Fortunately, I had the opportunity to speak with the president and CEO of NRW.INVEST LLC, Dr. John Gatto, about the region and why it’s an attractive location for the medtech industry. According to Dr. Gatto, the NRW region (short for North-Rhine Westphalia) is the most densely populated and top economic sector of Germany’s 16 federal states. It has been a highly prevalent investment destination for foreign companies and is home to 72 universities and over 700,000 companies.
Following is the interview I conducted with Dr. Gatto where he explains the value of the area to medtech manufacturers; Germany’s investment into the region; and how synergies between private, government, and academic entities help keep the area vibrant as a desirable business location.
Sean Fenske: Why is the NRW section of Germany attractive to medical device manufacturers?
Dr. John Gatto: NRW is the biggest healthcare market in Germany, developing medical devices and equipment. It’s part of a country that is the third biggest manufacturer of medical products in the world. NRW is also considered a world-class R&D location known for its vast research landscapes. Elite institutions like RWTH Aachen and Cologne, and the Universities of Düsseldorf, Essen-Duisburg, Bochum, and Bonn have renowned institutes of engineering and university hospitals with advanced scientific research facilities. These universities collaborate with industries in the region. Consequently, NRW offers some of the best conditions for innovation and technology transfer. Some of the reasons are:
- There are more than 61,000 healthcare sector enterprises and organizations in NRW employing more than 1.2 million people.
- The healthcare industry in NRW generates annual revenues of €68 billion.
- Between 2009 and 2014, more than 155,000 new jobs were created in the NRW healthcare sector.
- Around 200 NRW-located medical technology companies (the majority of which are SMEs) generate sales of nearly €1 billion.
- NRW has 370 hospitals, nearly 26,000 registered doctors, and 150 preventive care and rehabilitation centers.
- NRW has around 4,560 pharmacies, more than 2,300 outpatient care providers, and over 2,450 nursing homes.
- North Rhine-Westphalia has the largest single-market healthcare expenditure in Germany.
Fenske: How does government promote investment in the medtech sector for the region?
Dr. Gatto: The federal government of Germany promotes activities that lead to innovation through incentives programs and research projects. These programs must be linked to the EU Innovation Program Horizon 2020—the largest-ever EU Research and Innovation program with funding available over seven years—until the year 2020. To receive funding, the government publishes calls for papers for companies established under German law, including German subsidiaries of foreign companies.
The NRW State Government supports an industry-focused competition called “Leitmarktwettbewerb.NRW” aimed to motivate and utilize the strength of the North Rhine-Westphalian business and science community. This specifically includes SMEs developing sustainable technological and social innovations and solutions.
Fenske: Do private medical device companies partner with universities to bring innovative technologies into the healthcare sector? How does this arrangement typically work?
Dr. Gatto: The collaboration between medical device companies and universities is NRW’s key component to developing innovative technologies in the healthcare sector. This collaboration is fostered by our larger network, including universities, R&D institutions, and companies. It is also promoted by R&D incentive programs. Collaboration is initiated through university technology transfer centers, which introduce research ideas to potential industry partners. On the other hand, companies directly approach universities with a request for joint R&D. If funding is being secured through an incentive program, university specialists support the application process alongside counterparts at technical organizations.
Fenske: Can you share any information about innovation incubators and/or innovation competitions in the region?
Dr. Gatto: In NRW, there are more than 60 technology and startup centers, with 16 boasting a significant membership of biotech and life science companies. NRW startup incubators are generally very near research facilities, with a goal of providing efficient translations from scientific research to marketable products and processes.
This infrastructure offers ideal facilities, ICT equipment, networking, business consultation, promotional programs, venture capital, legal aid marketing, and beyond. These centers help found 96 percent of life sciences companies in every branch. By comparison, the average success in founding a new company in Germany is 50 percent.
Fenske: Are there relationships between clinics, medical facilities, doctors, and hospitals, and the medtech manufacturers in an effort to improve medical devices?
Dr. Gatto: The collaboration between these partners is very common as well as crucial. The most valuable medical device innovations are those that anticipate end-user needs, and understand patient benefits from a 360-degree view.
Fenske: Does your organization help make connections between stakeholders in the medtech sector in an effort to further innovation and development of new technologies?
Dr. Gatto: NRW.INVEST collaborates with a partner network that includes the North Rhine-Westphalian Ministry of Economic Affairs, the chambers of the state, several industry clusters and other state initiatives. All the partners work together to continuously advance the dynamic economic strength and international competitiveness of NRW as a business location.
Fenske: What misconceptions have you encountered regarding the region (or Germany in general)? How do you address or correct them?
Dr. Gatto: NRW does not fall under the Lederhosen-wearing and beer-fest image of Germany that is reminiscent of Bavarian traditions. It’s also not well known as a German state by its name, but rather by the names of cities and regions located within. It’s these locations that gained NRW its historic, economic importance.
The Ruhr region was the core of Germany’s heavy industry, coal mining, and steel production dominated by a few big players—Thyssen-Krupp or energy providers RWE and E.ON. Leverkusen is famous for chemicals company Bayer, and Cologne is known for its UNESCO world heritage site, the Cologne Cathedral. Now, NRW is a location characterized by technology-driven industry in an industrial environment. A large number of SMEs here are world players in mechanical engineering, automotive, electronics, chemicals, medical technology, microsystem technologies, new materials, and so on. NRW is also the leading German recipient of foreign direct investment for several years. This demonstrates its recognition by foreign companies as a prime business location in Europe.
Fenske: Before wrapping up, do you have any other comments you’d like to share about the NRW region?
Dr. Gatto: As with leading economies in the world, NRW faces the challenge to maintain technological excellence amid growing global competition.
The United States continues to be one of Germany’s most significant economic partners and thus, also for NRW. Historically, the relationship between the U.S. and NRW has been one of fruitful collaboration in the realms of industry, science, and research. Moreover, more than 1,700 U.S. companies chose NRW to be a central location for engaging in the European market. Western companies bring new ideas, new products, and new procedures to our state and they also create jobs.
Today, these U.S. companies employ more than 175,000 people. We are especially proud that numerous U.S. organizations conduct R&D projects in cooperation with universities and research institutes in NRW. We encourage more U.S. companies in the medical device sector to develop their operations in NRW and collaborate in our excellent network of industry, science, and technology.