Medical Alley Association

Minnesota's Medical Alley Reports $2B in Exits, $731M Raised in HealthTech Sector in 2018

1.png

Minnesota’s Medical Alley reports strong and consistent growth in 2018, according to a recent investment report from Medical Alley Association.

In 2018, healthtech companies in Medical Alley raised $731M, a slight decrease from the $759M raised in 2017. This represents the second consecutive year Medical Alley companies have raised over $700M of funding. This included large investments in digital health, with nineteen companies raising $320M. This was followed by $260M raised by forty-eight companies in the medical device space. $144M was also raised by eighteen biotech companies in Medical Alley. 

In total, nineteen healthtech companies raised over $10M. Top raises included $200M from health insurance company Bright Health, $70M from Bind, also a health insurance company, and $58M by Relievant Medsystems, a company developing solutions for chronic back pain.

Medical Alley additionally experienced significant exits with a declared total value of $2B. This included the acquisition of ABILITY Network, a company providing solutions to reduce costs for healthcare providers and payers, by cloud company Inovalon. Inspire Medical, a company developing sleep apnea treatments, had an IPO on the New York Stock Exchange, raising $108M. Biomedical company NxThera was sold to Boston Scientific for $400M. And microbiome company Rebiotix was acquired by the Swiss based Ferring Pharmaceuticals.

Despite these acquisitions, many of these companies have remained in Medical Alley. ABILITY Network has expanded within Minnesota through the hiring of new employees. Francis Medical, a spinout of NxThera after its acquisition, was also kept in Minnesota.

For more detailed investment reports on healthtech in Minnesota, head to the Medical Alley Association website.


About Medical Alley Association

Founded in 1984, the Medical Alley Association supports and advances the global leadership of Medical Alley’s healthcare industry, and its connectivity around the world. MAA delivers the collective influence, intelligence and interactions that support Medical Alley.

All Major Sectors in Medical Alley Break $100 million Raised for First Time

Cape Town (1).png

Medical Alley’s third quarter ended with new industry records and new milestones set across the board. 27 Medical Alley-based companies raised $176,089,457 in Q3, the second-best Q3 in the last five years.

“Medical Alley's portfolio of growing companies across the healthcare spectrum continues to demonstrate that this region is the best place to solve healthcare's biggest challenges, regardless of what sector you are in.” said Shaye Mandle, President and CEO, Medical Alley Association.

Medical Alley device companies raised $90 million this quarter, continuing a steady growth trend that began in 2009. Biotech companies also set new milestones in Medical Alley, breaking $100 million in capital raised in a year for the first time in Medical Alley history. Digital Health investment continued its strong run with $32 million raised in the third quarter for a year-to-date total of $116 million.

Most noteworthy in Q3 is that all major sectors in Medical Alley broke $100 million in year-to-date funds raised for the first time.

The top-raising companies included Recombinetics with $34M in Series A funding, Urotronic Inc. with $20M in Series B funding, 4C Medical Technologies with $17M in Series A funding, and Vireo Health LLC and Cardialen each raising $16M.

To see the full report click here.

About The Medical Alley Association

Founded in 1984, the Medical Alley Association supports and advances the global leadership of Medical Alley’s healthcare industry, and its connectivity around the world. MAA delivers the collective influence, intelligence and interactions that support Medical Alley.

Press Release: Medical Alley Leaders Build Economic Roadmap to Ensure Minnesota's Competitiveness

Report.png

Medical Alley Association, led by its Board of Directors and executives from all sectors of the Medical Alley healthcare community, convened two working groups to lead the development of a 10-year strategy plan for Minnesota to realize the vision of Medical Alley being recognized as the global epicenter of health innovation and care. Specifically, the two Working Groups focused on Minnesota Competitiveness and Early Stage Ecosystem.

“Minnesota’s place of leadership in the great history of healthcare advancement is secure. The goal of our Board and community is to ensure that Medical Alley continues to lead the transformation of healthcare around the world,” said Shaye Mandle, President & CEO, Medical Alley Association. “We’re excited to lay this foundation for the public and private sectors to work together to deliver the next generation of solutions and opportunities that define health innovation and care.Mandle said.

The Medical Alley Working Groups have delivered a plan with specific recommendations and actions to address Minnesota’s competitive status, lead the development of the ideal early-stage ecosystem that can capitalize on the evolving health marketplace and position the state for a sustainable leadership position.

Minnesota has a rich tradition of growing transformational healthcare companies and the talent to keep them innovating. Competing globally requires our elected officials to enact policies that encourage investment and growth, attract new talent, and properly prepares our workforce for the jobs this growth will create,” said Jeff Mirviss, Senior VP and President, Peripheral Interventions for Boston Scientific, and Co-Chair of the Minnesota State Competitiveness Working Group.

