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Medical Device Daily Senior Staff Writer

Midwest healthcare companies attracted $966 million in new investments across 182 companies in 2012 according to the latest report from BioEnterprise (Cleveland). The firm's annual Midwest Healthcare Venture Investment Report notes that the total dollars attracted is up by 23% from 2011.

"Investment activity in Midwest healthcare deals continues its upward trend, outperforming previous years' activity for three years in a row. As with the rest of the country, Midwest healthcare investing fell dramatically in 2009 after strong years in 2007 and 2008, but it appears investors are again optimistic about Midwest deals. 2013 should be an interesting year to watch," said Aram Nerpouni, interim president of BioEnterprise, the Cleveland biomedical accelerator.

Last year around this time the firm reported that Midwest healthcare companies had raised $810 in new investments across 178 companies (Medical Device Daily, Feb. 3, 2012).

This year, Ohio ($292 million), Minnesota ($165 million), and Illinois ($146 million) led Midwestern states in attracting investment dollars. Cleveland, Minneapolis, and Chicago were the leaders among Midwest regions. Medical device companies raised $309 million, or 32%, health IT and service companies attracted $177 million, 18%, and biopharmaceutical companies brought in $487 million, 50% of the 2012 equity funding.

"From a venture perspective, medical devices remains challenging," Nerpouni told Medical Device Daily. "The good news is that there is a growing network of early stage companies, just the number of opportunities getting funded is an upward trend as well, with close to 200 companies this year getting funding."

In terms of numbers of deals, particularly in the Cleveland area, medical devices continues to be the strongest area of activity, he added.

"It comes back to the number of deals," Nerpouni said. "Dollars can vary greatly from year to year, but seeing that number of deals getting funded in the Midwest makes me very optimistic for the coming year."

The Midwest Healthcare Venture Investment Report includes all reported numbers and regionally collected data.

"The Midwest typically sees more medical device companies than either healthcare IT or biopharmaceutical; however, biotech saw the largest influx of dollars in 2012 as investors continue to focus on later stage biotech opportunities," said Nerpouni. "Investment activity in Midwest healthcare IT remains robust as investors are drawn by payers and providers searching for applications to improve patient outcomes and efficiencies."

BioEnterprise is a business formation, recruitment, and acceleration effort designed to support the growth of bioscience companies. The firm partners with other Cleveland-based institutions, including Case Western Reserve University, Cleveland Clinic, University Hospitals, Summa Health System, and the Austen BioInnovation Institute (Akron, Ohio). Additional technology partners include the NASA Glenn Research Center, Cleveland State University, NorTech, and BioOhio.

The Midwest is known for being home to several large medical companies – Baxter (Deerfield, Illinois), Abbott (Abbott Park, Illinois), Medtronic (Minneapolis), St. Jude Medical (St. Paul, Minnesota), and Stryker (Kalamazoo, Michigan) – as well as many of the industry's smaller start-ups.

The region also has been dubbed, in recent years, as the "global home" of both orthopedic and cardiovascular industries and has one of the leading centers for neuro devices. Medical imaging is another strength of the area with companies like Philips (Andover, Massachusetts) and GE Healthcare (Milwaukee), among others, calling the Midwest home.

Since BioEnterprise started this report, the amount of total dollars invested in healthcare ventures across the Midwest has grown from $550 million in investments in 2005 across 86 companies, including 33 device companies and 23 healthcare software and service companies (MDD, Jan. 26, 2006).

In the history of the report, a few years have stood out as particularly strong for the healthcare industry in the Midwest. In 2007, for instance, $792 million was raised across 135 companies in the Midwest, a 25% increase over 2005. That year was also highlighted by a number of public offerings and several significant exits through acquisitions, the firm noted (MDD, Jan. 24, 2007). But that was nothing compared the following year when Midwest healthcare startups attracted a record $1.2 billion in new investments in 2007, representing a 55% increase over 2006 and still outpacing the national venture industry growth (MDD, Feb. 5, 2008).

Amanda Pedersen, 912-660-2282;

Published  January 22, 2013

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