopedic implants (e.g. artificial hips, knees); electronic implants (e.g. cardiac defibrillators); and electronic/irradiation diagnostic or therapeutic devices like X-ray machines, MRIs, CT scanners, ultrasound machines and medical lasers. Advances in medical nanotechnology promise to yield devices that, like pharmaceuticals, will be designed to function on a cellular and molecular scale, but unlike drugs will achieve their intended purpose through mechanical, electrical or radiological means instead of chemical action.

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1.2 Device Design, Development & Production The rapidly aging population’s demand for better, safer and less-invasive health care treatments drives new product development in the medical device industry. The equallyrapid pace of scientific innovation, and the accompanying steady stream of new technologies, will continue to influence the design and development of medical devices. As a result, today’s medical device industry is positioned at the confluence of modern medicine, science, engineering and high-tech manufacturing. While physicians frequently invent or retool medical devices to facilitate patient diagnosis and treatment, biomedical engineers are the applied scientists who specialize in the design and development of medical devices and systems. Biomedical engineers essentially work at the interface of engineering and medicine. According to the Biomedical Engineering Handbook (Bronzino, 1995; 2000), biomedical engineers, “apply electrical, mechanical, chemical, optical and other engineering principles to understand, modify or control biologic (i.e. human and animal) systems, as well as design and manufacture products that can monitor physiologic functions and assist in the diagnosis and treatment of patients. When they work within a hospital or clinic, biomedical engineers are more properly called clinical engineers.” The Whitaker Foundation, an organization committed to supporting research and education in biomedical engineering, defines the field as, “the development of new devices, algorithms, processes and systems that advance biology and medicine and improve medical practice and health care delivery.” So, while the field is not restricted to the realm of medical device design and development, biomedical engineering encompasses all of the disciplines that form the scientific foundation of the medical device industry. Biomedical engineers are in demand. And the largest demand for biomedical engineers through 2008 will be in the medical instrument and supply industry (BLS OOH, 20032004). Recent progress in biomedicine, engineering and computing are driving medical technology and stimulating the development of new and more advanced devices, thereby further increasing the need for biomedical engineering professionals. The U.S. Department of Labor listed Biomedical Engineering as a career for the first time in its 2003-2004 Occupational Outlook Handbook and at the same time indicated that employment of biomedical engineers is expected to increase by as much as 35% through 2010. The DOL cites the country’s aging population and the public focus on health issues as two factors that will increase the demand for better medical devices and systems designed by biomedical engineers. (BLS OOH, 2003-2004) While the term bioengineering is often used interchangeably with biomedical engineering, bioengineering generally refers to a basic research-oriented activity more closely related to biotechnology and genetic engineering than to biomedicine. Whereas bioengineers may be involved with the modification of animal or plant cells by manipulating their genetic and/or cellular machinery, biomedical engineers apply


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engineering principles toward the end of designing, developing and refining medical devices and systems. (Bronzino, 1995; 2000) Firms that produce medical devices may be classified by medical device manufacturing industry codes, such as those listed in Table 1.1. Medical device manufacturers may also be grouped with other industry sectors including metal manufacturing and plastics processing. However, all establishments engaged in the manufacture, preparation, propagation, compounding, assembly, or processing of medical devices intended for human use and commercial distribution in the United States are required to register their establishments with the Food and Drug Administration’s (FDA) Center for Devices and Radiological Health (CDRH) in accordance with Section 510 of the Federal Food, Drug, and Cosmetic Act (FD&C Act). The FDA and CDRH define two types of medical device producing establishments: manufacturers and contract manufacturers. A manufacturer is defined by the CDRH as a company that “makes by chemical, physical, biological, or other procedures, any article that meets the definition of ‘[medical] device’ in section 201(h) of the FD&C Act.” A contract manufacturer is defined by the CDRH as a company that “finishes a device to another establishment's specifications. The [contract] manufacturing establishment does not commercially distribute the device under its own name” (CDRH, 2003). The CDRH maintains a public database of FDA-registered manufacturers, which is a valuable resource for identifying the many medical device manufacturers that are not classified by medical device manufacturing industry codes.

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1.3 Industry Status and Trends Synergistic advances in medicine, science and engineering are driving the development of new, more effective and less invasive medical devices. The United States is the world’s largest producer of medical devices and the industry has experienced strong economic growth in this country over the past ten years. A few large companies dominate the medical device industry, but “small and emerging” firms account for more than 80% of all medical device manufacturers. Although small medical device companies contribute only 10% of total industry sales, they play an essential role in the development of innovative technologies; generating 28% of R&D spending for the entire industry (CMS, 2003; AdvaMed: Lewin Group Report 1). More than 2,100 new medical device and supply manufacturing companies have formed in the United States since 1996 (based on industry code classifications, Table 1.1). In the medical device and supply manufacturing business overall, the number of companies has increased more than 20% over the past eight years (Figure 1.2). The electrotherapeutic apparatus sector has experienced the most growth in terms of employment and new company formation. Since 1996, there has been a 60% increase in the number of electromedical apparatus manufacturing companies and a 30% increase in electromedical apparatus manufacturing employment. Second only to electromedical apparatus manufacturing, the medical appliances and supplies manufacturing sector experienced a nationwide employment increase of 20% and a 30% increase in the formation of new businesses. Figure 1.2 United States Medical Device & Supply Manufacturing Industries Growth: 1996 to 2004 overall medical device & supply manufacturing

businesses employment

ophthalmic goods manufacturing electromedical apparatus manufacturing irradiation apparatus manufacturing dental equipment & supplies manufacturing medical appliances and supplies manufacturing medical instruments manufacturing optical instruments and lenses manufacturing -30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

% Change from 1996 to 2004 Sources: Dun & Bradstreet, 1996; 2004 (calculations by Walker)


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Many medical products that are produced in high volume and do not require precision manufacturing technology are produced outside of the U.S. These products typically have large markets, fierce price competition and a fully developed, standardized production process (Clayton-Matthews, 2001). Therefore, significant savings on standardized process manufacturing can be achieved by exploiting low-cost labor overseas. However, medical device manufacturing that requires high research and development expenditures, prototyping, product design, technical support and vigorous marketing – typical of devices at the beginning stage of the product cycle – are more likely to be produced in regions of the U.S. with high-precision, customizable, short-run manufacturing capabilities. Medical device companies needing active and ongoing engineering support from their contract manufacturers place a premium on proximity, according to a New England-based company that performs contract manufacturing of certified medical devices (Somple, 2003). Furthermore, the aging population’s increased demand for ever-better and safer health care products favors medical devices made in the U.S. because the stringent FDA-approval process is internationally recognized as the “gold standard” of product quality and effectiveness (Clayton-Matthews, 2001). The remainder of Section 1.3 provides an overview of the medical device and supply industry financials, business climate, and technological forecast.

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Medical Device Industry Financials: The estimated $43 billion medical device industry adds more than $6 billion to U.S. trade accounts each year (CMS, 2003; Frost & Sullivan in Timmerman, 2003; AdvaMed: Lewin Group Reports I). When combined with medical supplies, annual sales for the broad medical device and supply industry are approximately $88 billion (Dun & Bradstreet, 2004). Financial analysts describe the industry as “robust” and “healthy” with “strong top-line growth across the board” (CMS, 2003; UBS, 2002). Over the last decade, the annual revenue growth of medical device companies averaged 23% (CMS, 2003). The Medical Devices Index 2 has consistently outperformed the S&P 500 (Figure 1.3) growing at a rate of 9% annually (Frost & Sullivan in Timmerman, 2003). The “graying of America” coupled with the rapid pace of scientific and technological innovation is positioning the medical device industry for “double-digit growth for years to come” (Bell, 2002). Figure 1.3 Relative Stock Market Performance of Medical Device & Supply Indices

Source: Bloomberg data from CMS 2003. Medical Device & Supply Indices are market-cap weighted and based on Company filings from medical device companies: Biomet, Boston Scientific, Edwards Lifesciences, Guidant, Medtronic, St. Jude Medical, Stryker, Zimmer and medical supply companies: Abbot Laboratories, Baxter international, Becton Dickinson, C.R. Bard, Johnson & Johnson.

Growth of the medical device industry is predominantly driven by the development of new products (CMS, 2003). In the 1990s, largely because of the launch of a variety of new and improved products, the cardiac and orthopedic sectors of the medical device industry became the most attractive, profitable and rapidly growing markets in the entire health care industry (UBS, 2002). In 2002, cardiovascular devices accounted for 32% of 2

Medical Devices Index includes: Biomet, Boston Scientific, Edwards Lifesciences, Guidant, Medtronic, St. Jude Medical, Smith & Nephew, Stryker, and Zimmer.


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medical device sales, while sales of orthopedic devices made up 16% of the total. The remaining major industry sectors include: ophthalmology devices and instruments; diagnostic equipment; blood products; respiratory/patient monitoring equipment; imaging devices; lasers; surgical instruments; ObGyn/urology products; and other implantable devices (Figure 1.4). Durable medical equipment, like wheelchairs and walkers, are not generally classified as medical devices and was not represented in the medical device and supply industry market analysis referenced in this section (CMS, 2003).

Figure 1.4 Major Medical Device Manufacturing Industry Sectors

Other (including blood products, ObGyn/urology products, & other implantable devices) Other

Cardiovascular 32%

33% 33%

Diagnostics 7% Orthopedics 14%

Ophthamology 14%

Source: CMS 2003 – based on net composite index of 2002 sales figures for 109 medical device companies.

The aging U.S. population and more frequent joint-replacement surgery in younger patients is predicted to fuel orthopedics sector growth rates of up to 20% for the next several years (UBS, 2002; CMS, 2003). Intense biomaterials and tissue engineering research as well as the availability of high-resolution imaging systems facilitate the development of new and improved implantable orthopedic devices. The three principle product classes within the orthopedic sector are: 1) reconstructive devices for hips and knees, 2) spinal fusion products, and 3) trauma products designed to facilitate the healing of fractures and breaks (UBS, 2002). Orthopedic products also include orthobiologics, designed to stimulate bone growth (CMS, 2003). The “Bone & Joint Decade 2000-2010” initiative launched by the World Health Organization will likely stimulate further orthopedic product development. An estimated 550,000 Americans are diagnosed with congestive heart failure (UBS, 2002). As a consequence of this demand, the market for medical devices designed to treat congestive heart failure is growing at an explosive pace (Kalorama, 2004). Cardiac rhythm management devices have the highest profit margin, highest return and highest

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growth of all medical devices (UBS, 2002). And the interventional cardiology subsector of the medical device market is expected to double, to $8 billion, over the next two to three years as a result of the launch of the drug-eluting stent (UBS, 2002), which is a mechanical-pharmaceutical hybrid device that prevents arterial reblockage after angioplasty. Toward the end of 2002 and throughout 2003, medical device stock performance improved largely as a result of new cardiovascular technologies, especially drug-eluting stents and cardiac rhythm management devices for the treatment of congestive heart failure (CMS, 2003).

Figure 1.5 Median R&D, as Percent of Revenue, Quarterly Trends, 2000 to 2003

Source: CMS 2003 based on Company filings from medical device companies: Biomet, Boston Scientific, Edwards Lifesciences, Guidant, Medtronic, St. Jude Medical, Stryker, Zimmer and medical supply companies: Abbot Laboratories, Baxter international, Becton Dickinson, C.R. Bard, Johnson & Johnson.

Compared with the biotechnology industry, medical device companies spend a relatively small amount of their revenue on research and development. R&D spending for most medical device companies averages about 9% of revenues (Figure 1.5, CMS, 2003) In contrast, many biotech companies invest more than half their revenue in R&D (Cortright & Mayer, 2002). Medical device companies instead depend heavily on university-based research groups for the technologies they use in product development (Gelijns and Thier, 2002). While many of the technologies employed by medical device companies are derived from research reports published in academic and trade journals, other technologies are acquired through direct partnerships with university researchers.


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Doing Business in the Medical Device Industry: The medical device industry is competitive, especially among the top-grossing companies, but for obvious reasons having the cheapest medical product is not the best way to gain a competitive advantage. Rather, companies focus on product differentiation through sales and marketing efforts (CMS, 2003). Increasing product prices and volumes drives rapid revenue growth in the medical device industry (UBS analyst Lothson cited in CMS, 2003). For example, the introduction of the drug-eluting stent, which is much more costly than its bare-metal predecessor, will revalue the medical device industry’s interventional cardiology submarket upward by several billion dollars (CMS, 2003). The same trend can be seen for cardiac resynchronization therapy devices designed to treat congestive heart failure. When the revenue growth prompted by these more expensive products “flattens,” new technologies will be developed to take their place. Thus, economic growth in the medical device industry is fueled by new product development (CMS, 2003). Furthermore, a significant proportion of that new product development comes from small and emerging companies. New products and technologies developed by smaller startup companies are often acquired by larger medical device companies. As in other life science industries, small companies rarely have the manufacturing facilities, distribution networks or regulatory approval process experience to get their product into the mass market. The trend of mergers and acquisitions in the medical device industry is expected to increase over the coming years. Recently, the small companies most frequently acquired by larger companies have been ones that develop orthopedic and cardiovascular medical devices and/or related technologies. (CMS, 2003) Table 1.2

Services Commonly Outsourced by Medical Device Companies

§ Cleanroom assemblers

§ Microbiology/Chemical testing and analysis

§ Clinical services

§ Liability insurance

§ Clinical testing

§ Marketing/Distribution

§ Components/Materials testing and analysis

§ Personnel-recruitment services

§ Consulting/Training services

§ Process validation/QC

§ EMI/EMC testing

§ Product design

§ Facility design

§ Product R&D

§ FDA submissions

§ Product safety/Performance testing

§ ISO 9000 certification services

§ Prototyping/Rapid prototyping

§ Laboratory research

§ Software development/Validation

§ Laboratory testing (toxicology, etc.)

