Railroad yard in front of Minneapolis’s Gold Medal Flour mill, ca. 1940.
Credit: Corbis Images
Minneapolis became a brainbelt for the life sciences, medical devices in particular, through a combination of factors. In the late 1940s, in response to data that showed a rising incidence of heart disease in the United States, the National Institutes of Health (NIH) boosted funding for research into heart health and related medical procedures. The grants created a cottage industry of medical-device developers in Minneapolis, as well as other areas in the country, and also encouraged the actions of pioneering, even swashbuckling, surgeons such as Lillehei.
Norman Dann was a venture capitalist in Minneapolis in the 1950s and watched as surgeons became “king of the hill,” as he put it. These entrepreneurial doctors secured research grants, had little bureaucracy to contend with, were infatuated with medical technology, and spent lavishly on new devices that offered the latest features and capabilities. Their spending, in turn, fueled the rise of the small, emerging medical-device makers that invested much of their profits in further research.
The creation of the Minneapolis brainbelt also involved the participation of several innovative, world-class hospitals in the area—including the Mayo Clinic—as well as a key educational institution, the University of Minnesota, and its surgeons and students.
The local culture—which can be described as one of “careful risk taking”—also proved to be well suited to the development of complex, innovative, life-and-death products such as medical devices. This attitude stems partly from the work ethic of immigrants from Northern Europe who were talented tinkerers and self-reliant inventors, parsimonious with their resources. They preferred to fix things themselves before calling in a repairman or buying a replacement.
A Company as Connector and Catalyst of the Ecosystem
Although Lillehei was an important player in the early Minneapolis story, it is the talent pool associated with a single company, Medtronic, that can be seen as the essential connector.
Medtronic was founded in a garage in 1949 by Earl Bakken, who created the first pacemaker prototype for Lillehei, in partnership with his brother-in-law, to manufacture the pacemaker. Medtronic grew to become the global leader in medical devices and implants, but its most important and profitable product is still the pacemaker. The devices have gotten far smaller and more reliable than the gadget cobbled together by Bakken from Lillehei’s specifications, but they are still expensive, selling in the range of $10,000–$25,000, not including hospital costs and surgeon’s fees. About 1.5 million pacemakers are sold annually and Medtronic produces 40 percent of them. In fact, the United States has a virtual monopoly on making pacemakers.7 Medtronic also leverages its expertise in pacemakers to produce other medical devices, including stents, defibrillators, brain and spine stimulators, and insulin pumps.8
As Medtronic grew into a global manufacturing leader, it spurred the creation of a great deal of new knowledge. When we asked Ellie Pidot, vice president of strategy at Medtronic, about the term “University of Medtronic”—which some say rivals or even surpasses the contribution of the University of Minnesota—she declined to rank the two, saying simply, “There is more innovation in cardiac R&D within a 50-mile radius of Minneapolis than anywhere else in the world.”9
The two institutions work in constant collaboration with one another, and the flow of innovation goes both ways. For example, an insulin pump developed at the University of Minnesota was commercialized by Medtronic. It is just one of the many technologies that have emerged from UMN’s Medical Devices Center, which is an invention “mill,” whose scientists have generated more than 125 patents. The university also teaches entrepreneurship and is a sponsor of the Minnesota Cup, the largest statewide new-venture competition in the nation, which has attracted more than 8,000 aspiring entrepreneurs since 2005.10
The collaboration of Medtronic with UMN and other players is an extremely successful business generator. In 2000, there were 450 life-sciences companies (predominantly focused on medical devices) around Minneapolis; by 2014, that number had risen to 2,500. St. Jude, the world’s largest heart-valve company, and Cardiac Pacemakers11 were founded by former Medtronic researchers. The founders of several other companies making stents and implants—including CVRX, EV312 and SurModics—began their careers at the local pacemaker producers. Because there is so much activity in medical devices in Minneapolis, start-ups can draw on its huge talent pool, gain access to venture capital, and get feedback from academics, entrepreneurs, and other mentors with deep knowledge and long track records in the industry.
