It’s no secret that health care is a major player in southwestern Pennsylvania’s economy. Downtown commuters get a reminder each morning when they see the letters of the region’s largest employer, UPMC, mounted near the top of the city’s tallest building.
Less apparent is the burgeoning success of smaller health care-related businesses in the region. Individually, only a few of the more established have familiar names such as Respironics or Medrad. Collectively, these businesses could represent a major potential for growth.
Since 2002, more than 100 life sciences companies — those in the business of making and marketing medical devices, pharmaceuticals or involved in other biotechnology ventures — have announced plans to add more than 5,000 jobs locally, according to the Pittsburgh Regional Alliance.
“They are a major factor, if something of a quiet industry. But there are some amazing things going on that people are not aware of,” said Brian Kennedy, vice president of government relations for the Pittsburgh Technology Council.
He cites Zoll Medical (http://lifevest.zoll.com/) in O’Hara, which makes a vest, called LifeVest, that comes equipped with a defibrillator that can prevent sudden cardiac death. It reported a doubling of its profits last year with $70.7 million in revenue. The company, which employs about 225 people locally, anticipates an additional 60 percent growth this year and plans to move to larger facilities in RIDC Park.
Another is Knopp Neurosciences (http://www.knoppneurosciences.com/) on the South Side, which last year signed an $80 million licensing agreement with Biogen Idec to market a drug to treat amyotrophic lateral sclerosis, or Lou Gehrig’s disease. In October, the company announced it had formed a new parent entity, Knopp Biosciences LLC, to signal its plans to become a more broadly integrated biopharmaceutical company.
Yet another is Precision Therapeutics Inc. (http://www.precisiontherapeutics.com/), also of the South Side, which develops technology to help physicians decide the best treatment for individual cancer patients. In 2008, it received $43 million in venture capital funding as it develops a diagnostic test for that purpose.
The sector “is small in terms of number of jobs,” said Harold D. Miller, president of Future Strategies LLC, a Downtown management and policy consulting firm, “but I think it’s a higher-wage sector and, in terms of the potential job growth, it’s certainly above average, particularly as we try to move toward a better technological solution to health care.”
The community doesn’t hear much about these companies, Mr. Kennedy said, because “a lot of companies are in the very early stages and they don’t want to publicize what they are working on or what gives them a competitive edge.”
“Once they start hitting it big, that all changes,” he said.
Hitting it big is the goal, as Respironics in Murrysville (http://www.healthcare.philips.com/main/homehealth/respironics.wpd) did when it was acquired by Royal Philips Electronics in 2007 for $5.2 billion. About the same time, Marshall-based Renal Solutions Inc. (http://www.renalsolutionsinc.com/) was sold to the German firm Fresenius Medical Care for about $200 million.
So, who’s going to be the next Respironics or Renal Solutions?
There’s a good chance it will be someone John Manzetti knows.
Mr. Manzetti is CEO of the Pittsburgh Life Sciences Greenhouse, which has been helping life sciences companies get off the ground since 2003. This is a greenhouse that has borne many fruits, starting with Renal Solutions.
One blossoming now is ClearCount Medical Solutions (http://clearcount.com/), a Ross business that uses radio frequency chips to locate and count sponges and towels used in surgery, so none are left behind when the patient is sewn back up.
ClearCount CEO David Palmer, formerly chief operating officer at Pittsburgh Life Sciences Greenhouse, said ClearCount had seen a fourfold increase in sales between 2009 and 2010, “and we look to double them again in the coming year.”
The life sciences greenhouse currently has 138 investments totaling $16.6 million in 61 companies, which in turn has leveraged nearly $500 million in additional capital. Mr. Manzetti said historically it takes five to seven years before the startups they invest in can stand on their own and, since the recession began, that has lengthened to seven to 10 years.
But there are some exciting possibilities in the pipeline. Cardiorobotics, a partnership with Carnegie Mellon University and the University of Pittsburgh, is developing snake robot technology for use in surgeries. Its most promising project, cardioARM, is currently in clinical trials in Germany.
He mentioned two others in clinical trials — Cohera Medical (http://www.coheramedical.com/) on the North Shore, which landed $16.1 million in financing in 2008 for its work developing the surgical adhesive TissuGlu, and ALung (http://www.alung.com/) on the South Side, which has developed a respiratory dialysis machine that may keep patients off ventilators.
ALung received $14 million from Shadyside capital venture firm Eagle Ventures Inc. last year and was listed as one of the best new medical technologies of 2010 by medGadget, an Internet journal covering emerging medical technologies.
Marshall-based Medrad (http://www.medrad.com), now a part of Bayer, sells vascular injection systems and other medical technologies now used in nearly every U.S. hospital. It recently won its second Malcolm Baldridge Award, bestowed by the U.S. Department of Commerce, for excellence in manufacturing. Medrad is one of only five companies nationwide to win it twice.
Gary Bucciarelli, Medrad’s senior vice president for emerging business, said the company uses the rigorous Baldridge evaluation process to make itself better. “It’s about continuous improvement.”
Another factor in their favor, company officials say, is a sense of cooperation. “There is a bond among the smaller companies and it’s a very tight-knit network here in Pittsburgh,” said Mr. Palmer. “I think everyone tries to help one another when they can.”
“These companies feed off each other,” said Mr. Manzetti.
“In many regards, Pittsburgh is already recognized as a center of excellence in life sciences,” said Mr. Kennedy.
“We’re not having any problem getting active investors to come in and look at companies,” he said. “We are a magnet for the type of talent that companies need to grow.”