§ Contract manufacturing (See Table 1.6)

Source: MPMN, 2004

Furthermore, medical device companies commonly purchase components from Original Equipment Manufacturer (OEM) suppliers and outsource jobs to a variety of service providers like software design and clinical testing (Table 1.2). Currently, more than one third of the value added in the production of medical devices is outsourced and this percentage is expected to approach one half by 2005 (Frost & Sullivan cited in MPMN, 2004). As a result of the linkages between medical device companies and other industry sectors, the medical device manufacturing industry causes an economic

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ripple effect that extends beyond the employment and earnings of medical device workers (Clayton-Matthews & Loveland, 2004). These industry linkages and their effect on the regional economy were described in a 2004 report on the medical device industry’s economic impact produced for the Massachusetts Medical Device Industry Council (MassMEDIC). In Massachusetts, there are 79 additional jobs associated with every 100 jobs in medical device manufacturing and for every dollar of medical device industry output, 22 cents comes from materials and services purchased from other industries in the state, according to the MassMEDIC report (Clayton-Matthews & Loveland, 2004).

Medical Device Industry Technology Forecast: The medical device industry has a dynamic history. As it matured over the last half of the 20th century, the industry consistently evolved in step with new technologies and scientific discoveries to develop ever-improving medical devices and systems. The rapid rate of innovation in biomedical science combined with the increasing health care demands of an aging U.S. population, is expected to stimulate the continued growth and evolution of the medical device industry (CMS, 2003). Some of the up-and-coming medical device technologies to watch in 2004 are: drugeluting stents, implantable defibrillators, neurostimulation devices, nanoscale biosensors, cardiac rhythm management devices, and less-invasive hip replacement therapies. Additionally, the FDA Center for Devices and Radiological Health identified several sectors of the medical device industry that are predicted to see significant advances in the near future: device-drug “hybrid” technologies (e.g. drug-eluting stents); computerrelated technologies; home and self-care technologies; minimally-invasive procedures; and organ replacement and assist devices that employ tissue-engineered components (AdvaMed: Lewin Group Reports 4). The trend toward less-invasive procedures that permit faster patient recovery and shorter hospital stays is driven both by technological advances and by constant pressure to reduce health care costs (Clayton-Matthews, 2001; Bell, 2002). Over the decades, advances in basic biomedical science have led to more effective and less invasive medical devices. An early cardiac pacemaker consisted of an internal implant activated by an external radio transmitter taped to the patients chest. Because of advances in cardiology, microelectronics and materials science, today’s pacemakers are much smaller and more reliable. Gastric surgery used to require a very large incision in the patient’s abdomen. However, minimally-invasive laparoscopic surgical techniques, developed due to advances in optics and imaging systems, permit decreased tissue damage and reduced patient recovery time. In addition to improved imaging systems, biomaterials research, especially in the area of bioabsorbable materials, will help to make a variety of surgical procedures less invasive (Clayton-Matthews, 2001).


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There is a general trend in medicine toward less invasive therapies and diagnostic tests. According to Larry Papasan, the president of Smith & Nephew Orthopaedics, minimallyinvasive technologies are valuable because any procedure that can be made less invasive reduces hospital time, which saves money and allows the patient to return to normal activity more quickly (Bell, 2002). So, any scientific research that leads to the development of less invasive medical devices will make a significant contribution to the industry (Clayton-Matthews, 2001; UBS analyst Lothson cited in CMS, 2003). Medical devices designed to deliver pharmaceutical products is another important industry trend. These “hybrid devices,” like the industry-renowned and profitable drugeluting stent, are anticipated to be an active area of medical product technology development in the coming years. Other examples of developing hybrid device technology include needles and pumps that regulate the delivery of insulin in diabetes patients and silicon skin patches that facilitate the (transdermal) delivery of a wide range of pharmaceuticals (Clayton-Matthews, 2001).

Medical Device Industry Risks and Challenges: Restructuring of the U.S. health care system, and the impact that may have on Medicare/Medicaid reimbursement procedures, was named as a primary risk for the medical device industry (UBS, 2002). Other risks include a slow-down in new device approvals by the FDA, strengthening of the U.S. dollar and product failure or recall. The challenges of doing business in the medical device industry are primarily associated with reimbursement issues. “Reimbursement in the United States stands out as the [medical device industry’s] most challenging problem,” says Terry Shepard, former CEO of St. Jude Medical, Inc. (in Bell, 2002). Medical devices not only have to be approved by the FDA, but they have to obtain coverage from the Centers for Medicare and Medicaid Services in order for the cost of the device to be reimbursed by private insurers, Medicare and Medicaid. The health care providers (e.g. hospitals and nursing facilities) that buy the majority of medical devices are reimbursed by third-party payors (e.g. private insurance, Medicare and Medicaid). In order for third-party payors to compensate health care providers for the use of a medical device it must be covered. To be covered, a medical device must fit into a benefit category that is defined by a federal statute. The device must also be considered “reasonable and necessary” to treat the patient’s medical condition. Reimbursement issues are so complex and complicated that most manufacturers have to hire specialists to help them navigate the process. Manufacturers have to be cognizant of the regulatory guidelines that apply to their medical device or risk losses. (Bell, 2002; CMS, 2003) However, from an investment perspective, the medical device industry is perceived to be less risky than biotechnology. The amount of venture investment capital directed toward medical device companies has risen in recent years. In 2003, the medical device

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industry received 8.6% of total U.S. venture capital investments, which is similar to the amount received by networking and equipment firms, but below that of biotech, telecommunications and software firms. Though the industry is less risky than biotech it is also perceived as less profitable. (PricewaterhouseCoopers, 2003 in Clayton-Matthews & Loveland, 2004) Of the top five regions that received significant medical device industry venture capital investments during Q3 2003, four were in California (Table 1.3). New England received the second greatest amount of medical device venture capital after Silicon Valley. Over the past eight years, venture capital investments in the medical device industry averaged $352 million per quarter. (PricewaterhouseCoopers, 2004)

Table 1.3 Medical Device Industry Venture Capital Investments by Region – Q3 2003: Amount ($ millions) % of Total Silicon Valley, CA $165 43.94% New England (MA, 63%; $54 14.38% NH, 24%, CT 13%) San Diego, CA $35 9.26% L.A./Orange County, CA $35 9.22% Sacramento/N. California $20 5.34% Northwest U.S. $18 4.78% Southeast U.S. $14 3.63% Texas $9 2.44% Midwest U.S. $9 2.37% Washington D.C. Metroplex $8 2.02% North Central U.S. $7 1.86% New York City Metro Area $2 0.47% Southwest U.S. $1 0.27% Colorado 30 employees

Biolitec, Inc.

East Longmeadow, MA

Manufactures advanced lasers and fiber-optic deliver systems for medical, dental and veterinary applications. 30 employees

Blackstone Medical, Inc.

Springfield, MA

Develops and manufactures spinal fixation devices and implants. >50 employees

Ciencia, Inc.

East Hartford, CT

Develops advanced fluorescence sensing instrumentation for biomedical research. Recipient of more than $1.4 million in NIH awards since 1998.

Clinical Dynamics Corp.

Wallingford, CT

Manufactures testing equipment for medical devices. 10-12 employees

Connecticut Fiberoptics

Somers, CT

Manufactures fiberoptics equipment specializing in image illumination and multi-legged light guides for dental and medical products. 11-50 employees

Connecticut Hypodermics, Inc.

Wallingford, CT

Manufactures surgical instruments (hypodermic needles and syringes) for major companies (e.g. Medtronic, J&J). ~100 employees

Diaelectrics Medistad Co.

Chicopee, MA

Manufactures medical fluid bags for blood storage, IV and blood transfusion. ~300 employees

DiaSys Corp.

Waterbury, CT

Designs and manufactures instruments for hospitals, clinics and private physician laboratories (disposables and durables). ~16 employees

Eastern Plastics, Inc.

Bristol, CT

Manufactures precision plastic components for blood testing equipment, surgical components, implantables, laboratory analytical equipment. ~160 employees

Energy Beam Sciences

Agawam, MA

Manufactures electron beam filaments and histology equipment and distributes electron microscopy laboratory supplies. ~11 employees

Hobbs Medical

Stafford Springs, CT

Manufactures endoscopy products. 30-50 employees

Instrument Technologies, Inc.

Westfield, MA

Manufactures optical medical instruments (e.g. endoscopes, fiberscopes, articulating probes and videoscopes) ~55 employees

Inframat Corporation

Farmington, CT

Designs and develops advanced, nano-structured materials including implantable bio-devices (e.g. bone replacement materials and biosensors)

Jarvis Surgical

Westfield, MA

Manufactures a variety of precision polished orthopedic implants including: Hip femoral/acetabular and knee femoral/tibial components, knee augmentation blocks, specialty screws. ~25 employees

K&M Electronics, Inc.

West Springfield, MA

Manufactures power supplies for laboratory equipment. ~240 employees

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Table 2.6 Examples of I-91 Corridor Medical Device Manufacturers & Contract Manufacturers Business Ludlow Technical Products (Tyco Healthcare Group)

Location Chicopee, MA

Description Manufactures medical electrodes, adhesives and other disposable medical products for hospital use. ~850 employees

Medsource Brimfield

Springfield, MA

Contract manufacturer of surgical and medical instrumentation (e.g. orthopedic devices.) >50 employees

Microtek, Inc.

Chicopee, MA

Manufactures custom wires and cables and provides R&D, prototyping, assembling and testing services to the medical device industry. >100 employees

MicroTest Laboratories

Agawam, MA

Provides medical device testing services specializing in bacterial and sterility testing. ~50 employees

Newmark, Inc.

Cheshire, CT

Manufactures precision metal and plastic components for medical devices. 25-49 employees

Sequel Special Products

Waterbury, CT

Manufactures medical instruments – spinal fixation and orthopedic devices. 11-50 employees

Texcel, LLC.

East Longmeadow, MA

Provides contract laser welding services to medical device manufacturers (e.g. sealing cases for neural stimulators & artificial hearts). ~50 employees

Z-Medica, Inc.

Newington, CT

Z-Medica manufactures hemostatic products that speed blood coagulation in first aid wound-treatment situations. Sister company, On Site Gas Systems manufactures nitrogen and oxygen generators for medical use where nitrogen/oxygen delivery is not readily available.

Torrington, CT

Manufacturers patient mobility systems and enclosures. ~10 employees

On Site Gas Systems

Vivax Medical Corporation

Marox is an FDA-registered contract manufacturer that employs high-precision, computer-controlled milling and metal shaping equipment to produce medical instruments, orthopedic devices as well as components the aerospace industry. Marox is a family-owned precision machining firm that formerly served a concentration of aerospace clients. Anticipating the increase in offshore aerospace manufacturing, the company gradually shifted its focus toward medical device manufacturing. Today, 90% of Marox’s client base is in the medical device industry. They have international clients and also manufacture components for major U.S. medical device companies. In addition to their international market perspective, Marox executives see the resources available to them here in the I-91 Corridor. They commented that skilled precision manufacturing technicians are available in the local workforce and that UMass Amherst is an asset. The company recently engaged the executive services of a UMass economics professor with expertise in the medical device/technology sector. For manufacturers such as Clinical Dynamics in Wallingford, access to the region’s hospitals and medical centers is a major regional advantage. Clinical Dynamics sells medical devices and equipment directly to health care institutions. The concentrated


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heath care services industry of the I-91 Corridor constitutes a sizeable local market for the company. Other I-91 Corridor medical device manufacturing companies see the region’s hospitals and medical centers as a resource for a source of expert medical device design and development consultants and a venue for product testing and evaluation. Because they provide access to resources and customers, medical device companies will always be attracted to areas with a number of large hospitals and medical centers like Southern New England’s I-91 Corridor. Medical device company executives in the I-91 Corridor also have easy access to the universities and research institutions in surrounding cities including Boston, Albany and New York. Executives at Texcel, a Springfield-area medical device contract manufacturing firm, commented that with Boston only 90 minutes away they can attend a biomedical consortium at MIT for lunch and return that afternoon – no need to fly (Battelle, 2003). And, of course, the region’s medical device companies have access to world-class research institutions closer to home. Sequel Special Products in Waterbury is engaged in an ongoing research project with Yale University in nearby New Haven. The businesses described above are examples of medical device contract manufacturers that have found a niche in the industry. However, the I-91 Corridor supports an extraordinary concentration of precision metal manufacturers. Many of these firms may have the skill sets, core technologies and quality control standards to produce medical devices and components, but are outside of the medical device industry loop. Their precision manufacturing capabilities are an important component of the region’s medical device manufacturing potential.

