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TRANSCRIPT: Podcast: Historian David Rhees tours the "Medical Alley" hot spot

How did Minnesota spawn a world-class cluster of medical device companies?

A production of the Smithsonian's Lemelson Center. Hosted by Matt Ringelstetter. Written by Matt Ringelstetter and Amanda Murray. Art Molella, executive producer. Amanda Murray, podcast program manager. Joyce Bedi, webmaster. David Rhees was interviewed on April 6, 2010, by Matt Ringelstetter. Podcast released July 16, 2010. Music is “ickmansworth” by Vim from the Free Music Archive http://freemusicarchive.org/music/Vim

[Music]

Matt Ringelstetter:  When talking about hot spots of invention, it’s important to keep in mind that cultural geography is just as important as physical geography. In today’s episode, we’ll learn about the culture and people involved in the creation of Minnesota’s “Medical Alley,” an innovation cluster of medical technology, and most recently, biotech companies. The name itself is a play on California’s Silicon Valley, and much like the west coast’s hot spot, Medical Alley owes some of its beginnings to companies that started out of garages, and a culture of ingenuity and risk-taking. Let’s listen in as Dr. David Rhees takes us through the history of Medical Alley, a hot spot of invention.


Matt:  Today we’ll be speaking with Dr. David Rhees, the executive director of the Bakken Museum in Minneapolis, Minnesota. David, thanks for joining us.

David Rhees:  Ah, nice to be with you.

Matt:  Now, in a recent presentation here at the museum, you stated that the area and industry in Minnesota known as “Medical Alley” has 500 FDA-approved firms, over 36,000 workers, and brings in about $20,000,000,000 annually in revenue amongst the top firms. Now, this sounds like quite an industry, and obviously not one that that just sprang up overnight or came together coincidentally. So today we’d like to hear about the origins of what’s known as Medical Alley, how such a massive industry developed, and specifically a question that we always ask with these places of invention and innovation: why Minnesota, and why at this time? So perhaps if we can just start off, we can talk about the Bakken Museum and maybe how Earl Bakken himself, the namesake for the museum, sort of starts off within this story.

David:  Sure, well, Earl Bakken founded two organizations. He founded our museum back in the 1970s, and our museum focuses on history and science of electricity and magnetism. But he’s well known for, as the co-founder of Medtronic, a company that originally was designed to repair electro-medical devices like EKG machines, and he founded that back, way back in 1949, and that really was the very first company that started specializing in medical technology here. And that company grew and grew, and started spinning off many other companies in the ’60s, ’70s, and ’80s, and the result is that we have this world-leading concentration of medical device firms originally in that area of applying electricity to the body, but diversifying into many aspects of medical technology, both cardiovascular and neurological.

Matt:  Now how did Earl Bakken get involved in creating these devices for the medical industry?

David:  Right, well, his wife worked in a local hospital, and he learned from her that the doctors there were having trouble maintaining some of the electronic equipment, so he saw that there was a need to help out these doctors and hospitals and founded this company. He, as I mentioned, began by repairing these devices, but gradually some of the doctors started asking him if he could create some new devices that they could use in clinical experimentations or for research purposes. That’s when he really started getting into some interesting territory, including the pacemaker.

Matt:  So it was also the doctors that were in this area, I’m assuming at the University of Minnesota Hospital, that were maybe trying out some new procedures and thinking in some new and innovative ways?

David:  That’s right. One of the critical factors in the rise of Medical Alley, the Minnesota medical device industry, was the University of Minnesota. The Department of Surgery there, led by Dr. Owen Wagenstein, really fostered a culture of research and experimentation and innovation among the doctors there. As a result, they became one of the early pioneers of open-heart surgery. The doctors there were responsible for many, many innovations in procedures, and in actually inventing devices, like an early heart-lung machine and the pacemaker. So that was fundamental to the development of the industry here. The doctors needed engineers like Earl Bakken and companies like Medtronic to help them achieve their ideas.

Matt:  So Dr. Wagenstein was working at the University of Minnesota, and this was one of the first cardiovascular hospital units in the country, I understand?

David:  That’s right. Actually the Variety Club Heart Hospital was founded in 1951 and so that was the location at the University of Minnesota, where these pioneering procedures were tried out. They were doing surgeries on so-called blue babies and other children with congenital heart defects. There were many pioneers involved there, but probably the leading one was Dr. C. Walton Lillehei, who was just incredibly innovative and stimulated innovation among everybody he worked with. Dr. Lillehei was doing surgeries on these children with congenital defects and fixing holes in their hearts, for instance. One day in October 1957, actually on Halloween, there was a gigantic power failure in Minnesota, in the Twin Cities area. He was using a pacemaker, an AC-powered pacemaker, a big sort of desktop model, to keep these children’s hearts going after the surgery. It turned out that the surgery actually damaged the heart’s natural conduction system, and they needed these external pacemakers, which used electrodes on the chest, to get the children’s hearts beating at the proper rate and give them time to recover from the surgery, at which point the pacemaker could be removed and their hearts were beating on their own. But when he had this power failure, the pacemaker wasn’t working, and it scared him. They probably did not lose any patients at that time but it scared him. So that’s when, one day he’s in the hallway after a surgery, and he sees Earl Bakken walking down the hall. He just kind of yells out “Hey Earl, I’ve got a job for you.” So he asked Earl to develop a battery-operated pacemaker so that there was no risk of a power failure disrupting its function, and set Earl to work on that task.

