Bioscience and Big Money Spark a Rust Belt Renaissance
WHY YOU SHOULD CARE
Cleveland is going from the butt of Hollywood jokes to a hub of innovation.
By Tom Thriveni
Down the street from Jake Orville’s office in downtown Cleveland, you can hear the cutting of steel gears from a nearly 100-year-old manufacturer of machinery parts. Just beyond that lies Millionaire’s Row, a stretch of historic homes built by industrial tycoons like John Rockefeller and Western Union founder Jeptha Wade, who dominated the city in the late 1800s and early 1900s. But in the midst of these landmarks to the city’s legacy as a manufacturing powerhouse, Orville and his team are working on something Rockefeller and Wade could never have envisioned: patented technologies to test for heart disease.
The technology I saw … was just as good, if not better, than what I had seen on both coasts.
— Jack Orville
Orville is the CEO of five-year-old Cleveland Heartlab, which has licensed several innovations from researchers at nearby — and world-renowned — Cleveland Clinic. The partnership was initiated by the clinic as part of its mission to turn its inventions into commercially viable medical products, generating profits for both parties. To date, besides Heartlab, 66 neighboring companies have spun out from Cleveland Clinic ideas since 2000. All told, the clinic has 525 patents and 450 licensing agreements.
This level of innovation would be stunning anywhere, but in Cleveland? Jake Orville was equally surprised when he arrived in 2008. After working for two public health-care companies, he had traveled the country looking for new technologies he could use to grow his own company. After pit stops in several of his old stomping grounds — New York, Chicago, Boston, southern California — someone suggested he check out Cleveland. His first reaction: “Cleveland? Are you crazy?” But he did visit and met with two dozen newly founded companies — and was blown away. “The technology I saw being developed … was just as good, if not better, than what I had seen on both coasts.”
Heartlab offers patented tests for potential heart disease that go well beyond standard diagnostics that only assess for cholesterol levels. By comparison, using basic blood or urine samples submitted by doctors across the country, Orville can test for multiple Biomarkers — many of them novel ones discovered by nearby medical researchers — that indicate, for example, inflammation of the arteries.
For decades the Cleveland Clinic and the University Hospital System have made the area a leading health-care provider. What a newcomer like Orville didn’t know about — and what many others around the country would be surprised to find — is a stretch of downtown dubbed the Health-Tech Corridor, the very same neighborhood where iconic American industrialists built their mansions and fortunes in a bygone era. Orville says he quickly realized the area has the perfect blend of resources to create medical and biotechnology products and companies: sophisticated medicine, world-class research and a strong business incubation and investment community.
Bioscience entrepreneurship has reshaped Cleveland’s sagging economy.
The 1,600-acre Health-Tech Corridor acts as Cleveland’s biomedical nerve center, housing three major health-care institutions besides the Cleveland Clinic, four higher education institutions, more than 130 biomedical and other technology companies and eight incubators that lease space and provide consulting and other business development services. This is where the Cleveland Clinic and other partner organizations, such as incubator BioEnterprise, interact with researchers, clinical caregivers, academics and business executives. State-funded groups like Team NEO (for North East Ohio) were launched to help attract new business to the region. Since Cleveland Heartlab opened in the Health-Tech Corridor’s first building, eight additional buildings have opened for tenants. A ninth will open soon.
Just as robotics companies in Pittsburgh and high-speed fiber-optic networks in Chattanooga, Tenn., have helped transform the economies of those cities, bioscience entrepreneurship has reshaped Cleveland’s sagging economy. According to Team NEO, between 1990 and 2012, the region experienced a 41 percent decline in manufacturing employment, dwindling from 453,000 workers to 268,000. Over the same period, however, health-care employment saw a 55 percent increase — from 196,000 to 303,000 jobs. That gain spurred others: Professional, scientific and technical service jobs grew 27 percent to 85,000 jobs. And from 2003 to 2012, exports for medical equipment devices jumped 112 percent, more than any other segment in Northeast Ohio’s economy.
Looking ahead, Team NEO projects continued growth across sectors from 2012 to 2020, including health care (13% or +40,000 jobs); finance (11% or +8,000 jobs); professional, scientific and technical services (16% or +12,000 jobs); and construction (19% or +12,000 jobs). Of course an organization dedicated to promoting the region might be painting a rosier picture than the facts will bear out, but the momentum is real.
A mentality exists in Cleveland to be not just a good scientist but a good inventor.
— Jack Orville
Naturally it will take time for the rapid growth of Cleveland’s bioscience sector to translate into dollars that compete with heavyweight sectors like real estate and manufacturing that have been around since the city’s founding. (Despite decreases in manufacturing jobs, that sector — propelled by technology efficiencies — remains the largest source of growth for Northeast Ohio.) But bioscience has provided invaluable economic diversification that will help insulate Northeast Ohio’s economy from future shocks in the manufacturing sector — so much so that Cleveland is doubling down. In October 2013 the city unveiled a $465 million, 235,00-square-foot Global Center for Health Innovation, intended as a marketplace for medical industry buyers and sellers, who will gather for health-care meetings and symposia at the site. Responding to critics who worry their tax dollars would be better spent elsewhere are supporters who believe the center will cement the city’s identity as an international hub for medical technology.
Orville remains confident that bioscience will continue to pick up steam in the region. “World-class medicine will always be here, but beyond that, a mentality exists in Cleveland to be not just a good scientist but a good inventor. So we will continue to have technologies coming out that are competitive with the West Coast, a strong investor base and growing professional management resources.”
The sector’s long-term trajectory remains to be seen, but if Orville’s right, Cleveland may need to make room for another Millionaire’s Row.
- Tom Thriveni, OZY Author Contact Tom Thriveni