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Pros & Cons: Conversations with executives from area medical device companies revealed certain advantages and disadvantages of operating a medical device manufacturing/technology firm in the I-91 Corridor (Table 2.7). The pros and cons presented in the table below were derived from the comments of executives at medical device manufacturing companies and precision contract manufacturing companies located in both the Connecticut and Massachusetts sections of the I-91 Corridor. In general, Springfield, Hartford and New Haven-area companies offered similar comments about the advantages of operating a medical device company in the region. The concentration of universities and medical centers, the educated workforce, the indigenous precision machining capabilities, and accessibility to major markets were acknowledged as positives by executives throughout the I-91 Corridor. However, complaints about high operating costs and talent attraction are problematic.

Table 2.7

Industry Executives Comment on the Pros and Cons of Operating a Medical Device Company in the I-91 Corridor Cons: Pros: § Area is too rural § Access to “top-quality” precision § Difficult to recruit and retain the best college manufacturing personnel and facilities graduates § Access to “vital resources” including: skilled § Poor quality labor retention labor, raw materials, plating, polishing, § Discouraging business development climate painting, welding and testing § High business taxes § Access to hospitals/medical centers for R&D § High cost area for manufacturers and expert consultants § High health care costs § Access to transportation networks (highways § High labor rates and Bradley International Airport) § High property taxes § Access to universities for R&D, expert § Inconsistent business conditions/volume consultants and licensable technologies § Lack of specialized workforce training § Aerospace precision manufacturing core programs technologies easily adapted to medical device § Lack of a biomedical industry park production § No animal testing facility (in western Mass) § Available small business development § Not enough interaction between industry and resources (STCC) higher education/health care institutions § Geographic location ideally suited to serve § Not enough support for the biomedical Boston, New York and other major northeast industry U.S. markets § Not enough support to help firms transition § High quality of life from aerospace manufacturing to new § Labor costs are competitive with other states markets like medical device manufacturing § Less expensive than other locations with a concentration of biomedical device companies § Rising insurance costs § Small pool of skilled workers to choose from § “Serious mechanical engineering design § Technical schools not well funded horsepower” § Strong educational infrastructure and educated workforce


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I-91 Corridor Medical Device Companies are Growing: Many of the company executives interviewed for this report indicated that company sales are growing; some by as much as 25-30% annually. Several executives commented on plans for expanding their company’s facilities. Others are positioning their companies to capture a share of the expanding medical device industry. Contract manufacturers that already have ties to the industry indicated a desire to expand their medical device client base. Companies with the precision manufacturing facilities, technicians and core technologies to produce components for a variety of different industries commented on their interest in expanding their client list to include more companies from the rapidly growing medical device sector. However, they also said that they need assistance connecting with medical device companies. Several members of the western Massachusetts chapter of the National Tooling and Machine Association commented that, even though they have the skill sets, core technologies and high quality control standards necessary for medical device manufacturing, the industry is tough to break into. “We don’t know the right people,” one said. This comment emphasizes the importance of regional industry support organizations like BEACON and BETA that facilitate regional interconnections among industries with natural linkages.

Research Funding for Businesses in Southern New England’s I-91 Corridor: I-91 Corridor companies receive major funding from federal agencies including the National Institutes of Health, National Cancer Institute, National Science Foundation, Defense Advanced Research Projects Agency and NASA. Though these companies manufacture devices and equipment designed for medical applications they are not classified by industry code (Table 1.1) as medical device and supply manufacturers. Ciencia, in East Hartford designs and develops portable fluorescence sensing instrumentation to perform cellular assays and in vitro biochemical assays in biomedical research. Ciencia has received significant NIH and NASA funding to develop their Cell Fluorescence Analysis System. KSE, Inc. in Amherst designs and develops air revitalization systems. Originally designed for use as part of the life support systems for extended space operations, the air revitalization system can be used to remove contaminants from the air during sensitive medical procedures. KSE has received NIH and NASA funding to develop their air revitalization system. STR Laboratories in Enfield manufactures high performance plastics and performs testing services for medical device industry and other industries. STR Laboratories, formerly known as Springborn, received significant NIH funding in 2001 & 2002. Argus VR International in Farmington designs and develops virtual reality systems for many different industries. Argus designs virtual reality systems for medical applications 67


including surgical training and molecular modeling. Argus received significant NIH funding in 2002. Amerinex Applied Imaging, Inc. in Amherst develops software that utilize computer visioning technology for medical imaging and other industrial imaging applications. Amerinex received NIH and DARPA support for development of advanced image understanding software. Inframat, in Farmington develops nanostructured materials for use in biomedical and other industrial applications. With support from the NIH, Inframat is developing novel processes to coat titanium implants (hip and knee joints) using nano hydroxyapatite and alumina titania, which increase adhesion and reduce joint wear. Inframat has also received funding from NASA, DARPA and the US Air Force.


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2.4 A History of Precision Manufacturing Excellence The I-91 Corridor has had a long history of precision manufacturing excellence. The precision manufacturing, machine tooling and aerospace industries are key components of the industrial sector and important components of the region’s economic base (Blodgett, 2002). I-91 Corridor companies have experience in the metal fabrication, plastics processing, industrial machinery and aerospace industries, which encompass a wide range of manufacturing technologies, including precision CNC machining and welding, electroplating and process manufacturing (Battelle, 2001). As a result of the region’s industrial history, the I-91 Corridor is home to more than 1,100 precision manufacturing firms (see Map 4) and a skilled workforce, which is also a resource for the medical device industry. Some of these businesses, even though they are not classified by medical device manufacturing industry codes (Table 1.1), are FDAregistered medical device manufacturers and contract manufacturers. The concentration of precision metal machining shops, plastics processors and electronics manufacturers in the I-91 Corridor exceeds the national average for these industries (Table 2.8, Figure 2.10). In fact, the I-91 Corridor is one of the most precision manufacturing industry-concentrated regions in the entire northeastern United States. Of the 66 metropolitan areas in the northeastern U.S., the I-91 Corridor has the third highest employment concentration in metal forging, machine turning, electroplating and metalworking machinery manufacturing. The region’s manufacturing capabilities, which include high precision machining, exacting quality control standards and customizable short-runs for specific components, are a good match for medical device manufacturing (Battelle, 2003). Additionally, many of the region’s manufacturers have had years of experience producing components for the aerospace industry, which requires a level of precision and quality control that is compatible with the rigorous standards the FDA has set for medical device manufacturing. In fact, there are already as many FDA-registered medical device contract manufacturers operating in the I-91 Corridor as there are in the entire state of New Jersey, where medical device industry employment exceeds 20,000. Table 2.8 Precision Manufacturing Industries Employment Concentration in the I-91 Corridor Precision Manufacturing Industry Sector: # Bus. # Emps. % Total Emp. L.Q. Machine shop jobbing, screw machine products 105 2,222 0.24% 4.45 Metal forging, die-casting & stamping 128 4,524 0.50% 3.64 Electroplating, plating and polishing 93 1,818 0.20% 3.43 Metalworking machinery & equipment 366 5,611 0.62% 3.13 Steel products, blast furnaces, nonferrous wire drawing & insulating 84 4,191 0.46% 2.25 Structural metal fabrication 79 1,546 0.17% 1.51 Plastic products, hoses, belts, resins 179 5,800 0.64% 1.50 Electrical apparatus, computers, relays, controls, motors 86 2,887 0.32% 1.34 Source: Dun & Bradstreet 2004 (calculations by Walker). See Appendix A, Table A3 for an extended precision manufacturing industry code list.

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Map 4. Precision Metal, Plastics and Electronics Manufacturing Businesses in Southern New England’s I-91 Corridor

Selected Industries


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I-91 Corridor medical device company executives interviewed for this report commented that access to “top-quality” precision manufacturing facilities and personnel is a regional asset. Using high-precision, computer-controlled (CNC) manufacturing equipment, these firms can produce short-run, custom batches that are required during the prototyping phase of medical device product development. Figure 2.10 I-91 Corridor Precision Manufacturing Industries Employment Concentration Electrical apparatus, computers, relays, controls, motors Metalworking machinery & equipment Electroplating, plating and polishing Machine shop jobbing, screw machine products

Structural metal fabrication

Metal forging, die-casting & stamping Steel products, blast furnaces, nonferrous wire drawing & insulating Plastic products, hoses, belts, resins 0.0

0.5

1.0 1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Location Quotient (national average = 1.0)

Source: Dun & Bradstreet, 2004 (calculations by Walker)

The National Tooling and Machine Association (NTMA) has two chapters in the I-91 Corridor; one in Western Massachusetts and one in Connecticut. Many of the members of these organizations who were interviewed for this report expressed great interest in expanding into the medical device industry. Although these are precisely the kinds of I91 Corridor businesses that have the experience, skill sets, and core technologies needed for precision medical device manufacturing, they are isolated from the area’s medical device companies. Inherent in these businesses is the capacity to be vital links in the region’s medical device manufacturing supply chain; they simply need an introduction. These manufacturers have the capabilities to produce medical devices and components, but they don’t have the contacts. NTMA members from Connecticut and western Massachusetts commented that they would benefit from greater interaction with area medical device companies. They expressed concern that the prototyping needs of area medical device companies and academic biomedical engineers are being met by

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companies outside of the region. Regional precision manufacturers commented that they would like the opportunity to bid on these local contracts. I-91 Corridor area firms that demonstrate a high level of precision manufacturing excellence, quality control standards and production flexibility have the potential to translate these core competencies into medical device manufacturing success. Regional businesses that have successfully transitioned from traditional manufacturing industries to medical device manufacturing include: Eastern Plastics in Bristol and the previously mentioned Marox Corporation in Holyoke. Eastern Plastics, a family-owned business that started with a focus on electro-plating over forty years ago, now has 90% of its precision plastics manufacturing capacity dedicated to producing components for medical devices and laboratory equipment. The company has domestic and international customers and is experiencing strong growth. According to Medical Device Consultants, Inc., a Boston-based industry advisory firm, precision manufacturers could achieve FDA compliance for medical device manufacturing within six months. Therefore, the high concentration of precision metal, plastics and electronics manufacturing industries in the I-91 Corridor represents enormous medical device manufacturing potential.


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2.5 Supporting Infrastructure for the Life Sciences & Medical Device Manufacturing Industry According to a study of the bioscience industry in western Massachusetts conducted by the Battelle Memorial Institute (2003), it is important to “[develop] effective mechanisms to facilitate and enable non-medical device companies with key manufacturing capabilities to enter the medical products marketplace… The challenge is not only educating, training and refitting existing manufacturers to meet the requirements of the medical products marketplace, but assisting them in developing new business relationships that translate into tangible business opportunities.” In the I-91 Corridor there are several organizations in place to do just that. The Biomedical Engineering Alliance and Consortium (BEACON) is based in Hartford, but serves the I-91 Corridor region and beyond. BEACON promotes collaborative exchange and research among its industrial, clinical, and academic partners. BEACON strives to foster an environment that optimizes the development and delivery of commercially viable innovations in biomedical science and associated engineering for healthcare applications. BEACON is incorporated as a not-for-profit 501(c)(6) trade association whose major goal is to facilitate collaborative research and industrial partnering in the basic and applied research necessary to develop new medical technology. In recognition of the multi-disciplinary nature of effective biomedical research and technology development, BEACON works to facilitate academic and industrial partnering by building bridges to other centers and organizations. To stimulate and enrich communication between its members, BEACON offers educational seminars on advances in medical technology and entrepreneurism as well as legal and ethical issues. BEACON also organizes an annual Symposium and Technology Fair to promote interchange between inventors and investors. BTN, Incorporated is a for-profit entity, that provides a range of resources to assist in the commercial development of biomedical discoveries as well as associative collateral technologies and business enterprises. BTN, Inc. coordinates with BEACON to achieve their common mission to promote and enhance the biomedical science and engineering industry. BTN, Inc. offers a range of business services geared toward bioscience and biomedical technology-focused companies: § § § §

Facilitating and negotiating clinical trials Arranging due-diligence studies Validating and producing business plans Making introductions for marketing, financing and strategic purposes

BTN, Inc. is in the process of establishing a seed fund of $5-10 million to enable it to invest in start-ups so that they can generate the traction necessary to attract venture capital support and investment.

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The Bio-Economic Technology Alliance (BETA) is a technology network operating under the umbrella of the Regional Technology Corporation and in affiliation with the Western Massachusetts Economic Development Council. The mission of BETA is to foster the growth and development of the bioscience and bioengineering cluster in Western Massachusetts. The cluster will grow through the attraction of companies to the region, the development of new products by existing firms, and the development of new companies through technology transfer from the research institutions in the I-91 Corridor. The organizations listed above focus on the I-91 Corridor, but both Massachusetts and Connecticut also have statewide bioscience and medical device industry trade organizations. Connecticut United for Research Excellence (CURE), Connecticut’s bioscience cluster, is a statewide organization that promotes medical research and biotechnology to build the state’s economic base. CURE is based in New Haven. MassMEDIC is a voluntary grassroots association of medical device manufacturers and associated companies in the Massachusetts. MassMEDIC is the only organization in New England dedicated solely to promoting the unique interests of the medical device industry.


