encouraging growth: ohio sees boom in bioscience industry

Within the past decade, Ohio has become an economic powerhouse in the bioscience industry, a new report by the statewide advocacy group BioOhio reveals.
 
Across Ohio, the bioscience industry employs 191,303 workers (direct, indirect and induced) and generates $4.58 billion in payroll, according to the BioOhio study. That's a 16.5 percent increase in jobs since 2000 during a time of tepid economic growth.

“In 2011, Ohio’s bioscience sector included 1,281 unique firms operating 1,743 locations, an increase of 441 (33.9 percent) since 2000,” explains John Lewis, Vice President and Chief Operating Officer of BioOhio. He credits Ohio’s world-class universities, medical centers, state support, and position as a top 10 manufacturing state as drivers of the bioscience industry.
 
Lewis cites state and angel investment support, workforce development and collaboration among partnering facilities as a formula for the state's ongoing success. For example, new developments surrounding “Ohio’s Medical Corridor” link medical institutions across the state to help accelerate clinical trials.
 
These partnerships have garnered national attention. In 2011, Ohio-based institutions and companies received $710.9 million from the National Institutes of Health to help spur startup companies. These investments have helped Ohio increase its credibility within the industry -- last year, the state obtained 685 bioscience-related patents and was eighth nationally in bio-related products.
 
In 2011 alone, Ohio companies attracted nearly $2.4 billion in funding from multiple different sources, including venture capital firms, acquisitions, angel investors, federal grants, and state initiatives like The Ohio Third Frontier.
 
Not only has the state committed funding, but its academic institutions have also made big investments. “Of the 450 Ohio post-secondary educational institutions, 105 awarded bioscience-related degrees or certificates,” boasts Lewis. “The number of bioscience grads was 8,820 in 2011, up 37 percent since 2006.”
 
Continuing this recipe for success – angel and state investment, tax credits, loans and workforce development strategies -- is essential for Ohio to continue attracting talent and encouraging entrepreneurship in the state.
 
Here’s a look at three bioscience startups that are fostering innovation in Ohio.

DG Medical
 
DG Medical in Centerville developed through the plastics molding expertise of the long-established DimcoGray Corporation, which specializes in the manufacture of thermoplastic and thermoset products, and industrial knobs and handles. With more than 30 years of field experience, DimcoGray established DG Medical in 2010 as a full service contract manufacturer of medical devices. Thanks to an aggressive business development effort in the early stages, the company was taking orders from customers before they even finished their clean room.
 
Linda Raisch, Sales and Marketing Manager at DG Medical, says that consumers benefit greatly from their molded plastic components through the medical device manufacturers the company partners with. “Our investment in scientific molding technology assures precise, repeatable parts each time,” she explains. “In essence, our OEM [Original Equipment Manufacturer] customers can have peace of mind that they are distributing the highest quality devices to the final consumer.”
 
Growth has been remarkable with conservative estimates anticipating a 22-25 percent increase in business in 2013. The one area that has been a struggle is staffing. “One of our biggest challenges has been [finding] individuals experienced in the bioscience/medical device field,” Raisch states. All of DG Medical’s manufacturing staff must have already completed the Bioscience Manufacturing Technology Certification Program offered by community colleges across the state. That's one area where BioOhio has been able to lend a helping hand, however.
 
“BioOhio coordinates a $5 million, three year effort centered on six community colleges across Ohio to train medical device and pharmaceutical manufacturing workers,” explains Lewis, who also says BioOhio refers clients to Ohio companies. “DG Medical has been a critical industry partner who has helped shape the curriculum and been a recipient of graduates from this program.”
 
The workforce development program received national recognition as a model of community colleges addressing bioscience industry needs when DG Medical hosted U.S. Labor Secretary Hilda Solis and Dr. Jill Biden in February. This has Raisch confident in Ohio’s current and future status in the bioscience industry.
 
“Bioscience is a very important and growing industry in the State of Ohio,” Raisch believes, adding that attraction of innovative companies through incubators like CincyTech, TechColumbus and BioEnterprise is key. “The state must continue to develop a supply chain for these companies for continued job growth in the state.”
 
