Indiana's medical device workforce will need skills upgrade

January 14, 2012
Orthopedics companies around Warsaw employ 6,800 people and pay them an average of $69,000 per year, according to an analysis released in January. (IBJ file photo)

Finding a job that requires only a high school diploma yet pays middle-class wages is a thing of the past—except in Indiana’s medical-device industry.

According to a new report by BioCrossroads, 53 percent of the 20,000 jobs in Indiana’s medical-device sector require no more than a high school education. Yet the average annual pay in the industry is about $60,000—56 percent higher than the state’s average.

David Johnson Johnson

“It’s a good thing today. The question is, ‘How long does that remain?’” said David Johnson, CEO of the Indianapolis-based life sciences development group. BioCrossroads will unveil its report, titled, “From Hearts to Hips: Indiana’s Leadership in Medical Devices,” on Jan. 18 during a conference at the Chase Tower downtown.

Production work inside medical-device companies is becoming increasingly automated and computerized, as it has among all manufacturers. In addition, biotechnology is beginning to allow medical devices to help patients’ bodies repair themselves, rather than serving merely as replacements for damaged bones and tissues.

So even though Indiana has the fifth-highest concentration of medical-device workers among U.S. states, it could lose that human capital advantage unless its work force rapidly updates its skills.

“Generations of workers have grown up in the industry, but that heritage is a diminishing advantage as the jobs have become more technical,” said David Floyd, the former CEO of DePuy Orthopaedics Inc. in Warsaw, who is now CEO of OrthoWorx, an affiliate of BioCrossroads that is grappling with labor issues in the Warsaw-based orthopedics cluster.

He added, “Most manufacturing jobs require advanced math and training beyond high school, which marks a change from hand work to automation and robotics.”

BioCrossroads’ report, based primarily on a survey of medical-device companies and interviews with industry leaders, says the medical-device industry will need to raise the education level of its work force to remain competitive, both in the United States and globally.

Johnson expressed hope in closer collaborations that are taking place between medical-device companies and educational institutions. For example, Ivy Tech Community College has hired a retired orthopedics executive to help the school offer training that gives students skills specifically tailored to orthopedics companies’ changing needs.

The future of Indiana’s medical-device industry is critical to BioCrossroads because the industry is larger than the group realized before it conducted an analysis of life sciences employment around the state in 2011. The economic output of medical-device companies totals $6.2 billion a year, and accounts for more than 40 percent of all life sciences jobs in Indiana.

“We knew it was important. We didn’t realize it was 40 percent of the pie,” Johnson said. “We couldn’t put our hands on where 10,000 of those jobs were.”

While BioCrossroads was well aware of the Warsaw orthopedics companies, Bloomington-based Cook Group and Indianapolis-based Roche Diagnostics, it was not aware of companies such as Catheter Research Inc., based in Indianapolis, which employs more than 100 people making supplies for larger medical-device companies.

Perhaps even more important, of about 8,800 life sciences jobs that Indiana added between 2002 and 2009, 5,600 of them were in medical devices.

As strong as the sector is in Indiana, it faces other challenges. Most immediately, the industry is crying foul over a tax created by the 2010 health reform law that would collect 2.3 percent of all sales of medical devices in the United States, beginning in 2013.

That has led companies such as Cook Group to say it might have to reduce jobs in Indiana or, at the very least, grow its operations outside the United States.

In addition, the U.S. Food and Drug Administration is in the midst of an overhaul of the main regulatory pathway it uses to approve new medical devices. That has thrown more uncertainty over the industry.

As a result, venture capitalists nationally say they expect to do fewer investments in medical devices than they have previously.

Johnson said he hopes the Jan. 18 conference helps Indiana leaders understand these challenges better, so that down the road they can develop strategies to help Indiana medical-device makers navigate them successfully.

“All we’re doing is opening the conversation,” Johnson said. “We want to understand the sector better.”•


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