Road to Recovery

Medical technology:

Sacramento area could become a medical tech hub

By Bobby Caina Calvan
Published May 17, 2010

Here's a nugget of hope, pulled out of a grim economy: Sacramento is carving out a niche in the promising field of medical technology.

Local entrepreneurs are using brainpower to create tools to treat disease, which in turn could create high-paying jobs.

There are at least 54 medical device firms headquartered in a nine-county area centered on the capital. An additional 19 companies have a substantial presence, according to MedStart, a nascent effort by the Sacramento Area Regional Technology Alliance to turn the region into a medical technology hub.

"We were amazed at how big of an existing industry we already had here," said Cary Adams, who helped launch MedStart two years ago.

From new stem cell therapies to tiny, umbrella-like devices that scoop stroke-causing clots out of blood vessels, local firms are part of a lucrative $123 billion national industry.

In 2006, the U.S. medical technology industry employed nearly 360,000 workers, generating $21.5 billion in salaries and producing $123 billion worth of products, according to the most recent data available from the Advanced Medical Technology Association.

The wave of aging baby boomers is driving growth in the overall health care segment, of which medical technology is a part. Health care is expected to account for nearly one in every five dollars spent in this country by 2020.

"We see growth across the board. I don't see much of a decline ... medical technology has already proven its ability to sustain itself and its ability to grow," said Patrick Driscoll, the founder of MedMarket Diligence, an Orange County market analysis firm.

California is the hub for much the industry's development. Whether the Sacramento area can become a major player in the industry is an open question.

But local boosters say the sector is off to good start here.

By the end of 2011, MedStart hopes to help add 10 more medical technology firms to the local roster, with 100 new jobs. In three years, the goal is an additional 15 companies and 400 more jobs.

MedStart is mainly sponsored by local businesses, which so far this year have contributed about $60,000. In addition, SARTA will use part of a $250,000 grant from the Sacramento Employment and Training Agency to support the program.

SARTA leaders say the effort, if successful, could pay big dividends for the region.

"If you put in a new big-box store, it will create jobs -- but it's not the high-paying jobs that a new medical technology company would bring," said Laura Good, SARTA's director of programs and operations.

Medical technology jobs in the capital area pay an average of $83,177 a year, according to a study produced last year by the state community college system. Having more of them could help insulate the Sacramento area against future recessions.

In 2008, more than 1,700 people were employed in the region's medical technology sector, according to figures collected by MedStart. That's still a tiny slice of the Sacramento economy. In comparison, hospitals and the rest of the health sector employ about 120,000 people in the core capital region, according to the Sacramento Metro Chamber of Commerce.

Most medical technology companies here employ fewer than 20 people, but several have built a larger presence. San Diego-based Volcano Corp., for instance, has about 500 workers at its Rancho Cordova manufacturing plant.

The products made and marketed by Volcano, such as intravenous ultrasound machines, may be hard to fathom. What's easier to understand are the economic benefits the company brings to the region: high-paying jobs and a more diverse stable of businesses.

Earlier this year, MedStart sponsored a coming-out party of sorts -- a showcase that drew 300 people and 50 exhibitors to California State University, Sacramento.

"Awareness is one of the things we're focusing on, to raise the profile" of medical technology, said Meg Arnold, SARTA's chief executive officer. "We need to be better at talking about what we have and what we can offer," she said, "because success breeds success."

That's particularly important for fledgling firms in search of investors.

With their proximity to Silicon Valley, Sacramento startups could be well-positioned to get noticed by venture capitalists.

"Sacramento has been embraced in the elastic limits of Silicon Valley," said Vikram Janardhan, chief executive officer of Insera Therapeutics, a five-person Natomas operation that began more than two years ago to develop its device to remove blood clots.

The recession, however, has caused some investors to pull back. As a result, Janardhan is relying on a $150,000 grant from the National Science Foundation and investments from friends and family. He says his company has spent about $1 million to date.

It takes years of research, development and studies -- and government approval by the Food and Drug Administration -- before a new medical product can be put on the market.

The process takes patience, Janardhan said. "A lot of what we're doing is very inventive. We're not making trinkets or toys for kids. This is medical technology."

In the Sacramento region, much of the necessary research and development backbone is already in place. The University of California, Davis, is a major hub of research -- much of it with potential health applications, including work in stem cell technologies, autism and telemedicine.

The Sutter Institute for Medical Research, meanwhile, supports Sutter Health's extensive network of hospitals across Northern California.

Still, there are obstacles.

"The ideas that come out of the universities aren't being commercialized in the region, and we don't want them to go elsewhere," said Good, SARTA's programs director.

To address this issue, MedStart is working with UC Davis to establish a medical technology commercialization clinic, funded by a $600,000 grant from the National Science Foundation. It will help would-be entrepreneurs translate their ideas into money-making ventures.

The state community college system is watching the industry to see if its local campuses need to respond with new training programs, said Theresa Milan, director for the Centers of Excellence, Northern California Region, which covers 15 campuses.

"The growth has surprised me," said Milan, who thinks the region has the potential to become a true hub for medical technology.

"If you asked me three years ago, I would have said no," Milan said. "But now? I do, I really do."

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