Introduction written by the publisher of MEDS (Medical Electronic Device Solutions), John Koon
Minnesota has long been known as a major hub of life science and medical device activities. Many top companies such as GE Healthcare, St. Jude and Medtronic are in the area. One outstanding organization called LifeScience Alley & BioBusiness Alliance of Minnesota is instrumental in helping the community to advance in medical science and technologies. We had the opportunity to interview Dale Wahlstrom, President and CEO of the organization, to learn about his vision.
Publisher: What is the vision of the LifeScience Alley & BioBusiness Alliance of Minnesota?
Our vision is: To grow and secure Minnesota’s position as a global leader in the life sciences.
Our mission is: To establish and lead a strategic approach to improve the business environment for life science companies and organizations through dedicated support to our members, and leading programs and projects to develop new industries, accelerate the evolution of existing industries, and to implement capabilities required to ensure a healthy business climate and a stronger community.
Publisher: What are the biggest challenges the healthcare industry is facing today? Additionally, what opportunities and challenges are developers facing today?
- Regulatory Uncertainty: The uncertainty of regulatory approvals has caused the industry to hesitate to invest in new technology. This is draining the pipeline of new products and slowing the advancement of new therapies. Not knowing when or if an answer on the approval of a new product will come has been the dominant issue causing venture capital investment in the industry to drop to much less than half of what is was a few years ago. Opportunities: The FDA has accepted that regulatory uncertainty is an issue that is negatively affecting the industry. As a result, the agency has adopted an improvement strategy based on “Regulatory Science” and engaging industry in trying to improve performance and efficiency of the product development, testing and approval process. To support this change, public / private partnerships such as the Medical Device Innovation Consortium are beginning to form and work toward making improvements.
- Health Care Reform: Health care reform has changed the market dynamics and created more uncertainty for the industry. Most significantly, the 2.3% excise tax has created an especially difficult situation. The fact that the tax is on revenue versus profit has shifted many of our fledgling companies from profitability back into an unprofitable situation, and forced them to attempt to borrow money or take on further investment to survive. We have had members of LifeScience Alley report that their effective tax rate has gone as high as 71%. Additionally, the extreme pressure on cost reduction has removed any opportunity to recover these additional costs through price increases. The result is a reduction in the attractiveness of the industry to investors, and the industry is feeling this lack of interest. Opportunities: Health care IT has exploded with opportunity as the effort continues to reduce costs and take advantage of the vast amount of information that is available within the health care system. Additionally, prevention and advanced diagnostic techniques are expanding and morphing to distribute systems that align with the efforts to bring the most cost-effective systems to patient care. Finally, the market is ripe for new technologies that drive cost down while enhancing the quality of care. This is a good time to invest.
- Shift in Funding Mechanisms: There is a significant reduction of money going into Venture Capital Investment. Since VC money is at the heart of the med tech industry, this reduction has caused the industry to contract and to shift its focus outside the U.S. as alternative mechanisms for funding are pursued. Opportunities: There is an increased level of angel investment that is finding its way into new ideas. This is both a blessing and a curse since follow-on funding is often not available. There also appears to be an increase in the level of strategic investment. Several of the start-ups we are supporting are going straight from angel to strategic investors, and on occasion this seems to be a reasonable approach for funding new concepts.
Publisher: What is the LifeScience Alley & BioBusiness Alliance of Minnesota doing to help developers to overcome these challenges and capture new opportunities?
We are doing a number of things to try to help the situation. Some are targeted to improve the business environment, others to help increase the skills of individuals or organizations to increase the odds of success. For example:
- Medical Device Innovation Consortium (MDIC): The MDIC is a formal public / private partnership between LSA and the FDA with the sole purpose of re-establishing trust between the FDA and the private sector companies. The MDIC has been created to provide a safe place where scientists and engineers from the private sector, and the same from the FDA, can come together in partnership to understand and remove issues that affect the design and approval of new medical products. The MDIC was proposed, developed and incubated by LSA in partnership with the FDA. Later this spring or early summer, the MDIC will spin out from LSA and will become a stand-alone national organization with governance provided by a national steering committee.
- “The Innovation Engine”: Even though Minnesota is the most densely concentrated med tech community per capita in the world, there is a need to re-catalyze innovation within our community. The BioBusiness Alliance has spent several years developing what has become branded the Innovation Engine to restart entrepreneurship in our community by providing access to CEO mentorship, education programming, alternative financing mechanisms, and broad scale support to any company or technology struggling to become commercialized. The results have been quite stunning and success is gaining momentum.
- We have established international connections that allow for market expansion and expanded international funding and product distribution business opportunities.
- We provide over 100 training programs per year that increase the skills of over 5000 people who work in the industry every year.
- We have hired a high-level Sr. Executive to work regional, national and international policy issues. This has resulted already in helping to keep markets open in Korea, and in increasing the awareness of issues in D.C. and St. Paul.
Publisher: How many members do you have and what do they expect to gain for being a member?
We currently have approximately 685 member organizations that employ nearly 300,000 people. Our members expect us to provide world-class advocacy, skills training and access to networks of people that can help them eliminate their problems. In the past years they have come to expect us to lead large complex projects that are addressing the removal of issues that are affecting the industry (such as the MDIC).
Publisher: How does the LifeScience Alley & BioBusiness Alliance of Minnesota cooperate with other medical electronic device companies in North America and internationally?
We are very involved with organizations such as AdvaMed, BIO and MDMA. We are in daily conversation with these organizations. We also have formal relationships with other state-based organizations such as MichBio, CHI and others. On occasion we partner to bring events to legislators in D.C., provide training programs via webcast etc. We partner on legislative fly-ins to D.C…usually coordinated by one of the national organizations. Internationally we have both formal and informal relationships with our sister organizations in Canada, Sweden, Norway, China (many), Japan, Thailand, Germany, Saudi Arabia and Israel, and we are adding more in 2013.
President and CEO
LifeScience Alley & BioBusiness Alliance of Minnesota
Dale Wahlstrom is President/CEO for LifeScience Alley (LSA) and BioBusiness Alliance of Minnesota (BBAM). LSA is the largest state-based life sciences trade association in the U.S., and BBAM is a nonprofit organization to advance bioscience-based businesses in Minnesota.
Prior to this, Dale held high-level positions at Medtronic for 24 years. He serves on several advisory and governance boards. 1988: Medtronic Star of Excellence Award; 1997: Wallin Leadership Award; 2007: Bioscience Success Story Award; 2010 and 2011: selected by Twin Cities Business Magazine as one of “200 Minnesotans You Should Know.” He has eleven patents in medical device technology.
Dale has an M.S. in Manufacturing Systems Engineering from the University of St. Thomas, and a B.S. in Engineering and Technology from St. Cloud State University.
About the organization:
LifeScience Alley, a Minnesota-based trade association serving over 680 member organizations, provides access to industry leaders, education and networking opportunities, insights into current trends, regulations, research and emerging technologies, and the power of a legislative voice.
Our member list includes Medtronic, St. Jude Medical, Mayo Clinic, Boston Scientific, Upsher-Smith Laboratories, Cargill, and the University of Minnesota, as well as start-ups and firms that specialize in professional services for life science organizations.