Earl initially was just going to use a car battery and an inverter and a recharger, which was probably about a hundred pounds of apparatus, but then he realized that the newly invented transistors could be used, and he adapted a circuit from an electronic metronome, and he adapted that circuit to work as a pacemaker. It had two transistors and one photoflash battery, and it was about the size of a very small paperback. So four weeks later he brought that device back to Dr. Lillehei, and Dr. Lillehei promptly used it on a patient. So that product cycle only lasted about four weeks, going from the concept to the actual clinical implementation. And that moment is kind of the true birthday of Medical Alley.

Matt:  Wow. It sounds like there is quite a culture of risk involved in producing new techniques and technologies when it comes to open hearts and pacemakers and things like that. It must have been a little bit different from nowadays, I would say.

David:  Absolutely. It was a very different atmosphere, but risk and failure are just essential to any kind of innovation. I mean when we teach kids here at the museum how to become inventors; we teach them that they have to learn to fail, and to accept failure, and to actually relish it because you learn more from your failures sometimes than you do from your successes. And the culture of risk-taking at the University of Minnesota Surgery Department was very strong. You could say, in retrospect, maybe they were foolhardy, but the fact is that if they hadn’t taken those risks, they wouldn’t have made all the innovations that they did.

They had one procedure that involved using a parent to oxygenate the blood of the child during surgery, it’s called cross-circulation, and there was actually a chance for a 200% mortality in an operation like that. You could lose both the child and the parent, and they almost succeeded, some of his colleagues almost succeeded in stopping him. But his boss, Dr. Wagenstein, gave him the okay to do it, and that was a crucial step in the evolution of open-heart surgery.

Today I think it’s a very different kind of culture, we’re less tolerant of failure and less tolerant of risk. Partly, I think, because we hear so much about the failures, because they’re spread through the media very quickly. And that’s a concern I think for a lot of people in medical technology, that we’ve become too risk-averse for our own good.

Matt:  Now let’s talk a little bit about the beginnings of Medtronic and Bakken’s company, because that’s maybe the start of this idea that became labeled and branded as Medical Alley. He was creating some of these products and technologies just in a typical, maybe, kind of garage or workshop?

David:  Yeah, exactly. It was sort of the classic garage startup. They had a 3-car garage that belonged to Earl Bakken’s partner Palmer Hermundslie, and it was very primitive. It got so hot in the summer they would take a hose and pour water on the roof to try to cool off the building. But in that humble little garage they got a great start and rapidly outgrew that, of course. No one had any intimation that this, even the first pacemaker that Earl Bakken developed, would lead to such a huge industry. It’s a little bit like the Hewlett-Packard garage story. You use what’s available, the space that’s available, and you make the most of it, and they certainly did. They used a tin can for a bathroom. It had very humble beginnings.

Matt:  Yeah, it certainly sounds like it. I’m glad you  mentioned the Hewlett-Packard because it certainly sounds similar to the Silicon Valley story, where you’ve got people working on computers in their garage, you’ve got skilled workers coming out of the universities around that area, and just all these technologies and these things coming together to create this new industry in the region.

David:  Yeah, it really is a confluence of many different factors, I think, that allows these high-tech clusters to develop. I don’t think any one of them are causal in any sense. But clearly you have to have pioneers like Hewlett and Packard and Earl Bakken and Dr. Lillehei, you know, people who are willing to take risks and really become the first to jump into a new area. But they can’t do it by themselves. They need the universities like Stanford or the University of Minnesota to provide the clinical setting and the patients, as well as the engineers and people who are going to staff those companies. Then from there, it’s almost inevitable that when companies reach a certain size, they’re not able to capture or follow-up on all the innovations that their people develop. So inevitably some of them go off and form their own companies, the spin-offs, and those become, many of them, not all of them, become successful. And then at the same time, these companies are looking locally for all kinds of support. For instance, they need suppliers to provide the materials, specialized materials, or components that they need. So those suppliers start to specialize in the direction of that industry, which here was medical technology.

We have a local company that originally was called Lake Region Manufacturing, it’s now Lake Region Medical, and they started out making fishing tackle and later on water softeners and machines for sticking hot dogs at the state fair, and all kinds of things. But Medtronic started using them to wind these specialized electrical conducting coils for the pacemaker leads, and they specialized in that and became very, very expert in this one particular field and the fishing tackle and the water softeners all faded away. So then the new companies that come along, the spin-offs, can also go to that company and get their pacemaker conductor coils, and it becomes a resource. The more of those resources that are stimulated by the growth of companies like Medtronic, then the more common resources are available for the little startups.