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3. THE SOUTHERN NEW ENGLAND I-91 CORRIDOR MEDICAL DEVICE MANUFACTURING INDUSTRY IN A NATIONAL CONTEXT The production of modern medical devices depends on the inputs of researchers, engineers, physicians and manufacturing technicians. The number of medical device companies and employees is a measure of current status, but it is not necessarily a measure of the medical device manufacturing industry’s future potential. In fact, as suggested by the authors of a recent study on Massachusetts’ medical device industry, areas that have a combination of hospitals, universities, and large pools of highly educated workers may be in a position to seize a greater share of the industry even if they currently have a relatively small medical-device presence (Clayton-Matthews & Loveland, 2004). Therefore, to put Southern New England’s I-91 Corridor in a national context and to assess the region’s medical device manufacturing potential, it is necessary to look at how the region “stacks up” based on a variety of parameters. The parameters used in this comparative analysis are: • Medical

device and supply manufacturing employment concentration or “Location Quotient” (LQ) • Proportion of total manufacturing businesses that registered with the FDA as medical device manufacturers or contract manufacturers • Precision metal, plastics and electronics manufacturing employment concentrations • Health care services employment concentration • Higher education employment concentration The ten metro areas chosen for this comparative analysis represent a cross-section of U.S. metro areas, large and small, with at least 25 medical device manufacturing businesses and several hospitals, medical centers and higher education institutions. In short, these are the kinds of metro areas that should have potential to grow their existing medical device manufacturing industry. Selections were made based on a review of medical device industry literature and conversations with industry executive and biomedical engineering experts who named the metro areas that they most associated with the medical device industry (Table 3.1). Table 3.1 U.S. Metropolitan Areas Selected for Comparative Analysis: Atlanta, Georgia Orange County, California Austin, Texas Philadelphia, Pennsylvania Baltimore, Maryland Raleigh, North Carolina Boston, Massachusetts Seattle, Washington Minneapolis-St. Paul, Minnesota Silicon Valley, California

The comparative analysis is presented graphically in the following figures and is interpreted in Section 3.1. Detailed descriptions of the ten metro areas chosen for this comparative analysis are provided in Appendix A.

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Comparative Analysis

Figure 3.1 Total Workforce in Selected U.S. Metropolitan Areas 2,500,000

Total Workers Total##of of Workers

2,000,000

1,500,000

1,000,000

500,000

0 Atlanta MSA Austin MSA

Baltimore MSA

Boston MSA I-91 Corridor Minneapolis Orange Philadelphia MSA County MSA MSA

Raleigh MSA

Seattle MSA

Silicon Valley

Source: Dun & Bradstreet, 2004; BLS, 2003

Figure 3.2 Total Manufacturing Industries Workforce in Selected U.S. Metropolitan Areas 300,000

250,000

Total # of Workers

200,000

150,000

100,000

50,000


Baltimore MSA

Boston MSA I-91 Corridor Minneapolis Orange Philadelphia MSA County MSA MSA

Raleigh MSA

Seattle MSA

Silicon Valley



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Figure 3.3 Health Care and Higher Education Industries Employment Concentration in Selected U.S. Metropolitan Areas


2.0

1.0 1.0

0.0

Atlanta MSA

Austin MSA Baltimore MSA

Boston MSA

I-91 Minneapolis Orange Corridor MSA County MSA

Philidelphia MSA

Raleigh MSA

Seattle MSA


Figure 3.4 Hospital and Higher Education Industries Employment Concentration in Selected U.S. Metropolitan Areas 4.0


3.5

3.0

2.5

Atlanta MSA Austin MSA Baltimore MSA Boston MSA I-91 Corridor Minneapolis MSA Orange County MSA Philadelphia MSA Raleigh MSA Seattle MSA Silicon Valley

2.0

1.5

1.0 1.0

0.5

0.0

General medical and surgical hospitals

Colleges and universities


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Silicon Valley


Figure 3.5 Medical Device and Supply Manufacturing Employment Concentration in Selected U.S. Metropolitan Areas 5.0


4.0

3.0

2.0

1.0 1.0

0.0

Atlanta MSA

Austin MSA

Baltimore MSA

Boston MSA

I-91 Minneapolis Orange Philadelphia Raleigh Corridor MSA County MSA MSA MSA

Seattle MSA

Silicon Valley


Figure 3.6 Employment Concentration of Selected Medical Device and Supply Manufacturing Industry Sectors in Selected U.S. Metropolitan Areas 7.0



6.0

5.0

LQ = 16.29

4.0

3.0

2.0

1.0 1.0

0.0

Surgical and medical instruments

Surgical appliances and supplies

Optical instruments and lenses



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Figure 3.7 Medical Device and Supply Industry’s Share of Total Manufacturing Employment in Selected U.S. Metropolitan Areas 10% 9%

% Total Manufacturing Employment

8% 7% 6% 5% 4% 3% 2% 1% 0% Atlanta MSA

Austin MSA

Baltimore MSA

Boston MSA

I-91 Corridor

Minneapolis MSA

Orange County MSA

Philadelphia MSA

Raleigh MSA

Seattle MSA

Silicon Valley

United States


Figure 3.8 % of Total Manufacturing-Sector Businesses in Selected U.S. Metropolitan Areas that are Registered with the FDA to Produce Medical Devices and Components

% of Total Manufacturing Businesses

4% FDA-Registered Manufacturers FDA-Registered Contract Manufacturers

3%

2%

1%

0%

Atlanta MSA

Austin MSA

Baltimore MSA

Boston MSA

I-91 Minneapolis Orange Philadelphia Raleigh Corridor MSA County MSA MSA MSA

Source: CDRH, 2004; Dun & Bradstreet, 2004 (calculations by Walker)

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Seattle MSA

Silicon Valley

United States


Figure 3.9 Total Number of FDA-Registered Medical Device Manufacturers & Contract Manufacturers in Selected U.S. Metropolitan Areas 500

400 FDA-Registered Manufacturers

# of Businesses

FDA-Registered Contract Manufacturers

300

200

100


Baltimore MSA

Boston MSA I-91 Corridor Minneapolis MSA

Orange County

Philadelphia Raleigh MSA Seattle MSA Silicon Valley MSA


Figure 3.10 Employment Concentrations of Precision Manufacturing Industries in Selected U.S Metropolitan Areas 6.0


5.0

4.0


3.0

2.0

1.0 1.0

0.0 Plastic Steel products, Metal forging, products, blast furnaces, die-casting & hoses, belts, nonferrous stamping resins wire drawing & insulating

Structural metal fabrication

Machine shop Electroplating, Metalworking jobbing, screw plating and machinery & machine polishing equipment products

Electrical apparatus, computers, relays, controls, motors



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Figure 3.11 Change in Combined Medical Device & Supply Manufacturing Industries in Selected U.S Metropolitan Areas 80%

employment businesses

% Change from 1996 to 2004

overall medical device & supply manufacturing

60%

40%

20%

0%

-20%

-40%

-60%

USA

New York

San Jose

Seattle

Raleigh

Philadelphia

Orange County

Minneapolis

I-91 Corridor

Boston

Baltimore

Austin

Atlanta

-80%

Sources: Dun & Bradstreet, 1996; 2004 (calculations by Walker)

Figure 3.12 Change in Medical Instrument Manufacturing in Selected U.S Metropolitan Areas 200% employment businesses

% Changemedical from 1996 to 2004 instrument manufacturing

150%

100%

50%

0%

-50%


81


USA

New York

San Jose

Seattle

Raleigh

Philadelphia

Orange County

Minneapolis

I-91 Corridor

Boston

Baltimore

Austin

Atlanta

-100%

Comparative Analysis Figure 3.13 Change in Medical Appliance & Supply Manufacturing in Selected U.S Metropolitan Areas 200% employment businesses

%medical Change from 1996 to 2004 appliance & supplies manufacturing

150%

100%

50%

0%

-50%

USA

New York

San Jose

Seattle

Raleigh

Philadelphia

Orange County

Minneapolis

I-91 Corridor

Boston

Baltimore

Austin

Atlanta

-100%


Figure 3.14 Change in Dental Equipment & Supply Manufacturing in Selected U.S Metropolitan Areas 300%


% Change from& 1996 to manufacturing 2004 dental equipment supplies

250%

200%

150%

100%

50%

0%

-50%

USA

New York

San Jose

Seattle

Raleigh

Philadelphia

Orange County

Minneapolis

I-91 Corridor

Boston

Baltimore

Austin

Atlanta

-100%



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Comparative Analysis Figure 3.15 Change in Irradiation Apparatus Manufacturing in Selected U.S Metropolitan Areas 200%


% Change from 1996 to 2004 irradiation apparatus manufacturing

150%

100%

50%

0%

-50%

USA

New York

San Jose

Seattle

Raleigh

Philadelphia

Orange County

Minneapolis

I-91 Corridor

Boston

Baltimore

Austin

Atlanta

-100%


Figure 3.16 Change in Electromedical Apparatus Manufacturing in Selected U.S Metropolitan Areas 700%

600% employment

% electromedical Change fromapparatus 1996 to manufacturing 2004

businesses 500%

400%

300%

200%

100%

0%


83


USA

New York

San Jose

Seattle

Raleigh

Philadelphia

Orange County

Minneapolis

I-91 Corridor

Boston

Baltimore

Austin

Atlanta

-100%

Comparative Analysis Figure 3.17 Change in Ophthalmic Goods Manufacturing in Selected U.S Metropolitan Areas 200% employment businesses

% Change fromgood 1996 to 2004 ophthalmic manufacturing

150%

100%

50%

0%

-50%

USA

New York

San Jose

Seattle

Raleigh

Philadelphia

Orange County

Minneapolis

I-91 Corridor

Boston

Baltimore

Austin

Atlanta

-100%


Figure 3.18 Change in Optical Instrument & Lens Manufacturing in Selected U.S Metropolitan Areas 700%


%optical Change from 1996 to 2004 instruments and lens manufacturing

600%

500%

400%

300%

200%

100%

0%

USA

New York

San Jose

Seattle

Raleigh

Philadelphia

Orange County

Minneapolis

I-91 Corridor

Boston

Baltimore

Austin

Atlanta

-100%



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Comparative Analysis Figure 3.19 Change in Total Employment for All Industries in Selected U.S. Metropolitan Areas 30%

20%

% Change from 1996 to(all 2004 % employment change industries)

10%

0%

-10%

-20%

-30%

-40%

-50%

USA

New York

Seattle

San Jose

Raleigh

Philadelphia

Orange County

Minneapolis

I-91 Corridor

Boston

Baltimore

Atlanta

Austin

-60%

Sources: Dun & Bradstreet, 1996; 2004

Figure 3.20 Change in Medical Device & Supply Manufacturing Relative Employment Concentration (LQ) in Selected U.S. Metropolitans Areas 300%

250%

% Change from 1996 to to 2004 % Change from 1996 2004

200%

150%

100%

50%

0%

-50%

Austin

Baltimore

Boston

I-91Corridor

Minneapolis

Orange County

Philadelphia

Raleigh

Seattle

San Jose

New York

USA

2004 LQ:

Atlanta

-100%

0.45

0.97

0.36

2.55

1.89

4.78

0.27

2.61

0.86

0.38

1.79

5.07

1.00


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3.1 Comparative Analysis Southern New England’s I-91 Corridor region is smaller than five of the ten other metro areas taken for comparison. With 1.2 million workers, the region’s workforce is similar in size to that of Baltimore, Seattle or Silicon Valley and bigger than that of Austin or Raleigh (Figure 3.1). Based on the total number of manufacturing-sector workers, the I91 Corridor is roughly the same size as Seattle and is bigger than Baltimore, Austin or Raleigh (Figure 3.2). The I-91 Corridor has the highest concentration of employment in the combined higher education and health care services industries (Figure 3.3). The proportion of the region’s workforce that is employed in higher education and health care services jobs is also more than 1.5 times the national average. These industries are not only major regional employers, but are also design, development and testing resources for the medical device manufacturers. Taken separately, it can be seen that the I-91 Corridor has the highest proportion of employment in hospitals and medical centers, but the proportion of college and university employment is slightly lower than it is in the Minneapolis metro area and significantly lower than it is in Raleigh (Figure 3.4). The percentage of the I-91 Corridor workforce directly employed in medical device and supply manufacturing is nearly twice the national average, similar to that of Seattle. However, it is not surprising that the recognized medical device industry enclaves of Boston, Minneapolis, Orange County and Silicon Valley have a higher proportion of medical device and supply manufacturing employment (Figure 3.5). The I-91 Corridor’s surgical appliance and supply manufacturing sector employment concentration is second only to Minneapolis. Employment in the surgical and medical instruments manufacturing sector is more concentrated than 6 of the 10 other metro areas. And in optical instrument and lens manufacturing, the I-91 Corridor has a higher proportion of employment than all other metro areas except Boston, Orange County and Silicon Valley (Figure 3.6). Less than 2.5% of the nation’s entire manufacturing workforce is employed in the production of medical devices. In the I-91 Corridor, more than 4% of the total manufacturing workforce is employed in the industry (Figure 3.7). This proportion of the I-91 Corridor’s manufacturing workforce is greater than the share of manufacturing workers who make medical devices in Atlanta, Austin, Baltimore, Philadelphia or Raleigh. Where the I-91 Corridor really stands out is in the proportion of manufacturing businesses that are registered with the FDA as contract medical device manufacturers (Figure 3.8). In this category, the I-91 Corridor is the clear leader. That such a large proportion of all the region’s manufacturing firms are FDA-registered contract manufacturers may indicate an enhanced level of overall precision manufacturing capabilities and high quality control standards. Because contract manufacturers make devices based on the specifications of another company, it also may


