"The Medical Device Industry in Southern New England's I-91 Corridor" (2004) by Loren W. Walker for the Biomedical Engineering Alliance and Consortium (BEACON)
- News Release: "Region's Medical Device Industry: Good Potential, Troubling Trends"
- Companion article by published in the Connecticut Economy Quarterly Journal: "The Medical Device Industry in Southern New England's I-91 Corridor " (Fall 2004)
- News coverage by the Hartford Courant: "Region Fertile Ground for New Industry" (6/11/04)
- News coverage by The Hartford Courant: "Medical Device Field Growing" (6/17/04)
- "New England's Medical Device Industry: Beyond Boston" published in New England Developments (Summer 2004)
- View the Report Summary here
- Download the Power Point presentation (1095 kb) delivered by Loren Walker on June 11, 2004 at the Hartford branch of Rensselaer Polytechnic Institute
- Download the Full Report (10,303 kb)
For release: June 11, 2004 / 12:30 p.m.
Contact: David C. Driver, 860-665-6312
REGION'S MEDICAL DEVICE INDUSTRY: GOOD POTENTIAL, TROUBLING TRENDS
HARTFORD, Conn. - Southern New England's I-91 corridor - a seven-county, 100-mile stretch connecting the metropolitan areas of New Haven and Hartford, Conn., and Springfield, Mass. - is well-positioned to compete in the international sweepstakes to capture jobs and economic growth from the medical device industry, one of the world's fastest growing economic sectors, according to a new study on the industry's regional impact.
But despite certain advantages, speakers at a June 11 news conference and forum in Hartford said the region's medical device industry has yet to fulfill its potential, making it vulnerable. For example, experts noted, while the number of medical device businesses is growing in the I-91 corridor, industry employment is declining here faster than the rest of the nation and the region faces the omnipresent threat of other states and regions trying to lure away its medical device businesses.
The region has a greater concentration of medical device industry jobs than most other areas of the United States, the report notes. It is proximate to the medical device industry enclaves of metropolitan New York and Boston, which rival Silicon Valley in California and Greater Minneapolis-Saint Paul, Minnesota for national leadership in the field, notes the 123-page study entitled, "The Medical Device Industry in Southern New England's I-91 Corridor."
The report - which can be accessed on-line at www.HartfordSpringfield.com -- compiles an asset inventory and offers a competitive analysis of the region. Among the positive findings, the region:
· ranks among the Top 50 areas in the nation relative to industry concentration;
· crosses two states, Massachusetts and Connecticut, which rank first and second in manufacturing firms certified by the Federal Drug Administration (FDA), an indication of the region's capabilities and maturity;
· is home to a substantial support system - health care institutions, precision machining capabilities, critical mass and industry support groups - upon which medical device firms rely;
· offers potential new markets for the area's machining and tooling firms, historically engaged in contract aerospace manufacturing; and
· has a lower cost of living than other metros with which it competes, including the Boston and California bastions.
But the I-91 corridor is losing its medical device manufacturing jobs in absolute terms (down 30 percent in eight years), despite an increase (15 percent) in the actual number of companies. Though the area shares this trend with U.S. manufacturing generally, it runs counter to the upward job trend in nearby Greater Boston, which experienced 50 percent medical device manufacturing job growth during the same period, the report notes. The region also suffers from a lack of aggressive, concerted promotion of the area's medical device research and manufacturing assets in national or regional venues, forum speakers said.
Invited to comment on the report's findings were Keith Parent, chief executive officer of Court Square Data Group in Springfield, Mass.; Bruce Carlson, chief of staff for the University of Connecticut Health Center in Farmington, Conn.; and Neil Yeston, M.D., vice president for academic affairs and associate director of surgical critical care services at Hartford Hospital.
Dotting Southern New England's I-91 Corridor are at least 5,000 workers employed at more than 310 medical device firms (1), according to the study, prepared by Connecticut's Biomedical Engineering Alliance and Consortium (BEACON). "These medical device companies are bolstered by a strong network of hospitals, affiliated health care organizations, world-class colleges and research universities, venture capital, and a broad base of long-standing metalworking, electronics, and plastics manufacturers," said Dr. Joseph Bronzino, president of BEACON and a professor at Trinity College. These firms also incur less risk than certain other manufacturing ventures, he said, and therefore require lower levels of R&D funding.