Acquisitions of small R&D firms with innovative teams are a key part of Medtronic’s brainsharing strategy, as is the case for many other life-science companies. In 2014, for example, Medtronic purchased the Dutch start-up Sapiens SBS (Steering Brain Stimulation), which specializes in neuro-modulation, the targeted delivery of electrical pulses and drugs to specific sites in the nervous system. It is also developing next-generation deep brain stimulation with as many as forty individual contact points. Jan Keltjens, Sapiens CEO, explained that getting financing had become a problem, so it made sense to get help from Medtronic to take its products over the “finish line.”13
Large legacy organizations make such acquisitions mainly because they can’t match the innovative spirit of small research firms and they rely on their acquisitions to do much of the innovative research, usually with better results and lower costs. With his early experience still fresh in his mind, Norman Dann, now in his eighties, expressed a view that is held by many others, that “the best R&D is done by a small band of researchers without hierarchy who can correct mistakes rapidly and work in a culture that understands that mistakes are unavoidable in research.”14 Large organizations tend to be siloed, slow, and hierarchical, places where researchers get punished for being wrong rather than for being late. Medtronic’s CEO, Omar Ishrak, an alumnus of GE Healthcare, believes that the yield on the company’s R&D was too low and, even as he acquired smaller firms, he fired several thousand in-house researchers.15 However, when it comes to organizing huge clinical trials and building support systems, big companies like Medtronic have overwhelming advantages—of expertise, reach, and resources.
In addition to the contributions made by Medtronic and the University of Minnesota, specialized research and training institutes, patent lawyers, regulatory specialists, venture capitalists, and the local government have also played important roles in forming “a whole culture,” said Dale Wahlstrom, who was a vice president at Medtronic and then became CEO of a Minneapolis trade association called LifeScience Alley.16 Public-private partnerships are of particular importance. “When I was working as a scientist in the private sector,” Wahlstrom told us, “I had no idea what a public-private partnership could do.” But he has come to see that it’s crucial for companies and universities to “band together” to develop new ideas and reach out to the regulators. “I am a believer, now,” he said, echoing what we discovered about other brainbelts around the world.17
Portland: A Philanthropist as Enabling Connector
Portland, unlike Minneapolis, did go through a rustbelt period. The state’s economy was once driven by forestry, aluminum smelting, shipbuilding, and automotive assembly, which were gradually replaced by apparel and technology companies. An extensive network of suppliers and distributors grew up around Tektronix, a manufacturer of test and measuring equipment. In 1974, Intel set up a chip fabrication plant in Portland to supplement its operations in California, when the US government required the company to establish a backup facility in an area not vulnerable to earthquake. Under the leadership of Governor Barbara Roberts, who served from 1991 to 1995, Oregon attracted other high-tech companies by offering tax breaks in exchange for setting up plants according to mutually agreed-upon goals.
Sometimes it takes an outsider to bring parties together, even when they have been operating in proximity to each other for many years. That was the ca
se in Portland, where researchers at a leading university and businesspeople at semiconductor giant Intel had long been working in the same area, without collaborating. It was Phil Knight, cofounder and chairman of Nike, icon of the sportswear industry and another leading company in the region, who served as a catalyst in bringing people out of their silos. An important moment in that effort came on a September evening in 2013, when Knight took the stage at a fund-raising event honoring Brian Druker, director and star researcher of the Knight Cancer Institute, who famously said: “There is no question that we can defeat cancer. What it requires is knowledge. When we understand what is broken, we can fix it.” Druker might have added that the required knowledge had two prerequisites: deep funding pockets and tight collaboration between the worlds of bioscience and high-tech manufacturing.
Phil Knight, founder of Nike and the Knight Cancer Institute.