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indicate that there is a large open available capacity for medical device production in the I-91 Corridor. In terms of the proportion of manufacturing sector businesses that are FDA-registered as medical device manufacturers, firms that make devices and components based on their own specifications, the I-91 Corridor also ranks high (Figure 3.9). Only Boston, Minneapolis, Orange County and Silicon Valley have a higher proportion of FDAregistered manufacturers. In absolute numbers, there are more FDA-registered medical device manufacturers in the I-91 Corridor than there are in Atlanta, Austin, Baltimore, Raleigh or Seattle; and there are more contract manufacturers in the I-91 Corridor than there are in all these metro area plus Orange County, Philadelphia and Silicon Valley. The precision manufacturing capabilities of Southern New England’s I-91 Corridor are further illustrated in Figure 3.10. The region has a far greater proportion of total employment in the precision metalworking industries of: steel products; metal forging, die-casting and stamping; machine shop jobbing; electroplating and metalworking equipment manufacturing than any of the other metro areas taken for comparison. Although, Southern New England’s I-91 Corridor supports an active and concentrated medical device and supply manufacturing industry, the industry’s employment growth has lagged over the past eight years (Figure 3.11). From 1996 to 2004, the only I-91 Corridor medical device industry sectors to experience substantial employment growth were medical appliances and supplies manufacturing sector and the optical instruments and lens manufacturing sector (Figures 3.12 – 3.17). Atlanta, Baltimore, Orange County and Raleigh also experienced medical device and supply manufacturing employment reductions from 1996 to 2004. In the I-91 Corridor, Atlanta, Baltimore and Raleigh, the decline in medical device industry employment over the past eight years is consistent with overall employment trends in these metro areas (Figure 3.19). While the relative medical device and supply manufacturing employment concentration (LQ) declined in Atlanta, Orange County, Philadelphia and Raleigh from 1996 to 2004, the concentration of medical device manufacturing employment in Southern New England’s I-91 Corridor remained steady at nearly twice the national average during this period (Figure 3.20). In summary, this comparative analysis illustrates that despite a recent decline in employment, the proportion of the I-91 Corridor workforce currently engaged in medical device manufacturing is still greater than many of the other metro areas taken for comparison, except the recognized medical device manufacturing enclaves of Boston, Minneapolis, Orange County and Silicon Valley. The I-91 Corridor also compares very favorably on the basis of higher education and health services employment concentration. Furthermore, the extraordinarily high concentration of precision metalworking industry employment and the high proportion of FDA-registered contract manufacturers suggests that the I-91 Corridor has significant medical device manufacturing potential.

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CONCLUSION: Southern New England’s I-91 Corridor is a vital component of the thriving medical device manufacturing industry in the northeastern United States. The Corridor’s universities, colleges, hospitals, medical centers, precision manufacturing capabilities and educated workforce important components of the region’s economic and cultural base. They are also essential links in the medical device manufacturing industry supply chain. Currently, the level of medical device manufacturing employment in the Springfield, Hartford and New Haven metropolitan areas of the I-91 Corridor is comparable to that of Dallas, Atlanta, Pittsburgh or Oakland. Furthermore, the region has all the research, engineering, and manufacturing capabilities necessary to support expansion within its existing cluster of medical device companies and to attract new medical device-related businesses. By supporting programs that connect the links of the supply chain and by publicizing the region’s indigenous strengths, the I-91 Corridor can tap into its full medical device manufacturing potential and move into the top tier of U.S. metropolitan areas focusing on the medical device industry.


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Works Cited: AdvaMed: Lewin Group Reports 1. 2001. “Report 1: The State of the Industry.” Describes the evolution of the health care market and regulatory environment since 1995, identifies key market forces affecting the industry's performance, and provides an initial assessment of how these forces may be affecting innovation. http://www.advamed.org/publicdocs/innovation/lewin1.pdf AdvaMed: Lewin Group Reports 4. 2001. “Report 4: The Impact of Regulation and Market Dynamics on Innovation.” Examines the implementation of the FDA Modernization Act of 1997 and the FDA's overall readiness for new technologies; and develops an innovation index as a means of analyzing the current climate for innovation and to provide a basis for future analysis and comparison. http://www.advamed.org/publicdocs/innovation/lewin4.pdf Bass, D. 2003. “Raleigh Chamber Leads the Way in Creating a Medical Device Mecca.” Research Triangle Regional Partnership Press Release 6/2/03. http://www.researchtriangle.org/news/nr/jun022003.html Battelle 2003. “Building Western Massachusetts’ Future in the Life Sciences.” Technology Partnership Practice. Battelle Memorial Institute. Cleveland, OH. 2/2003. Battelle 2001. “Western Massachusetts Regional Technology Audit and Network Identification Assessment: Building Technology Networks for Regional Economic Competitiveness.” Technology Partnership Practice. Battelle Memorial Institute. Cleveland, OH 1/2001. Bell, S. 2002. “The 2002 Medical Device Outlook: Business is Booming.” Medical Device & Diagnostic Industry News. March 2002. http://www.devicelink.com/mddi/archive/02/03/001.html Blodgett, J. 2002. “What Makes the I-91 Corridor a Region?” CT Magazine. October/November 2002. http://www.cerc.com/detpages/services714.html BLS 2003. U.S. Department of Labor, Bureau of Labor Statistics. 2003. BLS OOH 2002-2003: U.S. Department of Labor, Bureau of Labor Statistics – Occupational Outlook Handbook. http://www.bls.gov/oco/ Bronzino, Joseph, D., ed. 1995. Biomedical Engineering Handbook. CRC Press. Bronzino, Joseph, D., ed. 2000. Biomedical Engineering Handbook, 2nd Ed. CRC Press. CBR 2004. UMass-Baystate Collaborative Biomedical Research Program: Project Summaries. http://www.bio.umass.edu/cbr/summaries.html CDRH 2004. Food and Drug Administration (FDA) Center for Devices and Radiological Health (CDRH) Freedom of Information (FOI) Releasable [Medical Device] Establishment Registration and Device Listing Files. http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRL/registration.cfm CDRH database (updated 2/5/04) accessed through ZapConnect.com – The “Medical Device Industry Portal” http://www.zapconnect.com

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CDRH 2003. “Food and Drug Administration (FDA) Center for Devices and Radiological Health (CDRH) Freedom of Information (FOI) Releasable [Medical Device] Establishment Registration and Device Listing Files” Explanatory Page. August 28, 2003. http://www.fda.gov/cdrh/comp/estregls.html CDRH. 1998. “Is the Product a Medical Device?” FDA Center for Devices and Radiological Health. 6/30.1998 http://www.fda.gov/cdrh/devadvice/312.html Clark, J. W., 2003. “Reflections on Organizational Structure of EMBS Conferences and Publications.” IEEE Engineering in Medicine and Biology Magazine. 22(5):4-5. Clayton-Matthews, A., 2001. “The Medical Device Industry in Massachusetts.” Economic Research & Analysis Division of the Donahue Institute at the University of Massachusetts, Boston. http://www.massmedic.com/docs/profile01.pdf Clayton-Matthews A. & R. Loveland. 2004. “Medical Devices: Supporting the Massachusetts Economy.” University of Massachusetts Donahue Institute. http://www.massmedic.com/docs/Umass_Medical_Device.pdf CMS 2003. Centers for Medicare & Medicaid Services. Health Care Industry Market Update: Medical Devices & Supplies 12/5/03 http://www.cms.hhs.gov/reports/hcimu/hcimu_12052003.pdf COLI, 2004. Cost of Living Index. http://www.datamasters.com Cortright & Mayer 2002. “Signs of Life: The Growth of Biotechnology Centers in the U.S.” Brookings Institution Center on Urban and Metropolitan Policy. June 2002. http://www.brookings.org/dybdocroot/urban/publications/biotech.htm CPS 2004. U.S. Bureau of Labor Statistics & U.S. Census Bureau, Current Population Survey. http://www.bls.census.gov/cps/cpsmain.htm DeVol, R & R. Koepp. 2003. “America’s Health Care Economy.” A Policy Brief from the Milken Institute including the Milken Institute’s Metropolitan Areas Health Poles. http://www.milkeninstitute.org/publications/publications.taf?function=detail&ID=286&c at=PBriefs Dray, C. 1997. “Site Selection Criteria for the Medical Device Industry.” Medical Device & Diagnostics Industry News. March 1997. Dun & Bradstreet 1996. Dun & Bradstreet Marketplace ™ Data for 1996. Provided by the Connecticut Economic Resources Center. Dun & Bradstreet 2004. Dun & Bradstreet Marketplace ™ Data for 2004 Q1. Provided by the Connecticut Economic Resources Center. Duryee, T. 2002. “Venture Funding Aims at Medical Device Field.” Seattle Times 7/27/02 http://www.nasvf.org/web/allpress.nsf/pages/5996


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PricewaterhouseCoopers, 2004. “Quarterly Study of Venture Capital Spending in the United States.” Money Tree™ Survey of PricewaterhouseCoopers, Thomson Venture Economics, and the National Venture Capital Association. http://www.pwcmoneytree.com/moneytree/index.jsp RTP 2003. “Raleigh Chamber leads the way in creating a medical device Mecca.” http://www.researchtriangle.org/news/nr/jun022003.html Salemi, T. 1998. “Worcester Sets its Sights on Luring Medical Device Firms.” Boston Business Journal. 5/15/98 http://boston.bizjournals.com/boston/stories/ 1998/05/18/story2.html SIC, 1987. Standard Industrial Classification System. U.S. Census Bureau. SME 2004. Society of Manufacturing Engineers. Personal Communication regarding the NAICS codes for medical device-related metal and plastics manufacturing. 1/24/04. http://www.sme.org Solucient 2002. “100 Top Hospitals: Benchmarks for Success.” A ranking of the nation’s best hospitals by objective statistical analyses of public data sources. http://www.100tophospitals.com/Studies/national02/methodology.asp Somple, J. 2003. “Surviving in Manufacturing.” New England Developments Newsletter. November, 2003. Published by Northeast Utilities. Swain, E. and S. Conroy. 2004. “MedTech Forecast: The Experts Weigh In.” Medical Device & Diagnostics Magazine. February 2004. http://www.devicelink.com/mddi/archive/04/02/003.html Timmerman, L. 2003. “The Tangible Side of Biotech: Small Northwest Companies Take a Practical Approach.” Seattle Times. 10/13/03. http://seattletimes.nwsource.com/html/businesstechnology/2001764671_meddevices13.ht ml UBS 2002. UBS Warburg Global Equity Research. “Medical Devices: Analyzing Opportunities.” 9/9/02 U.S. Census Bureau. 2003. U.S. Census Bureau Metropolitan Statistical Areas and Components. Defined by the Office of Management and Budget. Last Updated 7/10/03. http://www.census.gov/population/estimates/metro-city/03msa.txt U.S. Census Bureau 1997. U.S. Census Bureau Economic Census for 1997 (most recent census available as of February 2004) http://www.census.gov/epcd/www/econ97.html Waters, J. 2004. “Valley job losses slow’ biotech software gains.” Application Development Trends Magazine. 1/26/04 http://www.adtmag.com/article.asp?id=8823


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Additional Sources: AdvaMed: Lewin Group Reports 2. 2001. “Report 2: The Medicare Payment Process and Patient Access to Technology.” Provides an overview of the current state of Medicare coverage, coding and payment systems; and assesses the impact of Medicare systems, policies and procedures on innovation and on patient access to technology. http://www.advamed.org/publicdocs/innovation/lewin2.pdf AdvaMed: Lewin Group Reports 3. 2001. “Report 3: Technology Assessment by Public and Private Payers.” Examines the state of health technology assessment, current trends in the field, and the implications of health technology assessment for innovation, the industry, and patient access. http://www.advamed.org/publicdocs/innovation/lewin3.pdf Biotech Browser from World Market Watch, Inc. http://www.1jump.com Bone & Joint Decade 2000-2010 Initiative. World Health Organization. http://www.bonejointdecade.org/organisation/default.html Department of Labor Standard Industrial Classification System http://www.osha.gov/oshstats/sicser.html Ernst and Young 2002. “Beyond Borders: The Global Biotechnology Report” IEEE Engineering in Medicine and Biology Society 2004 International Conference. http://www.eng.unsw.edu.au/embs/ColdFusion/viewco.cfm?conftype=1 IEEE EMB 2003. Institute of Electrics & Electronical Engineers, Engineering in Medicine & Biology Society Magazine September/October 2003 International Trade Directory (SIC Search): http://www.tradeattache.com/index.jsp MX 2002. “Hot Spots: Ten U.S. Region’s for the MedTech Executive’s Expansion Itinerary in 2002.” Business Strategies for Medical Technology Executives Magazine. 11/12-2002 NAICS 1998. “The North American Industrial Classification System (NAICS) of the United States, Canada and Mexico.” Energy Information Administration. 1998. http://www.eia.doe.gov/emeu/mecs/mecs98/naics/naics8.html Northeast Bioengineering Conference 2004. http://www1.wnec.edu/NEBC2004/ Simonsen, M. 2003. NASA’s Med-tech Summit Puts Emphasis on Development Efforts.” BBI Newsletter. March 2003. http://www.findarticles.com/cf_0/m3570/3_26/98999127/p1/article.jhtml Swain, E. 2003. “The Promise of Drug-Eluting Stents Confirmed.” Medical Device & Diagnostic Industry News. November 2003. http://www.devicelink.com/mddi/archive/03/11/010.html

