Top 10 stories for 2019 in Indiana health care and life sciences

By some measures, it was a pretty quiet year for Indiana’s health care and life science industry. There were no hostile takeovers, ousted CEOs or huge flameouts. All the big players and most of the little players made it through the year without big layoffs or restructurings.

But by other measures, 2019 was still notable. Life-science startups attracted a record $115 million in venture capital. Congress repealed the medical-device tax, ending years of frustration for Indiana’s 115 device makers. And Elanco, the animal-health spinoff of drugmaker Eli Lilly and Co., said it would buy Bayer’s animal-health unit for $7.6 billion. Meanwhile, a couple of people went to jail. Overall, it was an interesting ride for the sector, which accounts for tens of thousands of jobs and billions of dollars in revenue and taxes. Here are our picks for the top 10 stories of the year.

Medical device tax is history, ending years of frustration for Indiana companies

Just in time for Christmas, Washington gave Indiana’s medical device industry a long-awaited gift worth tens of millions of dollars a year, with a shiny bow on top. President Donald Trump signed a spending package on Dec. 20 that included a repeal of a tax on medical devices that the industry has been fighting against for much of the past decade. The repeal ended a 2.3% tax on thousands of medical devices, from stents and catheters to pacemakers and MRI machines. The tax originally was imposed in 2013, intended to raise $30 billion over 10 years to pay for subsidies to lower- and middle-class Americans to buy health insurance on the individual marketplace under the Affordable Care Act. The tax had been on hiatus since the beginning of 2016, but was set to return at the end of this year if Congress didn’t scrap it or repeal it temporarily again. But the bipartisan federal spending package that Trump signed into law means it is history. Indiana is home to 155 device-makers, making it the fifth-largest maker of devices in the country. The industry has complained for years that the tax was taking away money that could be used to develop innovative new products or to buy more efficient equipment.

Pharmacy owner sentenced to 33 months for making over-potent drugs

Paul Elmer is a pharmacist, but federal prosecutors say he shipped dangerous drugs to hospitals, even after employees and outside labs warned him the drugs were over- or under-potent—in one case, 25 times more potent than they should have been. Elmer, 68, former owner and CEO of Pharmakon Pharmaceuticals in Noblesville, said he was unaware of safety problems at his company, but a jury convicted him of nine counts of adulterating compounded drugs and one count of conspiracy. In September, U.S. District Judge James R. Sweeney sentenced Elmer to 33 months in prison. Prosecutors pointed out that the company distributed an opiate painkiller with a potency level of 2,460%, and the medicine was later administered to patients in Indiana and Illinois. Three infants from an Indiana hospital who got the drug were later taken by emergency helicopter to another hospital for emergency treatment. A key witness in the trial was Caprice Bearden, former compliance officer at Pharmakon, who said she and Elmer jointly engaged in a pattern of lies and deception. She was sentenced to five months.

Vaping injuries claim lives in Indiana

It could become the next major epidemic in Indiana: severe lung injury linked to “vaping,” or e-cigarette use. The Indiana State Department of Health announced in September the first death of an Indiana resident due to severe lung injury, and has since recorded at least four other deaths and 58 injuries. State and federal health officials say the use of e-cigarettes is a rising public health crisis in the United States. An Indiana survey last year found that vaping has increased 387% among high school students and 358% among middle school students since 2012.

Elanco says it’s buying Bayer division for $7.6 billion

Elanco Animal Health, which spun off last year from drugmaker Eli Lilly and Co., isn’t just sitting around, waiting for things to happen. The company announced in August it was buying the animal-health unit of German pharmaceutical giant Bayer AG for $7.6 billion. The deal, which is expected to close by mid-2020, would swell Elanco from the world’s fourth-largest animal health player to the second-largest, behind only New Jersey-based Zoetis. The deal further diversifies Elanco’s product line, which includes Interceptor Plus, a heartworm prevention for dogs, and Posilac, a hormone for dairy cows. But investors and analysts registered concern about the huge additional debt that Elanco would have to manage. The day the deal was announced, Elanco’s stock tumbled as much as 9%, although it has recovered somewhat.

