In Dresden, the focus has been on molecular biology. The driving force behind the work in that city has been Kai Simons, a Finnish-born doctor and biologist who spent much of his career as group leader at the European Molecular Biology Laboratory in Heidelberg.44 In the late 1990s, he collaborated with several colleagues to develop a plan for a new molecular-cell biology and genetics center that would be associated with the Max Planck Institutes, an independent, nonprofit organization based in Munich. A key characteristic of the new facility was that it should be open to other universities, research institutes, and for-profit companies—in short, a brainsharing organization.
Possible locations were debated. Simons and his colleagues decided against Heidelberg, because they doubted the brainsharing concept would work in that traditional city. They knew about Saxony’s interest in life sciences, however, and considered Dresden as a possible site. The problem, however, was the area had no tradition of research in molecular biology.45 They overcame their reservations because the commitment to sharing knowledge was so high on the agenda in Dresden and because the state of Saxony was willing to invest €100 million in the project—a strong incentive. The Max Planck Institute of Molecular Cell Biology and Genetics, Dresden46 opened its doors in 1998, near the University of Dresden’s hospital, on the banks of the river Elbe. In 2004, another life-sciences innovation center, the Bioinnovationszentrum,47 moved close by, and, in 2009, BioSaxony located its offices in the same building. The concentration of life-sciences activities in the neighborhood has now become so great, people refer to it as Biopolis.
The Max Planck Institute in Dresden acts as an accelerator of new brainsharing life-sciences initiatives. Physicists, biologists, and physicians work closely together there and their research is coordinated by colleagues from four institutions: the Technical University, the Faculty of Medicine, the University Hospital Carl Gustav Carus, and the Helmholtz Institute. In 2005, the interdisciplinary research initiative OncoRay was started at the institute, to promote personalized cancer treatment using radiation therapy.48 OncoRay was financially supported by the state of Saxony, the federal government in Berlin, and the EU in Brussels.
In 2006, brainsharing got another boost when the interdisciplinary network CRTD (Center for Regenerative Therapies) was founded in Dresden.49 Although it is administered by the Technical University, it operates independently, collaborating closely with a number of other research institutes, including other Max Planck Institutes (there are many of them, each focusing on different disciplines and studies) and the Max Bergmann Center for Biomaterials.50 In addition, a dozen companies—including Novartis, Amgen, Qiagen, and Boehringer—are involved in the project.
The development of the life sciences in Saxony continues to this day. In 2014, a new facility was opened on the grounds of the University Hospital to house a laser-driven particle accelerator. With this advanced equipment, treatments can be accurately targeted on cancer cells, causing little or no damage to healthy tissue.
But in the past couple of years, André Hofmann, of BioSaxony, has seen there are still many more beauties to be awakened, so he started the Bioconnection to showcase start-ups to investors and other companies.51 At the first meeting of the Bioconnection, sixty researchers made their pitches—limited to ten minutes—to the audience in a casual environment. There were also workshops in which experienced entrepreneurs shared their business experience with scientists, as well as a fair at which companies presented their work.
Not all of the action in the region is taking place through BioSaxony or in the Biopolis area. Wilhelm Zörgiebel, a highly successful entrepreneur, founded Biotype, in close collaboration with doctors from the University Hospital Dresden.52 They developed a test that can determine DNA in a single day, a sharp reduction from the four weeks it took before their discovery. In addition to his own entrepreneurial efforts, Zörgiebel transformed an old furniture factory located near the international airport in an area north of Dresden into a life-sciences incubator. Now, fifty companies have been established there, employing more than four hundred people. Two of the start-ups are Zörgiebel’s own. Qualitype creates software to improve forensic research and Rotop creates products for nuclear medicine diagnostics.53
Hofmann says he is satisfied with what has been achieved in the region, although there is still much to be done so that the world recognizes the Saxony region as an important life-sciences brainbelt. Before 2000, there was no life- sciences activity in the region. Within fifteen years, one hundred life-sciences companies—in biotech and pharma—have established themselves there. And that is a great distinction of this area: it was not a rustbelt area that had to come back from a great decline. It was, instead, a beauty that was created from scratch.
Oulu: From Wireless Talk to Connected Health
In the late 1990s, when Ericsson, Sweden’s mobile phone leader (a company we also discussed in Chapter 3), and Nokia, Finland’s wunderkind, were about to announce their quarterly earnings reports, the scene on the editorial floor of the Swedish financial publication Dagens Industri looked more like the inside of a sports pub toward the end of a soccer game than a newspaper office: the place buzzed with excitement as everybody waited to hear the final score. But in this case, it was not about which team had scored the most goals, but which of the two companies had sold the most mobile phones. Ten years later, Samsung and Apple had replaced the Scandinavian companies as the global leaders in mobile phones, and the Oulu region, where Nokia was based, had to look for a new focus, which it eventually found in wireless health-care facilities and devices.