93


UMass 2002. University of Massachusetts Bioscience Research Assessment. Whitaker Foundation http//:www.whitaker.org ZapConnect. “The Medical Device Industry Portal.” Database of FDA-registered Medical Devices & Companies. http://www.zapconnect.com/search/devices/index.cfm?fuseaction=devices_search_form &company_type=1


94

Appendix A Descriptions of U.S. Metropolitan Areas Chosen for Comparative Analysis: The metro areas 10 described below all have some level of infrastructure in place that is of value to the medical device industry including: universities, medical centers, research institutions, precision manufacturing capabilities. However, metro areas that are actively working to grow the medical device industry tend to place an emphasis on technology transfer and offer support for industry-health care-university networks and partnerships. These metro areas, such as Minneapolis, Raleigh, Boston, Atlanta and Orange County California, have consolidated information on their medical device industry related assets and resources and made this information easily available on-line. Medical device and supply manufacturing data provided in table form following each metropolitan area description are also represented graphically in Section 3. Industry code-classified medical device and supply manufacturing business data are listed separately from the number of FDA-registered medical device manufacturers because businesses classified by medical device and supply manufacturing industry codes may also be registered with the FDA. Employment data for FDA-registered manufacturing and contract manufacturing businesses were not available.

Atlanta, Georgia – Home of the U.S. Centers for Disease Control and Prevention, Atlanta is targeting bioscience-based economic development. In 1990, the Georgia Research Alliance was founded to, “provide the framework for leaders in academia, business and government to create support for the bioscience community.” The GRA has created a model for, “bringing business, research universities, and state government together to create and sustain a vibrant , technology-driven economy for Georgia. The GRA emphasizes technology from area research institutions to area industry. Table A1 Atlanta MSA: Medical Device and Supply Manufacturing Industry Data MD&S Industry Code Description

# Bus.

Total Emps. % Employment

LQ

Optical instruments and lenses Surgical and medical instruments Surgical appliances and supplies Dental equipment and supplies

16 56 70 17

95 1,322 1,264 142

0.0043% 0.0601% 0.0575% 0.0065%

0.191 0.477 0.620 0.411

X-ray apparatus and tubes Electromedical equipment Ophthalmic goods

6 12 18

27 95 266

0.0012% 0.0043% 0.0121%

0.182 0.138 0.374

Total

195

FDA-registered manufacturers FDA-registered contract manufacturers Total Businesses & Employment (all industries)

135 34

3,211 ---

0.1460% ---

0.446 ---

215,399

2,198,706

100%

Sources: Dun & Bradstreet, 2004; CDRH, 2004 (calculations by Walker)

10

With the exception of Silicon Valley, which is defined as Santa Clara and San Mateo counties in California, all metro areas are based on U.S. Census Bureau Metropolitan Statistical Areas and Divisions: http://www.census.gov/population/estimates/metro-city/03msa.txt

A-1


Appendix A

The medical device industry is featured in a list of industry focus areas posted on the GRA’s public website. Atlanta is also the headquarters for American Health Consultants who publish the industry newsletter, Medical Device Daily. Other resources related to the medical device industry in Atlanta include: The American Cardiovascular Research Institute; The Georgia Institute of Technology Center for the Engineering of Living Tissue; the Georgia Tech Biomedical Engineering Program; University of Georgia Biomedical and Health Sciences Institute. Notable medical device producers in the Atlanta metro area, based on the number of FDA-registered devices, include: C.R. Bard; the Centers for Disease Control and Prevention; and Rusch. The Atlanta MSA is Barrow County, Bartow Count, Butts County, Carroll County, Cherokee County, Clayton County, Cobb County, Coweta County, Dawson County, DeKalb County, Douglas County, Fayette County, Forsyth County, Fulton County, Gwinnett County, Haralson County, Heard County, Henry County, Jasper County, Lamar County, Meriwether County, Newton County, Paulding County, Pickens County, Pike County, Rockdale County, Spalding County, and Walton County.

Austin, Texas – The University of Texas at Austin has a graduate biomedical engineering program that supports an industry affiliates program and several additional research centers related to biomedical technology. Austin is known for strengths in computer science and software engineering. The Texas Materials Institute houses the Center for Nano and Molecular Science and Technology, which focuses on bioelectronic materials and nano and molecular scale electronics. The Nano and Molecular Science Center was cited in Medical Technology Executives Magazine article as a resource that brings together Austin’s strengths in biology and computer science (Henke, 2001). Austin business and academic leaders are choosing to emphasize this kind of technologybased interdisciplinary collaboration, the article said. Table A2 Austin MSA: Medical Device and Supply Manufacturing Industry Data MD&S Industry Code Description

Optical instruments and lenses Surgical and medical instruments Surgical appliances and supplies Dental equipment and supplies X-ray apparatus and tubes

Electromedical equipment Ophthalmic goods Total FDA-registered manufacturers FDA-registered contract manufacturers Total Businesses & Employment (all industries)

# Bus.


10 16 14 7 0 5 2 54

87 841 344 27 0 644 45 1,988

0.0139% 0.1347% 0.0551% 0.0043% 0% 0.1032% 0.0072% 0.3185%

32 14

---

---

68,087

624,133

100%

LQ

0.617 1.069 0.594 0.275 0.000 3.285 0.223 0.972 ---



A-2

Appendix A

Notable medical device producers in the Austin metro area, based on the number of FDA-registered devices, include: Encore Medical and Centerpulse Orthopedics. The Austin MSA is Bastrop County, Caldwell County, Hays County, Travis County, and Williamson County

Baltimore, Maryland – Home of top-ranked Johns Hopkins University and Hospital, Baltimore boasts its “dominant position in institutional medicine.” Baltimore is already recognized as a biotechnology hub (Cortright & Mayer, 2002) and now is trying to build on that reputation with the construction of the East Baltimore BioPark, a 2-millionsquare-foot biotech and med tech office park located adjacent to Johns Hopkins University. The Baltimore Development Council has a stated commitment to growing the medical and biotech sectors of the metro area economy. Johns Hopkins University also houses the nation’s foremost Biomedical Engineering research organization, The Whitaker Biomedical Engineering Institute. Table A3 Baltimore MSA: Medical Device and Supply Manufacturing Industry Data MD&S Industry Code Description



# Bus.


5 22 28 4 0 3 7 69

53 968 197 10 0 27 57 1,312

0.0047% 0.0861% 0.0175% 0.0009% 0% 0.0024% 0.0051% 0.1166%

47 20

---

---

105,114

1,124,873

100%

LQ

0.208 0.683 0.189 0.057 0.000 0.076 0.156 0.356 ---


Notable medical device producers in the Baltimore metro area, based on the number of FDA-registered devices, include: Becton-Dickinson & Co. and Hemagen Diagnostics. The Baltimore MSA is Anne Arundel County, Baltimore County, Carroll County, Harford County, Howard County, Queen Anne's County, and Baltimore city.

Boston, Massachusetts – Next to California, New England receives the most medical device industry venture capital investments. The majority of these investments go to Boston-area medical device companies. There is a high concentration of medical device companies in the Boston metro area including Boston Scientific, whose drug-device hybrid technologies are predicted to drive the medical device financial market in the near term. The Boston area is also home to some of the world’s top scientific and biomedical

A-3


Appendix A research institutions including: Harvard Medical School, The Tufts-New England Medical Center, MIT and others. Massachusetts General Hospital is consistently ranked among the very best hospitals in the country. The medical device industry group, MassMEDIC has the mission of securing the state’s dominant position in the medical device industry. Medical device exports are a significant part of the state’s economy and, so far, those exports are coming primarily from companies in the Boston Metro area. Table A4 Boston MSA: Medical Device and Supply Manufacturing Industry Data MD&S Industry Code Description

# Bus.


Optical instruments and lenses Surgical and medical instruments Surgical appliances and supplies Dental equipment and supplies X-ray apparatus and tubes Electromedical equipment Ophthalmic goods Total

68 149 79 22 16 37 18 389

2,341 11,252 1,207 243 762 2,342 243 18,390

0.1064% 0.5113% 0.0548% 0.0110% 0.0346% 0.1064% 0.0110% 0.8356%


452 138

---

---

204,865

2,200,802

100%

LQ

4.705 4.058 0.591 0.703 5.119 3.388 0.341 2.550 ---


Other notable medical device producers in the Boston metro area include: BayerHealthcare; Philips Medical Systems; Codman & Shertleff, Smith & Nephew, Zoll Medical Corp, Nova Biomedical and Tuzik Corp. The Boston MSA is Essex County, Middlesex County, Norfolk County, Plymouth County, Suffolk County in Massachusetts plus Rockingham County and Strafford County in New Hampshire

Minneapolis, Minnesota – Medtronic, the top-rated U.S. medical device company, is headquartered in Minneapolis. Largely because of Medtronic, the Minneapolis-St. Paul metro area has the highest medical device industry employment (>20,000) and the highest medical device industry annual sales (~$12 billion). The world-renowned Mayo Clinic is also located in nearby Rochester, Minnesota. The health care industry is very concentrated in Minnesota. Additionally, the state has developed a strong infrastructure to support the state’s health care and medical device industries. The “Medical Alley” trade association is organized to support the region’s health care and medical device industries with economic incentives and business support services including: regular meetings and symposiums and assistance connecting industrial, academic and financial partners. The Bioengineering and Mechanical Engineering Departments at the University of Minnesota spawned Medtronic and many of the state’s 500 other medical device companies. The State Department of Trade and Economic Development has a stated commitment to stimulating the health care and medical


A-4

Appendix A products industries. The DTEC also maintains a Site Location Program to assist business interested in expanding or relocating to Minnesota. The Medical Alley Trade Association also offers a “mini-MBA” 11-week course in Medical Technology Management. Table A5 Minneapolis MSA: Medical Device and Supply Manufacturing Industry Data MD&S Industry Code Description



# Bus.


12 111 99 16 0 42 17 297

247 6,751 4,611 152 0 10,069 2,335 24,165

0.0160% 0.4375% 0.2988% 0.0098% 0% 0.6525% 0.1513% 1.5659%

291 111

---

---

130,883

1,543,201

100%

LQ

0.708 3.472 3.220 0.627 0.000 20.775 4.672 4.779 ---


Notable medical device producers in the Minneapolis metro area, based on the number of FDA-registered devices, include: Medtronic, Beckman Coulter, Apothecary Products, 3M, Diasorin and St. Jude Medical. The Minneapolis MSA is Anoka County, Carver County, Chisago County, Dakota County, Hennepin County, Isanti County, Ramsey County, Scott County, Sherburne County, Washington County, Wright County in Minnesota plus Pierce County and St. Croix County in Wisconsin

Orange County, California – The self-proclaimed “birthplace of the medical device industry,” Orange County does indeed have a high concentration of medical device and supply companies. Orange County is situated in the middle of southern California’s medical device industry heartland – where >10% of all medical device companies are located. To showcase the strengths of its medical device industry, the Orange County Business Council has consolidated all information relating to the metro area’s medical device companies, research institutes and medical centers. The major medical device industry asset for Orange County is the University of California at Irvine, which has a biomedical engineering department and several other colleges and research institutes related to the medical device/technology industry including: the Beckman Laser Institute and Medical Clinic; the Center for Neurobiology; the College of Medicine; the Irvine Biomedical Research Center; and the 125-acre University Research Park. Orange County also has a history of precision manufacturing for the aerospace and defense industries.

