The biggest element that’s lagging in Michigan’s medical device industry?
That’s the most immediate and common answer among the state’s industry players.
“There are some areas where we have strengths, and there are some holes we need to fill to begin to be viewed as a device-centric part of the nation,” said Tim Fischell, M.D., CEO of Kalamazoo-based renal denervation startup Ablative Solutions Inc. and a prolific medical device inventor.
Finding managers to run all these new companies has gotten a little easier now that some legacy has been built. What’s needed is more — more successful ventures and more experienced people coming out of them — that, in turn, will begin to create the critical mass to attract talent from afar.
“There’s not a lot of senior management talent in life sciences in the region with a strong portfolio of success,” said Mark Olesnavage, managing director at Grand Rapids venture capital firm Hopen Life Sciences LLC. “This is no deep, dark secret in the state. We need to find ways to attract that kind of talent that wants to reside here.”
The bloom of startups in recent years is a good start, but not quite enough to attract heavyweights, said Mina Patel Sooch, general partner at Kalamazoo-based Apjohn Ventures LLC. One particular startup might be compelling enough to grab an experienced CEO’s interest, but that person is going to want a backup plan in case the first job doesn’t work out.
The 40 or so startups Michigan has seen arise in the last five years aren’t enough because they’re not all working on the same things, she said. Before committing to a move to another state to run a kidney-related medical device company, an exec wants to know there is a handful of other kidney-related medical device companies to jump to should the first one fail.
“We did struggle to find a CEO” for one of Apjohn’s portfolio companies, CytoPherx Inc. in Ann Arbor, Sooch said. But they were able to find executives in the Midwest, she said, and didn’t have to go all the way to San Diego.
The search for a CEO of a current EDF portfolio company, TransCorp Spine Inc. in Byron Center, came up dry when looking within the state, so a CEO in California was hired on a commuting basis.
“The hope was we could find somebody in Stryker. Well, Stryker’s spine division is in New Jersey,” said Mike DeVries, managing director of Ann Arbor-based EDF Ventures.
And taking from the pool of auto engineers isn’t always easy.
The FDA and ISO rules and reporting requirements of a medical device operation are a challenge for the uninitiated.
“We can train, but it takes time to change over from an automotive mindset to a medical device mindset,” said Chris Williams, president of Medbio Inc., a Grand Rapids-based contract injection molding company serving medical device companies. “It’s always a bit of a gamble.”
One of the aims of the newly formed Michigan Medical Device Consortium is to help funnel experienced managers from large companies like Stryker and Terumo into positions at startups. Some of these managers have hit a career ceiling and are looking for a chance to make an impact at a promising new company.
Talent was to blame when IntraLase Corp. moved to Irvine, Calif.
A spinoff from the University of Michigan, it was funded by in-state investors EDF Ventures and the UM student-run Wolverine Fund when it went public in 2004. But by then the company already had moved closer to the mass of talent in the industry.
“It moved to where all ophthalmology companies exist, which is Irvine, Calif.,” said DeVries.
Tim Petersen, managing director at Arboretum Ventures Inc. in Ann Arbor, said the talent situation has gotten better in the years since IntraLase left. IntraLase, if it were launched today in Southeast Michigan, would likely be able to stay because there’s more capital and talent than there was 15 years ago, he said.
The talent pool in Michigan has gotten bigger, however, as companies have begun to create a cluster effect, said Stephen Rapundalo, president and CEO of MichBio, an Ann Arbor-based trade association.
“There’s definitely more room for growth in that regard, but compared to 10 years ago, we’ve come a long, long way,” he said.
Oct. 13, 2013 | Crain’s Detroit Business – New Michigan Deal Supplement