Addiction-treatment centers pop up all over

It’s a sign of the times: the opioid epidemic that swept through Indiana and other states created untold thousands of patients who need recovery treatment. And true to fashion, companies began opening new treatment centers across the state. Many of the providers are not traditional health systems, but rather small, for-profit startups attracted by a soaring demand for recovery services. The companies often have only a few years of experience in treating complex addiction disorders. In many cases, they are opening high-end facilities in wealthy neighborhoods, and refusing low-income Medicaid patients in favor of those with higher-paying private insurance plans. Currently, 165 providers are certified to operate outpatient addiction treatment services across the state—up 67% from 2009, according to the Division of Mental Health and Addiction,

Sale of Carmel senior community a big win for residents owed millions

From the outside, The Barrington of Carmel seemed as steady a retirement community as you could find, with attractive buildings and grounds and a high occupancy rate of high net-worth retirees. But behind the scenes, the company that operated the Carmel property, Mayflower Communities, was missing bond payments and sliding into default. In January, it filed for bankruptcy, putting at risk $52 million in deposits of residents, who were listed as unsecured creditors. But the financial bumps had a happy outcome. In July, BHI Senior Living Inc. of Zionsville bought the Barrington out of bankruptcy and promised to honor the residents’ contracts, paying back millions of dollars in refundable entrance fees.

Corteva keeps local workforce but growth plans aren’t crystal clear

It has a new name and new corporate colors. But the company that was known for years as Dow AgroSciences—then briefly as part of DowDuPont—is now operating under a new name, Corteva Agriscience, following its spinoff in June from parent DowDuPont. Now, all eyes are on the local operation—with 1,500 employees, 14 office buildings, 42 greenhouses and dozens of labs—to see how quickly it will grow. The state has offered $26 million in conditional tax credits if Corteva can create an additional 600 jobs by 2028. And last year, Indianapolis gave Corteva $30 million in incentives to stay put on its 248-acre campus on the city’s northwest side. The company has been a key player in Indianapolis life sciences and technology circles for more than three decades, developing seeds and crop protection for farmers around the world.

Lilly bets billions on cancer drugs

Eli Lilly and Co., for years a mid-tier player in the fast-growing oncology sector, wants to change that, and is jumping in with both feet. In January, it paid $8 billion to buy Loxo Oncology, a Connecticut-based startup that is develop cancer-treating medicines. That followed a $1.6 billion deal a year earlier to buy Armo Biosciences, a California company that is a rising star in immuno-oncology. Last year, cancer drugs accounted for about 20% of Lilly’s revenue, or $4.3 billion. But the Indianapolis-based drugmaker is hoping to turbo-charge that, and gain ground on competitors including Roche, Celgene and Bristol-Myers Squibb.

Partner on St. Vincent neighborhood hospitals had big ambitions but flamed out

The financial and corporate structure behind St. Vincent’s tiny neighborhood hospitals is complicated enough to challenge a certified public account, with a joint venture that include multiple players and subsidiaries. But one of the main players, Tandem Hospital Partners of Texas, suddenly closed its doors and laid off 62 people at the beginning of the year, forcing St. Vincent to scramble to manage the network of hospitals. Four of the hospitals have been opened and three more have been built but not yet opened. Investors and employees are wondering what went wrong, but at the heart of it seems to be a lack of capitalization and poor relationships with companies in central Indiana.

Indiana life-science companies raise record $115M in venture capital

For small life-science startups, money is like mother’s milk. Without it, the fledgling company will die. The good news is that start-ups raised a record $115 million in 2018, according to BioCrossroads, an Indianapolis-based group that promotes and invests in the sector. The money was won by companies that are developing new brain-surgery tools, tissue-regenerating implants, new treatments for urologic disorders and many other products and services. Will companies match that record sum this year? Stay tuned: BioCrossroads will release the 2019 numbers in January. 

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