Douglas G. Fisher, director of economic and business development for Northeast Utilities, which sponsored the study, said many areas of the United States are looking at the medical device industry as a future growth engine. "This interstate region's medical device and supply industry is an unmined mother lode of research and production jobs that, if nurtured and promoted, can be an economic boon for the region," he said. The report's purpose was to determine facts about the industry and inform marketing efforts, he said. Recommendations, he added, should flow from follow-up meetings.
According to the assessment, medical devices and supplies are a $75-billion industry that has defied national manufacturing declines by growing at an annual rate of 9 percent for the past decade. Numerous industry studies project strong top-line growth.
Medical devices are generally defined as instruments, appliances and systems used to diagnose diseases and treat patients. These devices range from catheters and surgical swabs to x-ray machines and cardiac pacemakers. The industry is different than but often inspired by advances in biotechnology, which involves biological processes, drugs and genetic engineering.
The study outlines a growth scenario fed by the "graying of America," the rapid pace of scientific and technological breakthroughs, the population's demand for ever-better and safer health care products, and consumer preference for U.S.-made devices because of the FDA's stringent quality control and approval process.
Paul Tangredi, director of Business Planning and Development for NU's Western Massachusetts Electric Co., said the industry has particular significance to the I-91 corridor because it "offers traditional manufacturers in metalworking, electronics and plastics the chance to diversify and capture new markets, and opens up new opportunities for technical assistance and worker retraining."
According to the report, the interstate corridor has the qualities essential for the development, retention and attraction of medical device companies and suppliers. They include:
· top ranked teaching hospitals, medical schools, and physicians whose view, testing and utilization of the latest life-saving products are a vital part of the industry's product development efforts;
· advanced medical, life science, engineering and polymer research at the universities of Connecticut and Massachusetts and at Yale University, which attract nearly $400 million in National Institutes of Health (NIH) funding each year, plus close proximity to higher education hubs in Boston and New York City;
· a highly-educated and inventive population already comfortable with a medical industry environment, with more than 8,000 workers employed in various segments of the health care industry; the I-91 corridor also plays host to some 150,000 students at 43 colleges and universities; and
· precision-skilled metalworking, plastics, electronics and other manufacturers that supply the aerospace industry and are capable of serving the medical device industry.
According to Dun & Bradstreet, there are 36,000 New Englanders employed in the production of medical devices, with an estimated 28,000 more workers in the supply chain (taking into account U.S. Department of Commerce regional multipliers). Boston is the epicenter of the medical device and supply industry in New England, but the I-91 corridor has the second greatest level of industry employment and 15 percent of the jobs.
The corridor assessment points out that a substantial share of the industry is scattered throughout New England in Providence, Rhode Island; Worcester, Lowell and southeastern Massachusetts; eastern New Hampshire; western Connecticut; and southeastern Maine.
The report was compiled by Loren Walker, a subject expert and technical writer from Massachusetts, retained by BEACON, a trade association of medical, industrial, and academic institutions from throughout New England involved in biomedical engineering. Input was also provided by the BioEconomic and Technology Alliance (BETA), which fosters growth and development of the bioscience and bioengineering industries as part of the Regional Technology Corporation of Western Massachusetts.
The report was underwritten by Northeast Utilities (Connecticut Light & Power, Western Massachusetts Electric Co. and Yankee Gas Services); and the MetroHartford Alliance, which serves as the business association and economic development arm of the Greater Hartford region.
1. Many more workers are employed by the area's additional 162 FDA-registered firms and contract manufacturers. Specific employment data for these businesses was not available.
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Region Fertile Ground For New Industry
By STACY WONG
Courant Staff Writer
June 11 2004
The medical device industry employs 5,200 people in more than 300 companies between Springfield and New Haven, and it has the potential to grow into a regional economic engine with the right support, according to a report to be released today.
The findings compiled for the Hartford-based Biomedical Engineering Alliance and Consortium will be used to stimulate debate on supporting the industry at the state level and to market the I-91 corridor from Massachusetts through Connecticut at an industry trade show in New York next week.