Supporting startups and early-stage companies is critical to ensure that Minnesota remains the global epicenter of health innovation and care. This report puts forward solutions that require commitment and leadership from the public and private sectors. We look forward to working with our state’s leaders on moving these forward,” said Sheri Dodd, VP & GM, Medtronic Care Management Solutions & Non-Intensive Diabetes Therapies. Dodd also serves as the Co-Chair for the Early Stage Ecosystem Working Group.

Additional details can be found inside the plan, or by contacting the Medical Alley Association.

About the Medical Alley Association

Founded in 1984, the Medical Alley Association supports and advances the global leadership of Medical Alley’s healthcare industry, and its connectivity around the world. MAA delivers the collective influence, intelligence and interactions that support Medical Alley. www.medicalalley.org

Press Release: Medical Alley Applauds House Passage of Device Tax Repeal – Urges Senate Action

Medical Device Excise Tax Repealed.png

Golden Valley, MN- Today (July 24, 2018), the United States House of Representatives voted 283-132 to permanently repeal the Medical Device Excise Tax. The Medical Alley Association thanks those House members who voted to bring certainty to the healthcare marketplace and to prioritize health consumer access to the next-generation of medical technology solutions. The House has wisely voted to make permanent what Congress has suspended since 2016. We are encouraged that this strong, bipartisan vote will prompt the United States Senate to act quickly and move this legislation to the President’s desk for his signature. 

Medical Alley is especially grateful for the leadership that Congressman Erik Paulsen has provided on this issue. He has worked tirelessly, with members of both parties, to prioritize this issue and to eliminate this tax. Today’s vote would not have been possible without his hard work and dedication. 

Medical Alley is home to the most densely concentrated medical technology cluster in the world. We thank the other members of the Minnesota delegation who voted in favor of this legislation, Congressmen Tom Emmer, Jason Lewis, Collin Peterson, and Rick Nolan. 

About the Medical Alley Association

Founded in 1984, the Medical Alley Association supports and advances the global leadership of Medical Alley’s healthcare industry, and its connectivity around the world. MAA delivers the collective influence, intelligence and interactions that support Medical Alley. 

Investment in Medical Alley Health Tech Hit Record Levels in 2017 According to Latest Report

pexels-photo-433267.jpg

Last week, Medical Alley Association released their 2017 Investment Report, detailing total health tech investment in Medical Alley over the past year. Medical Alley Association is an organization that facilitates “an environment that enables health technology and care organizations to innovate, succeed, and influence the evolution of healthcare.”

2017 was an epic fundraising year in Medical Alley, with $735M raised by 85 health tech companies.

“The record fundraising from a global cadre of highly regarded venture capitalists, angels, and corporate investors continues to demonstrate that when the world looks for the future of healthcare, they find it in Medical Alley,” said Frank Jaskulke, VP of Member Services at Medical Alley Association.

Here are the top highlights from the report that you should know.

5 Key Facts about2017 Medical alley investment.png

Click here for the full Annual Investment Report.

2.png

Press Release: Medical Device Excise Tax Suspended Thanks to Strong Leadership

daniel-mccullough-446585.jpg

Golden Valley, MN – Medical Alley Association President & CEO Shaye Mandle issued the following statement regarding the suspension of the medical device excise tax:

"The Medical Alley Association is pleased that Congress and the President have prioritized health consumers and Minnesota’s leading health technology economy with a two-year suspension of the medical device excise tax, retroactive to January 1, 2018. We will continue to work with Congressional leaders to ensure that health consumers can have confidence in treatment options and improved outcomes through a full repeal.

We are thankful for Minnesota’s strong leadership on this issue and the continued support provided, led by Congressman Erik Paulsen and Senator Amy Klobuchar. Their tireless efforts are greatly appreciated by health consumers and innovators. We want to thank the members of our delegation who voted for this suspension, Congressmen Tom Emmer, Jason Lewis, Rick Nolan and Collin Peterson, and Senator Tina Smith.”

About the Medical Alley Association

Since 1984, the Medical Alley Association has been the front door to Medical Alley. We are the collective voice and expertise of Medical Alley; the strategy, implementation and execution vehicle of the Medical Alley Community. We deliver the collective influence, intelligence and interactions that support Medical Alley’s global leadership.

Return of Medical Device Tax Expected to Disproportionally Hurt Minnesota Innovation

nino-liverani-418090.jpg

As the federal budget deadline looms on the horizon, much remains at stake for Minnesota’s startup community. After a two-year suspension of a medical device excise tax, manufacturers of products like pacemakers, catheters, and artificial knees may have to start paying up by the end of the month. These expenses are expected to hit Minnesota harder than anywhere else in the country, costing the state in investment, research and development efforts, and jobs.

Let’s break it down.

The medical device tax, a 2.3% excise tax placed on the sale of medical devices within the United States, was developed as part of the Affordable Healthcare Act in 2010 to help finance the expanded health insurance coverage provided under this federal statute.