Harri Posti, director of the Centre for Wireless Communications at the University of Oulu, began his career at Nokia immediately after his graduation from the University of Oulu in 1989. Nokia centered its research efforts in Oulu because the Finnish government provided incentives for it to launch a cable company there. Nokia’s success kick-started Finland’s rapid transition from traditional industries like paper and pulp to high tech. When Posti joined, Nokia was a young company—most of its engineers were in their twenties and its managers in their thirties—that had boldly moved into the nascent mobile phone market.54 At its peak, the company employed 15,000 IT people in Oulu. It was an early brainbelt, but then, when it missed the boat in smartphones, it fell into a rustbelt-like decline, affecting the entire ecosystem and causing great anxiety about Oulu’s future. Like Lund-Malmö and the Research Triangle, it went through a double transition: the center of agriculture and traditional manufacturing went into decline and reemerged as a technology brainbelt, which ran into trouble and made another transition to a different brainbelt activity.
Good engineers are not the same as bold entrepreneurs. So, when Nokia reluctantly laid off employees, it not only gave them a two-year severance package but also provided seed capital to some of its engineers to help them set up new businesses. “The downfall of Nokia is definitely a mixed blessing,” Posti explained. “Several thousand jobs disappeared from Oulu, but a lot of the expertise in base stations and radio frequency remained.”55
Traditional Finnish perseverance transformed the fallout of Nokia’s implosion into many start-ups in IT, medical technology, and clean technology. Nokia, bolstered with solid cash flow from its patents (which it did not sell to Microsoft), rebranded itself as Nokia Networks, focusing on the intelligent networks that form the backbone of the Internet of Things.
Today, Oulu is once again of interest to the editors at Dagens Industri. Located in northern Finland just below Lapland and the Arctic Circle, Oulu’s cobblestone streets, bicycle paths, and traditional wooden houses—juxtaposed with modern Finnish architecture—belie the city’s transformation from a sleepy rural town historically known for producing sailing ships and tar for the British Royal Navy into a high-tech hub that hosts world-class research centers.
The University of Oulu houses 17,000 students and 5,000 faculty in a group of low-rise buildings in the forested outskirts of town located next to a business/technology p
ark for start-ups and close to Nokia’s R&D Center. Large numbers of foreign students from all over the world now find their way to Oulu, filling the streets and crowding local hangouts.
Nokia and the University of Oulu, in collaboration with a forward-looking city administration, created a modern version of the ancient Greek Acropolis—the nucleus and citadel of the capital city of Athens—but this one a haven for start-ups.
Technopolis comprises two business parks, which provide space for the sharing of brainpower between the University of Oulu’s science and technology researchers and the practical skills of the faculty of the University of Applied Sciences.
There are other types of support for start-ups, including a vocational training center, the VTT State Technical Research Centre (a public nonprofit institution that helps companies to apply the newest technologies), the Institute for Management and Technological Training, and a business incubator, Oulu Innovation Ltd.
There is considerable activity in Oulu, and much of it is in the life sciences. WellTech Oulu, an institute within the University of Oulu, coordinates the research conducted in the departments of science, medicine, and technology. It also works closely with companies to stimulate and improve education.56 The region boasts a major academic hospital and four medical centers.
The Oulu region now produces thirty to fifty start-ups in the life-sciences sector every year, and Finland’s medical-device industry achieved growth as high as 20 percent in 2012, outpacing the global average of 5 percent. This exceptional growth rate was achieved partly because the process of European and FDA approval for medical devices proved to be less of a hindrance than expected. In the past, it could take as long as seven years to gain approval for a new device, but one recent product, a heart monitor, was approved in less than a year.
Oulu, like other brainbelts, has built on its legacy: expertise in wireless technology that was gained during its Nokia days. It then moved beyond the original applications of that knowledge to apply it to a new activity, life sciences. Tuula Palmen, director of BusinessOulu’s bio-health cluster, agreed that Nokia’s implosion unleashed innovation in the medical technology field. “Our aim is now to marry advances in medicine with cutting-edge mobile technology,” she told us.57
The members of Oulu’s life-sciences brainbelt recognize the importance of personalized health-care delivery, and their approach is to give patients as much responsibility for their own health as possible. The start-up iSTOC has created software that reads diagnostic strips that continuously monitor vital information that the user’s smartphone instantly analyzes. Assisted by real-time medical coaching transmitted through the smartphone, patients (or nurses, if present) can perform most routine tests on the spot, which iSTOC claims can reduce overall costs by up to 70 percent.58 Odosoft has developed a fetal monitor that, together with a smartphone app, allows a pregnant mother to monitor her unborn baby’s heart rate, displaying the information in a graph of each week of the pregnancy. Spektitor monitors the heart rate of adult patients for emergency rooms or other triage situations, and Polar Electro produces heart monitors contained in bracelets, watches, and smartphones. Otometri CEO Manna Hannula, motivated by the experience his children had with recurring ear infections, worked closely with the Oulu University Hospital and the University of Applied Sciences to develop an ear-infection detector for home use. Finnish doctors now use his device extensively to minimize the use of antibiotics in treating ear infections, as they are unnecessary in 80 percent of cases.