Hardy Diagnostics
 
Hardy Diagnostics, a San Francisco area company that manufactures culture media and rapid identification kits for microbiological testing, was looking to build an eastern hub to respond to growing customer demand and rising shipping costs in the early 2000's. In part due to the phasing out of the Ohio corporate income tax, Hardy opened a new distribution center in Lima, then moved to a larger 47,000 square foot facility in Springboro at the end of the decade.
 
The Ohio presence has been instrumental in Hardy Diagnostics’ overall growth. “In 32 years of existence, we have never had a year of decreasing sales or an unprofitable year,” claims Jay Hardy, President of Hardy Diagnostics. “Currently we sell about $30 million of product annually and maintain a staff of 21 in Ohio.”
 
Hardy Diagnostics has made a name for itself in identifying and cultivating microorganisms. “The effects of the use -- and mostly the non-use -- of our products can be seen in the daily news,” explains Hardy. “For instance, if the compounding pharmacies that caused the recent fungal meningitis outbreak had used our products and procedures, it never would have happened.”
 
Now the third largest manufacturer of culture media in the United States, Hardy's impressive growth over the past three decades has been well documented. Inc. Magazine recognized Hardy Diagnostics in 2009 and 2011 as one of the 5,000 fastest-growing private companies in the country. Yet Hardy still considers his venture a “small company" that has tight-knit relationships with customers.
 
“We sell our products directly to the laboratories and, for the most part, do not rely on a middle-man distributor," says Hardy of his longstanding customers.

EndoSphere
 
Founded in California in 2006, EndoSphere developed and patented breakthrough anti-obesity technology with Dr. Kenneth Binmoeller, a gastroenterologist (GI) focused on obesity who serves as the Medical Director of the Interventional Endoscopy Service at California Pacific Medical Center in San Francisco.
 
“Dr. Binmoeller was looking for a device solution that could address the shortcomings of current invasive bariatric surgery by improving the regulation of appetite and satiety using the body’s natural physiology,” explains CEO Jim McKinley. “He recognized that the dense concentration of nerve receptors in the small intestine and the duodenum have an important role as appetite regulatory mechanisms.”
 
The discovery resulted in the SatiSphere System, a noninvasive device that can be inserted in less than 15 minutes, and helps to combat our nation’s obesity epidemic. “It is easier to place than a biliary stent. No fluoroscopy or radiation is used. All of these features keep costs low, especially in comparison to alternatives, such as gastric bypass and its potential complications,” says McKinley.
 
Three years ago, Columbus Academy alumni Christopher and Victor Thorne discovered EndoSphere. They invested in the company, offering strategic guidance and collaborated with the founders to upgrade EndoSphere’s business plan and financial model. Soon afterwards, the company relocated to Columbus.
 
“Many are aware that California and Massachusetts are home to more medical device companies than any other state,” explains McKinley. “What some might not know is that Ohio is also a fertile ground for medical device companies.”
 
McKinley says the decision to grow the company in Ohio was an easy one due to the investment community. “Nearly all of EndoSphere's funding since 2009 was provided locally from quality investors in Ohio, including Broadline Capital, Ohio TechAngel Funds, Glengary LLC, North Coast Angel Fund, Queen City Angels, Physician Investment Group LLC, EI Millstream Investment LLC, the Co-Investment Fund, Ohio Innovation Loan Fund, and a TechGenesis Grant.”
 
Lewis of BioOhio agrees, adding, “EndoSphere rapidly accelerated its progress following its move to Ohio. They achieved CE mark [regulatory approval for commercialization in 31 countries throughout the European Economic Area] this past March and have raised several million of capital financing.”
 
The decision to relocate has already paid off -- last month, EndoSphere was selected as a Fierce 15 award winner, a recognition given by FierceMedicalDevices to the top 15 most promising medical technology companies in the world.
 
BioOhio serves as an advisor to EndoSphere during the staff recruitment process as well as their investor presentation pitches, Lewis explains. Ultimately, the partnership has been a win for both EndoSphere and the State of Ohio.
 
“It’s a great success story for Columbus, Ohio.”