Credit: Paul Morigi
The Knight Institute had been named in Knight’s honor five years earlier when he made a $100 million gift to the institute, which is a part of OHSU, and focuses on early stage cancer research. That earlier gift proved to be a watershed moment for the Portland area: the increased funding put the Knight Institute on the map as one of the top cancer research centers in the United States, and it brought the Portland life-sciences research community into closer collaboration with crucial partners outside the field of medical research. To be successful, OHSU needed the kind of smart manufacturing that Intel, the chip maker, and FEI, a company that makes electron-beam microscopes, were engaged in. In turn, Intel was eager to collaborate because it was seeking to develop the next generation of chips that are critical for genomics research and needed to work with large sets of patient data to aid in chip development. FEI saw an opportunity to refine its microscopes so that cancer researchers could better observe cells and their interaction with drugs.
In part thanks to Knight’s 2008 gift, the biotech sector in Oregon did not suffer a decline during the recession; in fact, employment in the industry grew by 31 percent during the past decade.18 However, even with Portland’s success in life sciences during that difficult period, the region faced new financial challenges when, in 2010, the National Cancer Institute (part of NIH) began to reduce the size and quantity of its grants.
So, on that evening in 2013, Knight upped his commitment to the Portland area and challenged others to do the same. He pledged $500 million to the Knight Institute, if a matching amount could be raised over the next two years, a goal it was able to reach in June 2015.
Although Knight’s gift is substantial, Portland’s life- sciences brainbelt is still relatively small in comparison to areas like Boston and San Diego, but it is teeming with ambition and growing fast. Today, bioscience in the state is a $4 billion industry with a workforce of 15,000 people, 40 percent of whom work in medical instruments and 26 percent in the creation of drugs, making Oregon one of the leading states in biomedical manufacturing in the country.19
The Oregon Health & Science University grew and transformed as Portland’s industrial landscape changed. OHSU was established in 1974 as the University of Oregon Health Sciences Center, then assimilated several state programs—including dentistry, medicine, and nursing—into its offerings. In 2001, the institution merged with the Oregon Graduate Institute of Science and Technology. Today, OHSU employs 2,500 faculty, enrolls 3,000 students, and has a $350 million annual research budget, and its three on-campus hospitals manage nearly 1 million patient visits annually.20 OHSU is the sole National Cancer Institute–designated cancer center between San Francisco and Seattle and is recognized as one of the leading medical university research centers in the United States.
The growth of the high-tech industry, especially the presence of Intel, combined with the steady development of OHSU, put in place two essential elements needed to create the Portland life-sciences brainbelt: smart manufacturing and powerful academics. However, until the turn of the millennium, the technology community and the life- sciences players had not cohered into a “whole culture” of the kind Dale Wahlstrom talked about in Minneapolis. In 2001, the state of Oregon sought to close the gap between the two by strengthening the life-sciences ecosystem. A $200 million bond issue called Oregon Opportunity was proposed that would provide funds to develop a new biomedical research facility and recruit talent, and it was overwhelmingly approved by the voters. Local philanthropists contributed an additional $375 million to the pot.
The Oregon Opportunity initiative resulted in an explosion of activity and achievement. Not one but three new research centers and an incubator space were established, researchers brought in over $400 million in grants, and more than fifty biomedical companies started up and others moved in. Genentech produces two cancer drugs, Avastin and Herceptin, in a $400 million plant in the Portland suburb of Hillsboro. Biotronik, a Germany-based maker of the first wireless pacemakers,21 operates a state-of-the-art plant near Lake Oswego, south of Portland. Sam Medical Products was founded by Sam Scheinberg, a battlefield trauma surgeon who developed a new generation of lightweight splints to replace the bulky, ill-fitting models he had used during the Vietnam War. Medolac Laboratories is a human milk bank, which collects breast milk from an extensive network of women and distributes it to nourish prematurely born babies.
