
Vascular Solutions (NSDQ:VASC) CEO Howard Root has much to lament about the state of the medical device industry today.
As a veteran of Minnesota’s medical device body, Root hopes to see the North Star State reverse its recent downward trend in the number of medical device startups and workers.
In an op-ed for the Minneapolis Star Tribune, Root outlined out a series of regulatory, financial and workforce obstacles as well as some "practical steps" to get the Minnesota’s device cluster back up to par.
"When my company, Vascular Solutions, went public in 2000, Minnesota had 36 public medical device companies," Root wrote. "Today, it has only 14. Since 2009, only 3 Minnesota medical device companies have completed an IPO, while 7 have been acquired or gone out of business."
Vascular Solutions was born and raised in Minnesota, the U.S.’s hot-bed of med-tech innovation. The state is home to industry titans including Medtronic (NYSE:MDT), St. Jude Medical (NYSE:STJ) and Smiths Medical.
Root’s 1st challenge comes from a familiar place: the FDA.
"Between 1997 and 2000, Vascular Solutions spent $20 million to take our first product from concept to market," according to Root. "Today, because of increased testing requirements and longer FDA-approval timelines, that achievement would likely take double the time and double the money."
The FDA is a familiar cause for discontent, with detractors long decrying perceived inconsistency, unpredictability and a lack of transparency at the federal watchdog agency.
Should a company successfully navigate the FDA, more trouble lies ahead, according to Root.
"Beginning next year, FDA user fees for medical devices will double and a new 2.3% tax will be imposed on every sale of a medical device," he wrote. "Putting a sales tax on a product increases its price and reduces its availability. I understand that goal for cigarettes and liquor, but why do we want that same result with medical devices?"
Minnesota legislators have fought for their home industry, looking for ways to reduce the regulatory burden and taking aim at the impending 2.3% medical device tax slated to take effect at the start of 2013.
Sen. Amy Klobuchar (D) and Sen. Al Franken (D) have said they’re concerned about the impact the tax will have in the Land of 10,000 Lakes and Rep. Erik Paulsen (R) is spearheading a move to kill it outright.
While financial and regulatory burdens ranked high on Root’s list of industry challenges, he wrote that the biggest problem Vascular Solutions faces is in finding new workers.
"For my company the main reason growth is more difficult is a lack of skilled candidates," Root wrote. "The applicants have college degrees in irrelevant fields with courses that offer no substantive knowledge or advanced learning."
"In spite of highly publicized medical device recalls, no local university has yet created a degree in quality engineering," he added.