A-5


Appendix A Table A6 Orange County MSA: Medical Device and Supply Manufacturing Industry Data MD&S Industry Code Description

# Bus.



46 132 59 42 3 15 30 327

1,487 5,975 2,257 992 11 244 1,347 12,313

0.1032% 0.4148% 0.1567% 0.0689% 0.0008% 0.0169% 0.0935% 0.8549%


314 93

---

---

158,063

1,440,352

100%

LQ

4.567 3.292 1.689 4.385 0.113 0.539 2.888 2.609 ---


Notable medical device producers in the Orange County metro area include: Edwards Lifesciences Corp; 3M Healthcare; Beckman Instruments; Chiron Vision Corp; and Medtronic. Orange County is the Santa Ana-Anaheim-Irvine, CA Metropolitan Division Philadelphia, Pennsylvania – The Hospital of the University of Pennsylvania consistently ranks among the very best hospitals in the nation. The greater Philadelphia metro area has a relatively high health care industry concentration. The Albert Einstein Medical Center and Temple University Hospital are two of the metro area’s other major health care institutions. The University of Pennsylvania has a Bioengineering program. The Philadelphia Area Medical Instrumentation Association represents the metro area’s biomedical technology community. There do not appear to be any obvious economic development initiatives centered around Philadelphia’s medical device/technology industry. Table A7 Philadelphia MSA: Medical Device and Supply Manufacturing Industry Data MD&S Industry Code Description

# Bus.


LQ

1.671 0.817 0.874 1.427 0.212 0.539 0.544 0.855


27 87 79 35 4 16 22 270

843 2,296 1,810 500 32 378 393 6,252

0.0378% 0.1029% 0.0811% 0.0224% 0.0014% 0.0169% 0.0176% 0.2802%


170 73

--

--

--

--

--

--

204,285

2,231,118

100%



A-6

Appendix A

Notable medical device companies in the Philadelphia metro area, based on the number of FDA-registered devices, include: Premier Medical; Pilling Surgical; Equal Diagnostics; Synthes; and Siemens Medical Solutions. The Philadelphia MSA is Bucks County, Chester County, Delaware County, Montgomery County, and Philadelphia County.

Raleigh, North Carolina – Situated within the North Carolina Research Triangle Park, Raleigh has pinned its economic development hopes on the bioscience and medical technology industry. The Raleigh metro area does not yet have a great concentration of medical device companies, but it does have a high concentration of higher education institutions and the regional will to build the medical device/technology industry. The Raleigh Chamber of Commerce has been focused on expanding the medical device industry since 2001 when Michael Porter’s “Clusters of Innovation” report concluded that the region’s biopharmaceutical life science sector should have the resources to support a “thriving” medical device sector. Toward achieving Raleigh’s goal of becoming a “Mecca for medical devices,” the Raleigh Chamber holds receptions for area medical device executives and, through its press office, touts the health care, higher education and business support infrastructure available to medical device companies that choose to locate in the region. Table A8 Raleigh MSA: Medical Device and Supply Manufacturing Industry Data MD&S Industry Code Description

Optical instruments and lenses Surgical and medical instruments Surgical appliances and supplies Dental equipment and supplies

# Bus.


Electromedical equipment Ophthalmic goods Total

2 12 11 2 0 2 3 32

19 394 70 21 0 15 26 545

0.0043% 0.0893% 0.0159% 0.0048% 0% 0.0034% 0.0059% 0.1235%

FDA-registered manufacturers

17

FDA-registered contract manufacturers Total Businesses & Employment (all industries)

13

---

---

X-ray apparatus and tubes

42,613

LQ

0.190 0.708 0.171 0.303 0.000 0.108 0.182 0.377 ---

441,387


Raleigh metro area medical device companies include: Bayer Healthcare; Closure Medical; Bespak; and Triverix. The Raleigh MSA is Franklin County, Johnston County, and Wake County.

Seattle, Washington – biomedical research in Seattle is strong, thanks largely to medical technology venture capital and a Gates Foundation grant that started the Seattle Biomedical Research Institute. Seattle medical device executives think of their region as A-7


Appendix A “second-tier hub of medical device technology” (Timmerman, 2003). In 2002, Washington ranked third behind California and Massachusetts in medical device industry venture capital investments (Duryee, 2002). Also in the Seattle metro area are the University of Washington Medical School, Health Alliance International, the Infectious Disease Research Institute, and the Fred Hutchinson Cancer Research Center. Table A9 Seattle MSA: Medical Device and Supply Manufacturing Industry Data MD&S Industry Code Description

Optical instruments and lenses Surgical and medical instruments Surgical appliances and supplies Dental equipment and supplies X-ray apparatus and tubes Electromedical equipment Ophthalmic goods Total FDA-registered manufacturers FDA-registered contract manufacturers Total Businesses & Employment (all industries)

# Bus.


8 39 40 26 3 18 10 144

104 1,214 464 952 189 3,720 108 6,751

0.0090% 0.1054% 0.0403% 0.0827% 0.0164% 0.3230% 0.0094% 0.5862%

99 31

---

---

132,969

1,151,640

100%

LQ

0.399 0.837 0.434 5.263 2.426 10.285 0.290 1.789 ---


Notable Seattle metro area medical device companies include: Ameritek; GuidantRedmond; Philips Medical Systems; Spiration; and Spinal Dynamics. The Seattle MSA is King County and Snohomish County. Silicon Valley, California – In the 3rd Quarter of 2003 the medical device industry in Silicon Valley received more than $150 million in venture capital investments, which is more than three times the venture capital investments made in New England medical device companies during the same Quarter (PricewaterhouseCoopers, 2004). Business reporters covering Silicon Valley see medical device manufacturing at the heart of the next “Silicon Valley re-invention” (Waters, 2004). Silicon Valley’s medical device industry assets and resources include a concentration of research institutes – Stanford University, U.C. Berkeley, Lawrence Berkeley and Lawrence Livermore National Laboratories, NASA Ames Research Laboratory – and a history of tech-based entrepreneurism. Silicon Valley has a high concentration of electronics and electromedical equipment manufacturers and a very high concentration of optical instrument and lens manufacturers. Notable medical device companies in the Silicon Valley metro area include: Abbott Laboratories; Beckman Coulter; Becton Dickinson; Guidant Cardiac Surgery; and Stryker Endoscopy. Silicon Valley is Santa Clara County and San Mateo County.


A-8

Appendix A Table A10 Silicon Valley: Medical Device and Supply Manufacturing Industry Data MD&S Industry Code Description

# Bus.



38 103 29 12 11 36 7 236

4,474 10,402 619 101 74 1,789 19 17,478

0.3685% 0.8567% 0.0510% 0.0083% 0.0061% 0.1473% 0.0016% 1.4394%


296 62

---

---

109,655

1,214,260

100%

LQ

16.298 6.799 0.549 0.530 0.901 4.691 0.048 4.393 ---


I-91 Corridor, Connecticut-Massachusetts – A detailed description of medical device manufacturing in the I-91 Corridor is provided in Section 2.3. Table A11 I-91 CORRIDOR: Medical Device and Supply Manufacturing Industry Statistics MD&S Industry Code Description

# Bus.



19 50 51 9 5 11 7 152

484 2,088 2,134 114 70 160 170 5,220

0.053% 0.229% 0.234% 0.013% 0.008% 0.018% 0.019% 0.572%


142 94

---

---

94,399

911,805

100%

LQ

2.78 1.80 2.54 0.76 1.14 0.88 0.90 1.89 ---


The I-91 Corridor is Hartford County, Middlesex County, New Haven County, Tolland County and the town of Torrington in Litchfield County, Connecticut plus Hampden County, Hampshire County, and Franklin County in Massachusetts.

A-9


Appendix B Industry Codes (SIC & NAICS) Corresponding to Medical Device & Supply Manufacturing, Health Services, & Precision Manufacturing Industries Referenced in this Report: Table B1 Medical Device & Supply Manufacturing Industries with Corresponding North American Industrial Classification System (NAICS) Codes and Standard Industry Code (SIC) numbers: NAICS: 339112

Description: Surgical and Medical Instrument Manufacturing Orthopedic, Prosthetic and Surgical Appliance and Supplies 339113 Manufacturing 339114 Dental Equipment and Supplies Manufacturing 334517 Irradiation Apparatus Manufacturing 334510 Electromedical and Electrotherapeutic Apparatus Manufacturing 339115 Ophthalmic Goods Manufacturing 333314 Optical Instrument & Lens Manufacturing Sources: NAICS, 2002; SIC, 1987

SIC: 3841 3842 3843 3844 3845 3851 3827

Table B2. Medical Device Industry-Related Health and Educational Services Industries with Corresponding North American Industrial Classification System (NAICS) Codes and Standard Industry Code (SIC) numbers: NAICS:

Description: Ambulatory Health Care Services (Doctor’s offices, laboratories, 621 blood banks, etc.) 621493 Freestanding Ambulatory Surgical and Emergency Centers 621491 HMO Medical Centers 621112 Offices of Physicians, Mental Health Specialists 621111 Offices of Physicians (except Mental Health Specialists) 62211 General Medical & Surgical Hospitals 621511 Medical Laboratories 621512 Diagnostic Imaging Centers 61131 Colleges, Universities & Professional Schools 61121 Junior Colleges 611519 Technical & Trade Schools 623312 Nursing & Residential Care Facilities Noncommercial Research Organizations (physical engineering & life 54171 sciences) Sources: NAICS, 2002; SIC, 1987


SIC

8011

8062 8071 8221 8222 8243 8361 8733

B-1

Appendix B Table B3. Selected Precision Metal, Plastics & Electronics Manufacturing Industries with Corresponding North American Industrial Classification System (NAICS) Codes and Standard Industry Code (SIC) numbers:: NAICS:

Description: Plastic products, hoses, belts, resins: 32622 Rubber and plastics hose and beltings 325991 Custom compound purchased resins 326199 Plastics products, nec Steel products, blast furnaces, nonferrous wire drawing & insulating: 331221 Blast furnaces and steel mills 331222 Steel wire and related products 33121 Steel pipe and tubes 331491 Nonferrous wiredrawing and insulating 332611 Steel springs, except wire Metal forging, die-casting & stamping: 331522 Nonferrous die-castings except aluminum 332111 Iron and steel forgings 332112 Nonferrous forgings 332116 Metal stampings, nec Structural metal fabrication: 332312 Fabricated structural metal 33211 Miscellaneous metalwork Machine shop jobbing, screw machine products: 332721 Screw machine products 332722 Bolts, nuts, rivets, and washers Electroplating, plating, polishing, anodizing & coloring: 332813 Electroplating, plating and polishing Metalworking machinery & equipment: 333512 Machine tools, metal cutting type 333513 Machine tools, metal forming type 333514 Special dies, tools, jigs, and fixtures 333515 Machine tool accessories (Precision Measuring Devices) 333518 Metalworking machinery, nec Electrical apparatus, computers, relays, controls, motors: 334111 Electronic computers 335312 Motors and generators 335314 Relays and industrial controls 335999 Electrical industrial apparatus, nec Sources: NAICS, 2002; SIC, 1987

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SIC: 3052 3087 3089 3312 3315 3317 3357 3493 3364 3462 3463 3469 3441 3449 3451 3452 3471 3541 3542 3544 3545 3549 3571 3621 3625 3629

Appendix C Medical Device & Supply Manufacturing Industry Statistics for U.S. States, Territories and Metropolitan Areas:

Table C1. U.S. States and Territories with AboveAverage Medical Device Manufacturing Employment Concentration * LQ State: 1 Puerto Rico 7.82 2 Minnesota 3.62 2.93 3 Delaware 4 Utah 2.69 2.45 5 Massachusetts 6 New Hampshire 2.25 2.07 7 New Jersey 8 Rhode Island 1.71 1.64 9 Indiana 10 California 1.61 11 Colorado 1.43 12 Connecticut 1.35 13 Washington 1.20 1.20 14 New York 15 Pennsylvania 1.18 16 South Dakota 1.12 17 Florida 1.03 1.01 18 Illinois 19 Ohio 1.00 Source: Dun & Bradstreet, 2004 (calculations by Walker)

*

Location Quotient (LQ), or relative employment concentration, is the percentage of regional industry employment divided by percentage national industry employment. An LQ of 1.0 is equal to the national average. Medical device industry LQ was derived from Dun & Bradstreet Marketplace™ employment data for businesses classified by medical device manufacturing industry codes (Table 1.1).


