Medical Biosciences
Medical device companies hunt for a `critical mass'
Sacramento Business Journal
Sacramento's clout as a healthcare leader, the two local universities and an abundance of available land in the region have led to the quiet growth of a related industry: medical technology.
Medical technology has gotten far less press than the burgeoning high-technology market dominated by computer firms, even though some of the med-tech players also have ties to Silicon Valley and the Bay Area.
Some are strictly involved in research and development, with their potential still looming in the future. A few have products for sale overseas, or winding their way through the regulatory pipeline. Others pull in annual revenue in the millions.
"We are trying to make a concerted effort to recruit and develop a biosciences industry base in this region," said Al Gianini, executive director of the Sacramento Area Commerce and Trade Organization.
While the numbers have increased in recent years, Sacramento has yet to tip the scale with enough med-tech firms in town to serve as a magnet for others.
"We certainly have for food processing and electronics, but not yet to that level for medical and bioscience companies," Gianini said. "What that magic number is and when we'll hit it, we're not sure."
There's considerable cross-over between biotech, high-tech, bioscience, biopharmaceutical and medical technology firms, generating confusion about how to separate them in a meaningful way. Here, we've designated medical technology as firms that develop or manufacture products for the healthcare industry.
By conservative estimates, more than 20 local medical-technology firms employ at least 1,600 people in the four-county Sacramento area. They range in size from four to 450 employees. There are some new firms, but most have been around for a while. The Business Journal found 27 such companies in its research for this special supplement.
Other observers put the numbers higher. The California Healthcare Institute has identified 117 firms in the four-county Sacramento area. The La Jolla-based group was formed in 1993 to represent the interests of companies in biotechnology, medical devices and pharmaceuticals, and academic research organizations that foster this business.
"Sacramento doesn't have what we consider a significant cluster of biomedical firms, like Orange County (359), San Diego (379) or Silicon Valley (662), but there certainly are some significant players," said Molly Ingraham, a spokeswoman for the institute.
The area has had more luck attracting manufacturing firms than those with research and development expertise. That's due to a lack of experienced, highly skilled workers, according to a study prepared for SACTO by the Real Estate & Land Use Institute at California State University Sacramento.
Most recently, Affymetrix Inc. of Santa Clara announced plans to build a manufacturing plant in West Sacramento that could eventually employ up to 200 workers. The company makes "biochips" coated with strands of DNA that can be used to detect and analyze disease.
In another coup, Bindley Western Drug Co., a division of one of the nation's largest wholesale pharmaceutical distributors, is setting up shop in Woodland. The company has leased 47,000 square feet of distribution space in an effort to close the gap in its West Coast division, which has centers in San Dimas in Southern California and in Portland, Ore.
On the flip side, some of the area's up-and-coming companies will disappear into mergers just as they begin to reach their potential.
Ophthalmic Imaging Systems Inc. agreed to a friendly takeover by a Southern California medical laser firm in February, leaving the future of its 42 local employees uncertain. The company makes a device that helps eye surgeons detect disease. It was acquired by Irvine-based Premier Laser System Inc. in a deal worth at least $5.4 million.
And JRH Biosciences, a Kansas biotech firm started in a Woodland garage in 1987, closed down in late 1997 despite acceptance of a $100,000 incentive from Woodland in 1993 to stay in town. The company manufactures liquid nutrients that are used for cell growth in the production of vaccines and other medicines by biotech firms. JRH spent $4 million on a new plant, but downturns in the market prompted a company decision to consolidate operations in Pennsylvania last year.
Home-grown talent: The largest player in the Sacramento region is Dade MicroScan Inc., a West Sacramento outpost of Dade Behring Inc. It employs 450 and produces instruments and "disposables" used in microbiological detection of infectious diseases.
An example of a local outfit that hit the big time, Dade's roots date back to a student project at California State University Sacramento performed under the direction of former professor Dr. Richard Wertz.
A pathologist, Wertz started a local firm dubbed MicroScan in the 1970s to promote technology that identifies bacteria and determines its sensitivity to certain microbiotics. He sold it in 1982 for $4 million. Its current Frankfurt, Germany-based parent generates annual sales of $1.5 billion.
The biomedical engineering program at Sac State that generated Wertz was also responsible for such innovations as the Smeloff heart value developed by retired Sutter cardiologist Edward Smeloff, and other entrepreneurs. But the program faces an uncertain future and could be nixed by autumn because of a lack of funding and administrative support. (See story, this page.)
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