The report cites assets the corridor offers medical device makers, including access to the underlying academic, research, medical, financial and precision manufacturing resources.
"The infrastructure is there," said Joseph Bronzino, president of the engineering alliance and professor of applied science at Trinity College. "The medical institutions are there. The researchers are there. The skilled workers are there. We can make a premier center for development of medical devices."
But the industry at the moment exists largely without support from the state of Connecticut, and without outside recognition of the strength of the industry in the region, he said.
Just how, and if, the industry should be developed further is scheduled to be discussed today by academic and industry officials during a panel at Rensselaer in Hartford.
According to the report, which was paid for by Northeast Utilities, the counties surrounding the Springfield-Hartford-New Haven metro areas already comprise one of the top 50 regions for medical device development in the country.
Medical devices include instruments, appliances and systems used to diagnose diseases and treat patients.
They range from catheters and surgical swabs to x-ray machines and cardiac pacemakers.
One of the largest device makers in the region, Norwalk-based U.S. Surgical, employs 2,250 people in Connecticut. About 1,900 of them work at the company's North Haven manufacturing plant, a spokeswoman said.
Most of Connecticut's 18,000 life science employees work in the pharmaceutical industry discovering or developing new drugs.
While the life science employees make up just a small part of the state's 1.6 million workers, the jobs tend to pay well and are less likely to be transferred to Asia, said Fairfield University economics professor Edward Deak.
And it's also important for anyone hoping to build the industry to think regionally, said Matthew Nemerson, president of the Connecticut Technology Council.
He said supporting players such as precision manufacturing companies should be included in any discussions.
Bronzino said developing the medical device industry would diversify the client base for many of these companies, which are heavily concentrated in defense and aerospace.
Bristol-based Eastern Plastics Inc., for example, makes precision-machined plastic components for medical devices and is nearing completion on its third expansion in eight years.
Co-owner Scott Brackett said his company has had steady work, and at times he has hired machinists laid off from other industries, including aerospace.
"A good machinist catches on pretty quickly," he said.
David Driver, an economic development official at Northeast Utilities who tries to get businesses to move to New England, said he and other officials intend to use the report's data as a promotional tool next week at the Medical Device & Manufacturing East industry show in Manhattan.
But Joseph Brennan, vice president of governmental affairs for the Connecticut Business and Industry Association, said the key question is how should the industry grow?
"If it's only through state subsidies it's difficult," he said, adding that the state should maintain strong colleges and universities, as well as tax and governmental policies that favor growth.
Bruce Carlson, the special assistant to UConn president Philip Austin for economic development and chief of staff at the UConn Health Center, said the university in recent years has improved the climate for translating research into economic activity.
It has beefed up its technology transfer staff, built business incubator space at the Storrs and Farmington campuses and already has licensing agreements in place with medical device companies such as Boston Scientific.
Carlson said he was struck by the industry's strength in the region.
"It's like this even without any real coordination, so the question is, how much better could it be if we tried to coordinate this industry?"
Copyright 2004, Hartford Courant
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Medical Device Field Growing
By STACY WONG
Courant Staff Writer
June 17 2004
NEW YORK -- In the air-conditioned vastness of the Jacob Javits convention center, wedged between a laboratory services company and a silicone products maker, the Team New England booth beckons with bright autumn colors, free wiffle balls and a polo-shirted staff.
It is just past 10 a.m. on Tuesday, the first day of the big Medical Device and Manufacturing East exposition, where thousands have gathered this week from all over the world to investigate the latest in high-tech, medical-related manufacturing.
The field has been growing, propelled by the need to treat an aging population. And at a time when other manufacturing sectors have stalled or shrunk, this growth has not gone unnoticed by Team New England's funders, which include the Metro Hartford Alliance and Northeast Utilities.
They want to drum up interest in what they call the "Knowledge Corridor" - the path of I-91 from Springfield south to New Haven - to bring new companies and jobs to the region.
The trade show is their first coordinated effort to make the region more visible to the medical device industry, and on the first day there was interest in their message, even from companies outside the United States.
Industry executives said part of the reason is that New England is already well known as one of three major areas for developing medical devices, the other two being California and Minnesota.
