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BioCrossroads rolls out orthopedic initiative

September 10, 2009

With job growth surging in Warsaw’s orthopedic cluster, the life sciences development group BioCrossroads Inc. set out to find a way to keep the party going.

It also wants to make sure new technological breakthroughs and federal efforts to pinch health care spending don’t shut down the party entirely.

BioCrossroads’ prescription? Spawn a copy of BioCrossroads for the north-central Indiana region, dubbed OrthoWorx, to promote the industry and the things it needs to keep growing.

The recommendation is detailed in a new report documenting the strengths and challenges facing Zimmer Inc., DePuy Orthopaedics Inc., Biomet Inc. and the other orthopedics companies in Warsaw. BioCrossroads also supports a beefed-up research initiative, called IN-OrthoNet, that would strengthen ties between Indiana universities, orthopedic surgeons and the Warsaw companies to help launch the next wave of innovations to the joint-replacement implants made in Warsaw.

“The Warsaw-based orthopedics sector represents a significant force globally—one that both needs and merits support to realize expanding opportunities and address the many challenges facing the region and the industry as a whole,” reads an executive summary of the report, which is being released today.

The concentration of orthopedics revenue in Warsaw is impressive. The worldwide industry had revenue of $32.5 billion in 2007, BioCrossroads determined, and $10 billion of that flowed to companies headquartered in Warsaw. The second-largest cluster, around Kalamazoo, Mich.,, pulled in half as much revenue.

Medical-device firms and the companies that serve them employ more than 6,000 people in Kosciusko County, of which Warsaw is the capital. From 2001 to 2007, employment growth in the medical device sector surged 39 percent.

But the Warsaw cluster faces two major challenges. First, health care reform and increased federal regulations could squeeze the profits of orthopedic implant makers. And that puts pressure on them to outsource operations to lower-cost regions.

David Johnson, CEO of BioCrossroads, wants to create as many local “roots” as possible in Indiana so it’s easier for the companies to grow in Warsaw and harder for them to grow anywhere else. Some of those things could include a sterilization facility (most companies now use one in Dayton, Ohio), an orthopedic surgeon-training facility to help roll out new products, and independent testing facilities.

The second challenge comes from cell-regeneration technologies and the self-healing potential of stem cells, which could one day render artificial hip and knee replacements unnecessary. The Warsaw companies are working to make those breakthroughs, rather than be broken by them.

To make sure they’re the innovators, the Warsaw companies need to attract the most talented people they can. But the community of Warsaw, with only 12,500 people, cannot possibly offer all the amenities that many highly skilled workers will expect. To address this workforce challenge, BioCrossroads suggests the new OrthoWorx organization work to promote cultural and educational institutions—not only in Warsaw, but also in nearby Fort Wayne and South Bend.

“The medical innovation coming out of Warsaw is some of the best in the world, so it’s critical that we have a plan for sustainability and growth,” said Cheryl R. Blanchard, chief scientific officer at Zimmer. “With true and widespread business and community participation, BioCrossroads has created a roadmap to move us forward.”

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