Portland is also rapidly moving into remote medical monitoring, which requires multidisciplinary brainsharing among software engineers and medical researchers, and the coming together of wireless technologies with distributed computing power. We visited the offices of a company operating in this sector, ReelDx, located in a former rope factory that is now home to more than sixty start-ups. Bill Kelly, CEO of ReelDx, is a Harvard Business School graduate and serial entrepreneur22 who founded the company with David Spiro, chief of pediatric emergency medicine at OHSU. Their purpose was to document patient treatment through smartphones or GoPro cameras worn by paramedics. Although they conceived their product as a teaching tool for medical students, they soon recognized its potential for use in ambulances and clinical trials, and in monitoring incapacitated and elderly patients. The plan is to enable the sharing of video through a secure, cloud-based platform that is compliant with HIPAA (the Health Insurance Portability and Accountability Act) regulations and to help make health care less costly and more efficient.
A Big Data Trade: The OHSU-Intel Collaboration
Perhaps the most emblematic initiative of Portland’s academic-manufacturing brainsharing is the one between OHSU and Intel. Mary Stenzel-Poore,23 senior associate dean for research at the OHSU School of Medicine, helped get the program off the ground. She is a person who describes complex problems as “delicious” and regards the reduction in grants from the NIH as a positive development. Why? Because it forced the sharing of brainpower. As we saw in so many other brainbelts, it is often necessity that forces the emergence of team science, cross-disciplinary collaboration, and knowledge sharing. “People will only partner when they can’t get there alone,” Stenzel-Poore told us. But these relationships-of-necessity can be a lot of “hard work,” she said, and they knew they needed a connector, a “matchmaker who could make the magic happen.”
That’s what they found in Joe Gray, chair of OHSU’s Department of Biomedical Engineering, a scientist with over eighty patents to his name and a background in engineering and nuclear physics. As Gray described it, OHSU’s goal was to create a “Google map for cancer” that would combine a microscopic view of the billions of mutations in cancer cells with a big-picture analysis of the entire cancer system.24 Data visualization on this scale requires a tremendous amount of computing power, which is why Gray reached out to Intel and connected with Stephen Pawlowski, then Intel’s CTO.25 Pawlowski saw that the collaboration would combine Intel’s strength in “developing energy-efficient, extreme scale computing solutions” with OHSU’s ability to visualize and understand complex biological information.26 Today, the Intel-OHSU program brings together computer scientists, biologists, and experts on biophysics, bi
o-informatics, and genomics, and they work side by side daily. Twenty Intel engineers are embedded on the OHSU campus.
Both partners see this kind of brainpower sharing as the way forward. For Intel, health care is a key future market, one it wants to lead by creating the next generation of high-powered chips. The goal is to be able to analyze an individual’s DNA in a period of hours, rather than weeks, and to do so for tens of dollars, rather than thousands. OHSU provides the patient data that Intel needs and, in return, gains the ability to treat its patients more effectively. To realize the potential of personalized medicine, Gray says, it is necessary to collect data on millions of patients to identify cells that are similar to those of the patient you’re treating and to understand the outcome of different kinds of treatments. Only by working together can the researchers gain the insight they need to better help patients and the chip makers gain the expertise they require to produce more capable chips for health-care applications.
Joe Gray, on the right, chair of OHSU’s Department of Biomedical Engineering.
Credit: Oregon Health & Science University
Collaborations of this kind have helped scientists in the Portland area see that the ability to transform research into marketable products is essential for securing corporate funding. (There are still traces of the old academia-business divide in Portland and other brainbelts.) But the complexity of the projects and the regulatory hurdles that must be overcome in the health-care industry can make for a slow transition from research to product. Still, according to Andrew Watson, director of OHSU’s Office of Technology Transfer, OHSU has granted eighty-four licenses to for-profit companies to commercialize research conducted by OHSU scientists and technologists and has spun off start-ups at a rate of three or four per year. (Not bad as a start when compared to longtime champions Stanford or MIT, where as many as twenty start-ups are spun off annually.) Most of OHSU’s start-ups are located in Oregon, so they contribute to the region’s economic development and also bring OHSU as much as $3 million in license fees annually.27
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