A sub-region such as the I-91 corridor can capitalize on New England's existing reputation by becoming more visible at the trade shows, they said.
"It's a good chance to socialize and meet face to face," said Krister Hornfeldt, who came to the show from Sweden, where he is research and development section manager at Radi Medical Systems, a maker of cardiac devices.
Hornfeldt stopped at the Team New England booth because he had visited Boston during a previous business trip for his company.
He ended up talking with Ralph A. Carlson, vice president of marketing for the Western Massachusetts Economic Development Council, who made a point of talking up New England's proximity to Europe.
Carlson also swiped Hornfeldt's badge through a small machine that read the bar code on it and automatically recorded Hornfeldt's contact information for future use. The Team New England staff also kept printouts of the contacts made throughout the day with handwritten notes on each about following up.
Some of the visitors to the booth did not want to give their names because they were job hunting, such as one young engineer from New Jersey who designs orthopedic devices.
"I would love to live in New England," he said, stopping to admire the blazing autumn foliage design stripped across the top of the Team New England display.
In the competition for companies and workers, Team New England officials chose to emphasize the region's academic institutions and hospitals, as well as its availability of precision manufacturers.
By contrast, other places marketing to the medical device industry, such as Oklahoma, Texas, Florida, and even southeastern Massachusetts, emphasized low costs or lifestyle advantages.
Many of these places want to attract contract manufacturers or distribution and packaging companies, as opposed to the research and development operations that need substantial intellectual firepower.
For those in the economic development field, snagging even one company can mean success if it brings in significant jobs and tax revenue.
"It's like selling lemonade for $1,000 a glass. One sale, and you've had a good summer," said Richard Clements, manager of economic development at Oklahoma Gas & Electric Corp., which had a booth around the corner from Team New England.
The medical device industry encompasses more than 130,000 products used in hospitals, clinics, physician offices and other sites to diagnose or treat medical conditions.
The $79 billion industry grew by more than 6 percent in each of the past two years, according to the market analysis firm RAK Associates and AdvaMed, formally the Health Industry Manufacturers Association.
A recent report paid for by NU and the Metro Hartford Alliance found that the I-91 corridor already had a base of more than 300 medical device companies employing more than 5,000 people.
Though making up only a small percentage of the region's workforce, the industry could become an important driver of the economy in central Massachusetts and Connecticut, officials said.
The industry could also give an important lift to manufacturing companies suffering a slowdown in aerospace, automotive or general commercial work, they said.
Brian J. Malone, executive director of the Palestine (Texas) Economic Development Corp., said marketing a region and sharing costs gives lesser-known communities better name recognition.
Wearing a red, white and blue shirt made to look like the flag of Texas, Malone was pushing the advantages of the I-45 Corridor Alliance in a booth across the aisle from Team New England.
He said his small community of 18,000 between Dallas and Houston split the $4,800 cost of the booth with neighboring Mexia and Fairfield. The shared expense lets the communities market the I-45 corridor to more people.
"We want to be aggressive so our cities have a future," Malone said.
It is a sentiment echoed in New England.
"This is a longstanding industry, but it really hasn't been given a lot of attention," said Doug Fisher, director of economic and business development at NU.
"Yet it has given a lot to our economy, and it has the potential to save [manufacturing] jobs. ...Anything that lends itself to bringing stability to our regional economy, we're interested in," he said.
Copyright 2004, Hartford Courant
See related article, "New England's Medical Device Manufacturing Industry: Beyond Boston" by Loren Walker, June 2004
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Originally published in New England Developments, Summer 2004 -- http://www.nu.com/develop/newsletters.asp
New England's Medical Device Manufacturing Industry: Beyond Boston
By Loren Walker
Long recognized as a bastion of health care services excellence, New England is also a hotbed for the medical device industry. In a recently released study of America's health care economy, the Milken Institute reported that New England has the highest concentration of medical device and supply manufacturing employment of any region in the nation.
New England's world-class universities, state-of-the-art medical centers, and high-precision manufacturing facilities are ideally suited to meet the research, testing and production needs of the modern medical device industry. However, New England's medical device leadership position will not go unchallenged. Other regions are vying for a share of this ascending sector. Through effective interstate collaboration, New England can leverage its vast biomedical research capabilities and industrial resources to ensure retention of medical device manufacturing jobs and foster the industry's growth.