Another example is legal support, lawyers that specialize in patents in medical technology or liability issues. The banks and the venture capital and the angels who have come to appreciate that this area of medical technology has vast potential, and so they can get capital locally from those folks. So that infrastructure kind of co-evolves. Once you have a couple of companies that reach a certain size and stimulate that supplier network, the industry kind of bootstraps its way up. It’s a fascinating process.

Matt:  Now Metronic receives plenty of awards, particularly from the National Academy of Engineering, for some of its devices, so it played a very big role on the way to what eventually became the implantable pacemaker. But it didn’t actually develop this implantable pacemaker.

David:  That’s right.

Matt:  Was that like a missed opportunity? Why did Medtronic choose not to develop the implantable pacemaker?

David:  Right. Well, I think as I mentioned before, nobody really knew that there was this huge market there, so it wasn’t as if people were consciously trying to move in that direction. It was something they kind of edged into, a little bit by accident and luck. Once Earl Bakken developed that transistorized, wearable, portable pacemaker, it was pretty inevitable that somebody was going to develop a fully implantable unit. The team that succeeded was in Buffalo, New York, but there was a team in Sweden as well. So that was just 1959, just a year or two after the wearable pacemaker. But I think Medtronic was in the best position of anybody at that time to realize the economic importance of that fully implantable unit that Wilson Greatbatch and William Chardack developed in Buffalo. They actually wasted no time in flying out to Buffalo and signing a contract to license that technology for ten years. So even though it wasn’t invented in Minnesota, they were very quick to license it and then develop the technology and the manufacturing processes here in Minnesota.

Matt:  Right, because they had all of the means for doing so all set up once this area of industry sort of started to come together, it sounds like.

David:  That’s right.

Matt:  Now, as all these spin-off companies started to develop and you had other resources such as lawyers and banks and capital coming together to create this hot spot, when did, and how did, the people of Minnesota become aware of their state being the home to this world-renowned technology cluster?

David:  Right, that’s an interesting question. I think it was a gradual process of dawning awareness, because of course the growth of the industry was fairly gradual. It’s not until the mid-1980s that you see the term “Medical Alley” start to pop up in newspapers, probably coined by a journalist. But there’s a crucial role that was actually played by the governor of the state, Rudy Perpich, and some other individuals who came to him and said, “Look, we’ve got this great developing industry here we need to support.” They actually formed a trade association that was supported by the state initially, called Medical Alley, the same name as the nickname of the industry. They were formed in 1984 and were designed to help nurture this industry further along. One of the projects that the state undertook was to do a whole advertising campaign, and they had a special section in TIME Magazine in 1987 where they had a big advertisement and were trying to promote Minnesota’s medical industry in general. They published some very nice posters and started spreading the word, and I think that was actually an important factor in helping accelerate the growth of the industry and bring it to the attention of not just the people in Minnesota to appreciate what they had in their backyard, but also nationally and internationally.

Matt:  So there’s marketing now for Life Science Alley, a new name for Medical Alley, kind of taking off of the biotech industry. Is there a new hot spot emerging here? Or is it just the existing hot spot being rebranded in a new way?

David:  Well I think the existing medical technology hot spot is evolving, because the technology is evolving. The technology is evolving in the biological direction, and so there’s a lot of new drugs and techniques for implanting cells in the body. I think the industry here, the companies here, have been very clever in making sure that they are not left behind by these new innovations. What they are doing now is leveraging their implantable technology and forming strategic alliances with pharmaceutical and other companies so that they can use their technology to deliver drugs or cells or genes into living organisms. They call them combination devices. This is a new sort of cross-fertilization area that’s potentially very exciting.

Right here at the University of Minnesota, Dr. Doris Taylor has become world famous for actually being able to kind of synthesize a rat heart. She took an existing rat heart and removed all the cells from it, leaving only a sort of a matrix, or a structure of a heart, and then re-seeded it with fresh heart cells and was able to regenerate a working heart from that technique. So here again the university is a center of innovation, which I believe a company has been formed to commercialize some of these ideas. So the companies are very much looking at the biological area, at the genetic area, and its early days to say whether that will be as successful as the original growth spurt of medical technology here. There are new laboratories that have been built at the university, there’s a proposal for one down near the Mayo Clinic. We’ll just have to wait and see how that one evolves.

Matt:  All right. David, thanks a lot for joining us. It’s been really interesting speaking with you about Medical Alley and the invention and innovation cluster that formed in Minnesota.

David:  Well thanks, it was my pleasure.


[Music]

Matt:  That was Dr. David Rhees, from the Bakken Museum in Minneapolis. To learn more, visit www.thebakken.org. For the Lemelson Center’s podcast series, this is Matt Ringelstetter. If you’d like to leave feedback on this episode or any in the series, drop a line to Lemcen@si.edu, or submit a review on our iTunes page or web site, invention.smithsonian.org/video. Tune in again next month as we explore more people, places, and spaces in the world of invention and innovation.

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