To learn more about how such companies go about the arduous process of developing ideas for life-sciences products into production-ready goods, we visited Optomed, a start-up that designs and manufactures a hand-held retinal imaging device called the Smartscope™. Seppo Kopsala, the company’s thirty-five-year-old founder, is as soft-spoken and understated as he is serious and determined. Together with Markku Broas, a physician at the University of Lapland, he wanted to create a device that could replace the expensive, heavy desktop imagers that were then standard. (His approach is reminiscent of Lillehei and his pacemaker.) With its remarkable power, portability, and versatility, the Smartscope™ is to existing imagers what the smartphone is to the desktop computer. China and India have expressed interest in Optomed’s scanner, given the importance of remote diagnostics for their massive (and underdeveloped) rural areas. An initial lack of interest from Western doctors worried investors, but many of them have since come around and the Smartscope™ has been increasingly accepted.
Kopsala’s story is similar to that of many start-up founders in Oulu. He began his career at MyOrigo, a Finnish company that developed an early touchscreen and user interface for smartphones. Samsung and Apple passed on the technology (Steve Jobs said, “We don’t want to get involved in mobile phones”), and MyOrigo eventually went bankrupt. Kopsala learned that even with a working prototype of a good idea, the real work has only started. This realization served him well when he founded Optomed, as he worked out several technical kinks and nearly went bankrupt more than once.
Optomed’s Smartscope retinal imaging device.
Credit: Optomed
In addition to personal qualities—an ability to think differently, optimism, and persistence—the entrepreneur needs government assistance, marketing partners, and, very important, money. Kopsala thought he could develop a prototype in two years with a €1 million investment and half that amount from Tekes, a Finnish agency that finances innovation, but it ended up taking five years and €12 million to create a prototype that was credible to potential customers and partners, and a total of eight years to become a financially viable business.
During those years, Kopsala spent as much as 70 percent of his time talking to potential investors. In October 2010, his colleagues completed a prototype with an outstanding optical design and, with the last of his money, Kopsala traveled to the United States to meet with Volk, a well-regarded lens manufacturing company based in Cleveland, which had been considering Optomed as a supplier. Kopsala joined Volk’s CEO and CTO on a journey across the United States, visiting clinics, doing demonstrations for ophthalmologists and optometrists, and calling on university professors to talk up his product. “I went through the wringer,” Kopsala remembered, but Volk was convinced.59 Volk acquired exclusive distribution rights for the device in North and South America, and its English parent company, Halma Plc, invested €2 million to bring the product to market.
Optomed launched its first viable, if imperfect, commercial product in the spring of 2011, and it gained acceptance in the market, particularly from pediatric ophthalmologists, who liked using the handheld product with children because they have difficulty sitting still before the traditional retinal scanner. It also proved popular with doctors who perform outreach screening for eye diseases in villages in developing countries and with customers in emerging markets. The Aravind Eye Care System, based in India, performs more cataract surgeries than any company in the world. Seeking to become the “McDonald’s of eye surgery,” Aravind uses Optomed’s handheld scanners to streamline its surgeries into an assembly line–like process that reduces the duration of the average procedure to two minutes (it usually takes forty minutes) and cuts costs by 99 percent.
Today, Optomed’s growth in sales and presence—along with its success in attracting partners in Europe, the United States (Volk), Europe (Zeiss), and Japan (Canon)—gives Kopsala confidence that the company has a bright future and could disrupt the life-sciences market. It also introduced him to the concept of smart manufacturing. Although he originally assumed that production would take place in China or Thailand, he started manufacturing in Austria and will soon bring it to Oulu. Why? “The plant needs to be close to the engineers who designed the Smartscope™,” he said. “You need a lot of engineering support and also must be able to get to market fast.”
Peril and Potential
Although there is great excitement about the developments in the field of medical devices, wearables in particular, there is
also plenty of concern and uncertainty. How will all that data be handled? What about payment through government and insurance plans?
Despite concerns, the need for innovation in life sciences and medical devices is urgent and the opportunities enormous. Today, the United States and Northern Europe are world leaders in the medical device industry. Although uncomplicated medical products such as rubber gloves, thermometers, and syringes can be made in countries throughout the world, Western companies are dominant in the creation of complex, high-value medical devices such as pacemakers, prostheses, implants, and surgical robots. In life sciences, perhaps more than any other industry, smart trumps cheap.
The life-sciences industry has a reputation for employing creative thinkers, paying good salaries, and driving GDP growth, exports, employment, and innovation. Over 400,000 people work in the medical-device industry in the United States alone, mostly in well-paid, high-tech jobs (despite considerable outsourcing of assembly to Mexico, Ireland, Costa Rica, China, and Puerto Rico). Two-thirds of the world’s forty-six largest medical device makers are based in the United States, with over 6,500 companies in the industry.60 The United States has 137 medical schools, and nearly four hundred major teaching hospitals are important partners for industry innovation.61 Europe has a similarly impressive record in the field. More than 575,000 people in Europe are employed in the life-sciences sector, as compared to 520,000 in the United States. There are more than 25,000 companies involved in life-sciences work, 95 percent of which are small or medium-sized, and most of which are based in Germany. Yearly turnover of these European companies is €100 billion. Considering the total global market, the United States has about a 39 percent share; Europe, 28 percent; and Japan, 10 percent.62
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