Life Sciences in the Midwest – December 2010

In the November edition of “Life Sciences in the Midwest”, we laid a little bit of a foundation for this recurring post. This month, I thought I would share a few thoughts about some of the major life science players in Indiana. You might have read the Inside Indiana Business article about 2010 being a record year for life sciences in Indiana. I also wrote a brief editorial on this topic.

Let me share my opinions about the Hoosier life science players.

Major Indiana Life Science Companies

Cook Medical – Their claim to being the largest private medical device company in the world appears to be undisputed. I spent a significant part of my career with this company (and may have a slight bias). Cook continues to grow, focusing on niche product areas, especially in areas of Aortic Intervention and Peripheral Intervention. One thing I always appreciate and admire about Cook is their primary focus on doing what’s right for patient care.

Lilly – The layoffs are happening in volumes. Several friends and acquaintances whom I thought would be protected are no longer employed by the Indiana’s pharmaceutical giant. From my perspective, Lilly is caught in a struggle just like many other big pharma companies; it’s perceived that the days of blockbuster drugs are nearly gone. Many pharmaceutical companies are fighting to figure out their niche–many moving towards biotech and personal medicine. Lilly has long been regarded as the figurehead and leader of life sciences in Indiana. How long this will continue (maybe this has already ended) seems less about if and more about when.

Roche Diagnostics – I don’t have much to report from Roche. They started massive layoffs a couple years ago. The trend seems to be continuing; I received a call from an acquaintance today who was just let go. Roche is still a major player in in vitro diagnostics (IVD).

Boston Scientific – While headquarters are in the Boston area, the company does have a large presence in Spencer, IN. Boston Scientific is still reeling from their acquisition of Guidant from several years ago. Soon after the acquisition, FDA came down very hard on the company for poor business practices. Only recently did Boston Scientific satisfactorily address warning letter issues with FDA.

Beckman Coulter – Company headquarters are in Southern California but Beckman Coulter does have an Indianapolis presence.  Local news reports in recent months have indicated Beckman Coulter Indy is growing and will be adding jobs. However, the news for the corporation has not been good this year. The company has been dealing with some major product recalls and resignation of their CEO. Also, recent news reports indicate Beckman Coulter is for sale.

Zimmer – The largest orthopedic company (I think) in Warsaw, which is dubbed the “Orthopedic Capital of the World” (see blurbs about DePuy and Biomet below). Orthopedic regulations throughout the world have evolved affecting Zimmer and other orthopedic companies throughout the world.

DePuy – Also a large orthopedic company (division of Johnson&Johnson) headquartered in Warsaw, IN. Like Zimmer, DePuy has been adjusting to a more heavily regulated environment.

Biomet – Again, an orthopedic company headquartered in Warsaw, IN. A few years ago, the Department of Justice was involved in reforming orthopedic industry. Biomet might have been one of the hardest hit of the major orthopedic companies. The company went from being publicly held to being acquired by private equity and is privately held.

Suros Surgical – Now a division of Hologic as a result of acquisition a few years ago. Hologic, headquartered in the Boston area, has acquired many companies to build a company focused on women’s health issues. Suros is a true Indiana life science success story, going from start-up to multi-million dollar purchase in a short period of time. Many throughout the state are waiting for the “next Suros” to happen (see blurbs on SonarMed and NICO below).

Potential Indiana Life Science Juggernauts

SonarMed – The core technology of SonarMed comes from Purdue University. The company has been very successful in getting funding (primarily in the form of grants) in a very difficult time for life science start-ups. SonarMed received FDA 510(k) clearance earlier this year. They appear to be in the process of establishing market opportunities for the technology. The company has received quite a bit of positive press in recent months.

NICO Corporation – Founded by the leadership team that led Suros Surgical, leveraging platform technology from Suros for neurological applications. The founders started NICO with a very savvy business strategy; much of the ground work, development, and regulatory clearances were achieved years ago during Suros days. NICO is quietly doing their thing, following a growth model strikingly similar to their success with Suros.

Indiana Start-Ups

There are still numerous life science start-ups throughout Indiana. There is a good mix of medical device, pharmaceutical, and biotech. The biggest obstacle plaguing most of these early stage companies is lack of funding. Indiana has always been conservative when it comes to start-up investments. In these economic times, Indiana is even more conservative than ever. It will be interesting to see which of these life science start-ups survives tough economic times.

Conclusion

The life science regulatory environment across the board and the world has become significantly more challenging for all companies in the industry. Many large life science companies in Indiana and across the world are under more scrutiny from FDA and other regulatory agencies.

The days of large life science companies seem to be numbered. Many of the big companies seem to be constantly laying off hundreds, sometimes thousands, of employees. The emergence of outsourcing is a growing phenomenon that many companies, large and small, are relying on to get new products to market.

Today is a very tough time for life science start-ups. Investment dollars are very tight in Indiana and across the country. While many in Indiana claim stake to being a leader in life sciences, the current reality is that places like Silicon Valley, San Diego, Boston, Seattle, and Austin are much more actively investing in life science start-ups.