The United States is the global leader of the medical device and medical technology industry, which has been growing at an average annual rate of 9% for the past ten years. 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 U.S. trade accounts each year. Additionally, this tech-intensive industry requires an educated workforce, which means that medical device employees earn more on average than their counterparts in other manufacturing sectors.
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 FDA-approval process is internationally recognized as the "gold standard" of product quality and effectiveness.
Medical device manufacturing businesses are distributed throughout the country. However, 45% the industry's total workforce is based in California and in the northeastern U.S. from Maryland to Maine. The eleven Mid-Atlantic and New England states, which cover an area comparable to California, employ approximately 28% of the nation's medical device and supply manufacturing industry workers. The hub of New England's medical device industry is the eastern Massachusetts' I-495 Beltway of metro areas with Boston at its center.
Although it accounts for less than 6% of Massachusetts' total manufacturing workforce, the medical device industry is an important contributor to the state's economy, according to a report produced for the Massachusetts Medical Device Industry Council (MassMEDIC). The report concluded that the industry has a "ripple effect" on the state's economy beyond the employment and earnings of medical-device workers, primarily because of the important linkages that exist between medical device manufacturers and other industry sectors. To produce medical devices, companies purchase components from Original Equipment Manufacturer suppliers and outsource jobs to a variety of service providers. As a result of these linkages with other sectors, 79 additional jobs are associated with every hundred medical-device jobs and for every dollar of medical device industry output, 22 cents comes from materials and services purchased from other industries in the state. An estimated 36,000 jobs in Massachusetts are related directly or indirectly to medical device manufacturing, according to the MassMEDIC report.
The epicenter of New England's medical device industry is the greater Boston metro area, but that is only half the story. Beyond Boston, other New England metro areas support over 50% of the region's approximately 36,000 medical device manufacturing jobs. If the economic ripple effect from medical device manufacturing observed in Massachusetts is consistent throughout the region then as many as 65,000 New Englanders may be employed directly or indirectly in the production of medical devices.
Medical Device Manufacturing Employment Distribution in New England* Eastern Massachusetts I-495 Beltway, Greater Boston 47% I-91 Corridor, New Haven, Hartford, Springfield 15% Rhode Island & Southeastern Massachusetts 10% Eastern New Hampshire & Southerastern Maine 9% Southeastern Connecticut 7% Worcester, Massachusetts Metro Area 5% Other areas 7%
*Source: Dun & Bradstreet Marketplace Data, 2004.
The design, development and production of modern medical devices requires inputs from researchers, physicians, engineers and precision manufacturers of metal, plastic and electronic components. In addition to the I-495 Beltway, other parts of New England with a combination of teaching hospitals, research-driven universities and precision manufacturing capabilities, are uniquely positioned to increase their share of the burgeoning medical device industry. Southern New England's I-91 Corridor is one such area.
The I-91 Corridor extending from the Pioneer Valley of western Massachusetts to the Connecticut coastline has great medical device industry growth potential. The New Haven, Hartford and Springfield metro areas support a large research community and nationally-ranked medical centers that provide accessible venues for device testing and evaluation. Additionally, many of the corridor'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.
The combined strengths and potential of New England's metro areas suggest a bright future for the region's medical device manufacturing industry. Nationally, the industry is predicted to experience strong and sustained growth over the coming years and decades, creating more good jobs at above-average wages. Because this growth potential has not gone undetected by other states and regions, New England faces stiff competition for medical device industry jobs.
Through interstate collaboration that effectively leverages the region's strengths and resources, New England can maintain its leadership position in medical device manufacturing and medical technology development. In this way, the region will benefit economically and people around the world will benefit from the life-saving devices produced here.
- Dun & Bradstreet Marketplace Database. 2004.
- Clayton-Matthews & Loveland. 2004. Medical Devices: Supporting the Massachusetts Economy. The Massachusetts Medical Device Industry Council.
- Health Care Industry Market Update: Medical Devices & Supplies. December, 2003. Centers for Medicare and Medicaid Services.
- DeVol & Koepp. 2003. America's Health Care Economy: A Policy Brief from the Milken Institute.
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