The medical device tax was highly unpopular in Congress, with particularly strong opposition from the medtech-heavy states of Minnesota and Massachusetts. With dual-party support, the tax was suspended on the sale of medical devices for two years, between January 1, 2016 and December 31, 2017.

“The suspension itself was a bipartisan package that was signed by President Obama. The history of this tax and its suspension included the architect of the Affordable Healthcare Act. This is something that we’ve felt was well understood and there was broad agreement on it,” explained Shaye Mandle, President and CEO of Medical Alley Association, a Twin Cities-based organization that influences policy, fosters connections, and gathers intelligence to support Minnesota’s health industries.

The tax was originally predicted to generate $30B annually to help fund the Affordable Healthcare Act, Mandle explained.

“The thirty billion never really materialized. It was a smaller number, more like twenty to twenty-one billion,” he said.

This tax was paid on revenue- not profits- and was expected to drastically impact medical device manufacturers, eighty percent of which, at least in the United States, employ less than fifty people.

With President Trump’s tax reform plan that was signed into law this December, the corporate income tax rate was lowered from 35% to 21%. However, repeal of the medical device tax was not included in the $1.5T tax reform package, allowing the suspension of the medical device tax to expire for sales of medical devices in the U.S. starting on January 1, 2018.  

So, instead of seeing a tax break, the medical device industry will actually see a tax come back that had not been contributing to the federal budget for a few years.

“For the last two years, we’ve seen medical device companies make significant investments in Minnesota,” said Mandle. “Investments in early stage companies across healthcare but also in devices, keeps going up. We’ve had record years for the past couple of years.”

The investments included a record high $735M raised in 2017 by 85 companies in Minnesota, $399M of which was raised by 44 medical device companies in the state, according to Medical Alley Association’s latest numbers.

The U.S. Joint Committee on Taxation predicts that repeal of the medical device tax will reduce federal revenue by $1.37B in this year alone. Other advocates of the tax say that medical device manufacturers will benefit from the corporate tax decrease enacted by the current administration. But Mandle says that besides massive, profitable companies like Medtronic and Boston Scientific, this tax cut is not even relevant to the majority of medical device companies.

There may be a prime opportunity for a congressional repeal of the tax in conjunction with the latest federal budget, which must be approved by January 19th. If the tax is not suspended once again as part of this deal, medical device manufacturers selling products within the U.S. will have to start paying the tax this month, which Mandle says will disproportionally affect Minnesota companies, especially early stage startups.

“The very first thing that the device tax will do is have an impact on existing companies and how many people they have and what they can invest in or not,” Mandle explained. “But the long term, I think and this is particularly important for Rochester, is how there can be growth in [the medical device] marketplace. Uncertainty about the device tax alone has an impact. Actually having the device tax has a significant impact.”

Mandle says the tax will likely influence hiring and spending in small medical device companies in the state. This ultimately could impede research and development efforts, innovation, and ultimately slow down technologies from getting to the patient. According to the U.S. Department of Commerce, 29,000 U.S. jobs were lost while the tax was previously in effect, leading to a $2B decrease in research and development efforts.

Minnesota’s ‘Medical Alley’- a region stretching from Duluth, through the Twin Cities, down to Rochester- houses the “most densely concentrated cluster of medical technology companies in the entire world,” said Mandle. This region has a denser concentration of medtech than even Boston and Silicon Valley. Recoil from the medical device tax is expected to hit Minnesotan small medical device manufacturers harder than anywhere else in the U.S.

If (or more likely when) the tax comes back, Mandle predicts it will be worse for companies than when it was originally instated in 2013. He said the industry was just not prepared for the tax burden, especially since the issue had previously been resolved. He said the medical device industry, advocates like Medical Alley Association, and Minnesota’s federal delegation are working hard to get their message across in Washington.

If not repealed or suspended, the medical device tax will not only affect the Twin Cities, it could also have significant impact in Rochester, especially in a region like the Destination Medical Center’s Discovery Square District, an area aimed at the rapid commercialization of technology to improve health. Mandle says a healthy medical device sector is essential to “grow and be successful along with digital health and biotech and all of the things that the Mayo Clinic and Rochester are world leaders in.” Uncertainty in the medical device industry from an unstable market or unclear timeline to get to sales or profits hurts investment for early stage companies, disrupting this piece of the puzzle.

“With Rochester being one of those places that is going to help define what economic and healthcare growth looks like, this is not helpful,” advised Mandle.

 

Further reading and References:

1.     Medical Device Excise Tax.

2.     Medical Alley Association.

3.     Medical-Device Industry Boosts Efforts to Fight Excise Tax

4.     ObamaCare Medical Device Tax

5.     Repeal the Medical Device Tax

6.     Medical Technology Firms to Trump: GOP Forgot to Ax The Device Tax

7.     Medical Device Tax, AdvaMed