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Appendix C

Table C2. U.S. States and Territories with More than 2,000 Medical Device Manufacturing Employees Emp. State: 66,729 1 California 27,062 2 New York 26,594 3 Minnesota 22,954 4 New Jersey 22,059 5 Massachusetts 21,467 6 Florida 18,924 7 Texas 18,655 8 Pennsylvania 16,404 9 Illinois 15,377 10 Ohio 13,794 11 Puerto Rico 13,286 12 Indiana 8,797 13 Washington 8,757 14 Colorado 7,920 15 Utah 6,686 16 Georgia 6,520 17 Michigan 6,509 18 Connecticut 6,135 19 North Carolina 6,022 20 Wisconsin 5,307 21 Tennessee 4,963 22 Arizona 4,683 23 Missouri 4,645 24 South Carolina 3,969 25 New Hampshire 3,803 26 Oregon 3,554 27 Delaware 2,917 28 Virginia 2,519 29 Arkansas 2,203 30 Nebraska 2,194 31 Alabama 2,160 32 Rhode Island Source: Dun & Bradstreet, 2004

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Appendix C Table C3. U.S. States with Over 100 FDA-Registered Medical Device Manufacturing Businesses % Total FDA-Registered Manufacturing Manufacturers State Businesses 2,075 California 2.31% 719 New York 1.87% 588 Illinois 2.12% 553 Massachusetts 3.50% 448 Florida 1.24% 357 Texas 0.74% 348 Pennsylvania 1.29% 337 Minnesota 2.39% 295 New Jersey 1.54% 282 Ohio 1.01% 238 Michigan 0.94% 234 Connecticut 2.56% 218 Colorado 1.88% 200 Wisconsin 1.32% 184 Indiana 1.33% 180 Georgia 1.01% 171 Missouri 1.44% 170 Arizona 1.65% 170 North Carolina 0.90% 159 Tennessee 1.29% 154 Washington 0.83% 137 Utah 2.43% 118 Virginia 1.03% 112 Oregon 0.98% 101 Maryland 1.16% Source: CDRH, 2004; Dun & Bradstreet, 2004 (calculations by Walker)


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Appendix C

Table C4. U.S. States with Over 100 FDA-Registered Medical Device Contract Manufacturing Businesses FDA-Registered % Total Contract Manufacturing Manufacturers: Businesses: State: 491 California 0.55% 205 Massachusetts 1.30% 169 New York 0.44% 156 Illinois 0.56% 147 Pennsylvania 0.55% 144 Florida 0.40% 130 Minnesota 0.92% 127 Indiana 0.92% 99 Connecticut 1.08% 99 Texas 0.21% 96 Ohio 0.34% 94 New Jersey 0.49% 92 Wisconsin 0.61% Source: CDRH, 2004; Dun & Bradstreet, 2004 (calculations by Walker)

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Appendix C Table C5. Metropolitan Areas of U.S. States and Territories with More Than 2,000 Medical Device Manufacturing Industry Employees Metro Area: Emp: Metro Area: Emp: Minneapolis-St Paul, MN-WI 24,360 Reading, PA 2,468 Chicago, IL 15,704 Orlando, FL 2,278 San Jose, CA 14,422 Santa Barbara-Santa Maria-Lompoc, CA 2,266 Boston, MA-NH 13,735 Caguas, PR 2,147 Orange County, CA 12,187 Austin-San Marcos, TX 2,073 Los Angeles-Long Beach, CA 12,126 Lowell, MA-NH 2,071 San Diego, CA 9,035 Syracuse, NY 2,008 Bergen-Passaic, NJ 7,908 Mayaguez, PR 1,994 Salt Lake City-Ogden, UT 7,460 Fort Lauderdale, FL 1,987 Seattle-Bellevue-Everett, WA 6,753 Riverside-San Bernardino, CA 1,947 Middlesex-Somerset-Hunterdon, NJ 6,557 Indianapolis, IN 1,924 Philadelphia, PA-NJ 6,547 San Angelo, TX 1,908 Rochester, NY 6,027 Allentown-Bethlehem-Easton, PA 1,902 Oakland, CA 5,527 Detroit, MI 1,856 Pittsburgh, PA 5,483 Worcester, MA-CT 1,848 Nassau-Suffolk, NY 5,473 Madison, WI 1,701 I-91 Corridor 5,220 Greensboro-Winston-Salem-H.P,NC 1,671 Atlanta, GA 5,179 Albuquerque, NM 1,480 Cincinnati, OH-KY-IN 5,149 Utica-Rome, NY 1,478 Dallas, TX 4,805 Ventura, CA 1,438 Miami, FL 4,512 Portsmouth-Rochester, NH-ME 1,417 Denver, CO 4,472 Charleston-North Charleston, SC 1,379 Cleveland-Lorain-Elyria, OH 4,357 Baltimore, MD 1,378 Tampa-St Petersburg-Clearwater, FL 4,057 Charlotte-Gastonia-Rock H., NC-SC 1,375 Newark, NJ 4,027 Sarasota-Bradenton, FL 1,350 San Francisco, CA 3,948 Tucson, AZ 1,256 Portland-Vancouver, OR-WA 3,809 Memphis, TN-AR-MS 1,242 St Louis, MO-IL 3,467 Kansas City, MO-KS 1,236 Glens Falls, NY 3,453 Grand Rapids-Muskegon-Holl., MI 1,210 Phoenix-Mesa, AZ 3,401 Santa Rosa, CA 1,206 New York, NY 3,076 Daytona Beach, FL 1,194 Boulder-Longmont, CO 3,064 York, PA 1,189 Providence-Fall River-Warwick, RI-MA 3,020 El Paso, TX 1,171 Milwaukee-Waukesha, WI 2,680 Ann Arbor, MI 1,112 Houston, TX 2,561 Knoxville, TN 1,110 San Juan-Bayamon, PR 2,558 Fort Worth-Arlington, TX 1,109 Ponce, PR 2,537 Columbus, OH 1,099 Wilmington-Newark, DE-MD 2,533 Akron, OH 1,083 Buffalo-Niagara Falls, NY 2,488 Scranton-Wilkes-Barre-Haz., PA 1,060 Jacksonville, FL 2,469 Monmouth-Ocean, NJ 1,002 Source: Dun & Bradstreet, 2004


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Appendix C Table C6. Metropolitan Areas of U.S. States and Territories with Above-Average Medical Device Manufacturing Employment Concentration (LQ) Metro Area: LQ: Metro Area: LQ: 1 Ponce, PR 25.37 51 Johnstown, PA 1.84 2 Glens Falls, NY 19.91 52 Sarasota-Bradenton, FL 1.80 3 Mayaguez, PR 18.01 53 Portland, ME 1.80 4 Caguas, PR 14.94 54 Asheville, NC 1.78 5 San Angelo, TX 14.11 55 Pittsburgh, PA 1.75 6 Sumter, SC 6.36 56 Manchester, NH 1.73 7 Boulder-Longmont, CO 5.97 57 Jacksonville, FL 1.71 8 Lowell, MA-NH 5.89 58 Buffalo-Niagara Falls, NY 1.66 9 Sherman-Denison, TX 5.68 59 Jackson, MI 1.65 10 Bloomington, IN 5.64 60 Nassau-Suffolk, NY 1.57 11 San Jose, CA 5.50 61 El Paso, TX 1.57 12 Reading, PA 5.37 62 Miami, FL 1.56 13 Minneapolis-St Paul, MN-WI 5.18 63 Anniston, AL 1.53 14 Rochester, NY 4.59 64 Ann Arbor, MI 1.49 15 Utica-Rome, NY 4.57 65 Kalamazoo-Battle Creek, MI 1.49 16 Santa Barbara-Santa Maria-Lompoc, CA 4.38 66 Ventura, CA 1.48 17 Bergen-Passaic, NJ 4.18 67 Portland-Vancouver, OR-WA 1.47 18 Lawrence, KS 4.17 68 Sioux Falls, SD 1.46 19 Pocatello, ID 4.12 69 Newark, NJ 1.45 20 Middlesex-Somerset-Hunterdon, NJ 4.00 70 Racine, WI 1.45 21 Portsmouth-Rochester, NH-ME 3.98 71 Albuquerque, NM 1.45 22 Aguadilla, PR 3.89 72 Bridgeport, CT 1.42 23 Salt Lake City-Ogden, UT 3.83 73 Cleveland-Lorain-Elyria, OH 1.41 24 Danbury, CT 3.04 74 Chicago, IL 1.40 25 Worcester, MA-CT 2.83 75 San Francisco, CA 1.40 26 Dover, DE 2.78 76 Denver, CO 1.38 27 Wilmington-Newark, DE-MD 2.69 77 Jersey City, NJ 1.37 28 New Bedford, MA 2.66 78 Melbourne-Titusville-Palm Bay, FL 1.37 29 Rochester, MN 2.65 79 Jacksonville, NC 1.34 30 Orange County, CA 2.64 80 Scranton-Wilkes-Barre-Haz., PA 1.33 31 York, PA 2.62 81 Tucson, AZ 1.33 32 Brockton, MA 2.58 82 Huntington-Ashland, WV-KY-OH 1.33 33 San Diego, CA 2.54 83 Bremerton, WA 1.30 34 San Juan-Bayamon, PR 2.52 84 Tampa-St Petersburg-Clearw., FL 1.29 35 Boston, MA-NH 2.51 85 Colorado Springs, CO 1.25 36 Santa Rosa, CA 2.33 86 Milwaukee-Waukesha, WI 1.25 37 St Cloud, MN 2.29 87 Bellingham, WA 1.17 38 Allentown-Bethlehem-Easton, PA 2.29 88 Akron, OH 1.15 39 Daytona Beach, FL 2.29 89 Santa Cruz-Watsonville, CA 1.15 40 Elmira, NY 2.25 90 Kenosha, WI 1.14 41 Cincinnati, OH-KY-IN 2.20 91 Austin-San Marcos, TX 1.11 42 Madison, WI 2.18 92 Stamford-Norwalk, CT 1.10 43 Nashua, NH 2.15 93 Beaumont-Port Arthur, TX 1.09 44 Providence-Fall River-Warwick, RI-MA 2.08 94 Knoxville, TN 1.08 45 Syracuse, NY 2.00 95 Fitchburg-Leominster, MA 1.08 46 Charleston-North Charleston, SC 1.96 96 Los Angeles-Long Beach, CA 1.07 47 Seattle-Bellevue-Everett, WA 1.93 97 Gainesville, FL 1.06 48 I-91 Corridor 1.89 98 Newburgh, NY-PA 1.05 49 Oakland, CA 1.89 99 Gary, IN 1.02 50 Mcallen-Edinburg-Mission, TX 1.87 100 Brazoria, TX 1.00 Source: Dun & Bradstreet, 2004 (calculations by Walker)


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Appendix D Medical Device Industry Resources: I-91 Corridor Resources: Bio-Economic Technology Association (BETA): http://rtccentral.com/beta Biomedical Engineering Alliance & Consortium (BEACON): http://www.beaconalliance.org BEACON Technology Network (BTN): http://www.btninc.net Connecticut United for Research Excellence (CURE) http://www.curenet.org Hartford Hospital Biomedical Engineering: http://www.harthosp.org/biomedical/ University of Connecticut Biomedical Engineering Department http://www.bme.uconn.edu University of Hartford Biomedical Engineering Program http://uhaweb.hartford.edu/biomed/ Yale University Biomedical Engineering Program http://www.eng.yale.edu/biomedical/

General Resources: Advanced Medical Technology Association: http://www.advamed.org Association for the Advancement of Medical Instrumentation (AAMI): http://www.aami.org Association of Medical Diagnostics Manufacturers: http://www.amdm.org BBI Newsletter – High-Tech Medical Device Industry News and Analysis: http://www.findarticles.com/cf_0/m3570/mag.jhtml?issue=1 http://www.ahcpub.com/ahc_root_html/products/newsletters/bbi.html Business Strategies for Medical Technology Executives: http://www.devicelink.com/mx/ Center for Devices and Radiological Health (CDRH): http://www.fda.gov/cdrh/ http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRL/registration.cfm http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRL/listing.cfm


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Appendix D Centers for Medicare and Medicare Services (formerly Health Care Finance Administration): http://www.cms.gov

CMS Market Update Reports: http://www.cms.hhs.gov/reports/hcimu/default.asp Connecticut Tooling and Machine Association: http://www.ct-toolandmachine.org DeviceLink.com, “The Platform Website for the Medical Device Industry” http://www.devicelink.com Engineering in Medicine and Biology Society: http://www.eng.unsw.edu.au/embs/index.html FDA Centers for Devices and Radiological Health – Device Advice: http://www.fda.gov/cdrh/devadvice/ Manufacturing Alliance of Connecticut: http://www.mact.org/ Massachusetts Medical Device Industry Council: http://www.MassMedic.com Medical Design and Manufacturing Conference EAST: http://www.devicelink.com/expo/east03/ Medical Design and Manufacturing Conference WEST: http://www.devicelink.com/expo/west04/welcome.html Medical Design Excellence Awards: http://www.devicelink.com/expo/awards02/index.html Medical Design Online: http://www.medicaldesignonline.com Medical Design Technology: http://www.mdtmag.com Medical Device Tradeshows: http://www.devicelink.com/expo/index.html Medical Device & Diagnostic Industry Magazine (MD&DI): http://www.devicelink.com/mddi Medical Device Manufacturers Association: http://www.medicaldevices.org/public/ Medical Electronics Manufacturing News: http://www.devicelink.com/mem

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Appendix D

Medical Equipment Flyer: http://www.advamed.org/solutions/medflyer-localcost.pdf Medical Equipment & Instrumentation (OMMI) Microelectronics – www.export.gov/infotech Medical Equipment – www.ita.doc.gov/mdequip Instrumentation – www.ita.doc.gov/td/instrumentation Medical Product Manufacturing News: http://www.devicelink.com/mpmn/ Medical Technology Search Engines: Achoo – www.achoo.com HealthAtoZ – www.HealthAtoZ.com World-wide directory of medical equipment – www.medizin.li National Institute for Biomedical Imaging & Bioengineering: http://www.nibib1.nih.gov/ National Tooling and Machine Association: http://www.ntma.org/ Pharmaceutical & Medical Packaging News: http://www.devicelink.com/pmpn/ Society for Biomaterials: http://www.biomaterials.org SSTI (State Science & Technology Institute) – Technology-Based Economic Development: http://www.ssti.org/ Western Massachusetts Tooling and Machine Association: http://www.westernmantma.org/members.html ZapConnect: The Medical Device Industry Portal http://www.zapconnect.com


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