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IX Swiss Turkish Economic Forum – Innovation through Clustering.
Dr. Patrick Dümmler, Istanbul, Dec. 10.
An Introduction into the Theory of Clusters –
The Swiss Medtech Industry as an Example.
Agenda
1. In a nutshell – Cluster theory and definition
2. The example of the Swiss medtech industry
3. Growing a cluster or letting a cluster grow
The cluster concept can be traced back to two main
authors
Source: Adapted from Dümmler (2005), Lasuén picture from congreso.es, Porter picture from visionary.management.com.ua, diamond illustration from docstoc.com.
“A growth pole
consists of “a set of
highly interrelated
activities (sectoral
cluster) highly
concentrated over
the territory
(geographical
cluster).”
1) LASUÉN, JOSÉ RAMON (1973): Urbanisation and Development – The temporal Interaction between Geographical and Sectoral Clusters
2) PORTER, MICHAEL E. (1990): The Competitive Advantage of Nations
Lasuén1) Porter2) Porter’s diamond of national advantage
1. Cluster theory and definition
Knowledge spillovers are an essential ingredient for a
successful and dynamic cluster.
Source: Adapted from Dümmler (2005).
• “The marginal cost of
transmitting knowledge
rises with distance”
(Audretsch)
• “Intellectual breakthroughs
must cross hallways and
streets more easily than
oceans and continents”
(Glaeser et al.)
1) Not to be mixed up with information. Information can be transmitted globally at almost no costs via
internet
Knowledge1) Spillovers• Knowledge spills over –
Knowledge spillovers are
regionally limited
• The flow of knowledge is
embedded in regional
labor networks
• Spillovers lead to more
competition – higher
innovation rate and early
adoption of new knowledge
1. Cluster theory and definition
The three dimensions of the Cluster Cube form the
basis for the cluster definition.
Source: Adapted from Dümmler (2005).
Interactions
Spillovers
Distance
Close Far
Different
value
chains
Low
Intense
Same
value
chain
The Cluster Cube
A cluster is
• a spatially concentrated
agglomeration of actors
like service providers,
industrial companies and
institutions
• that are active in the same
value chain,
• form a network by the
exchange of services, goods
or knowledge,
• benefit from spatially limited
spillovers that have a
positive impact on
innovation output and
regional growth
1. Cluster theory and definition
A strong Swiss medtech industry –
Key facts & figures.
CHF
Number of companies: 1,600
850 suppliers and
manufacturers
750 service providers and
traders & distributors
Turnover and growth: Positive
Total turnover EUR 10.2bn
(CHF 12.5bn)
Significant growth, +5.9%
(2012) and +6.6% (2013e)
Employees: Growing
Grown from 49,000 (2009) to
more than 51,000 (2011)
1.1% of Swiss workforce work
in medtech
Research & Development: High
Manufacturers spend 13% of
their turnover on R&D while
suppliers spend 8%.
On average half of the product
portfolio is less than 5 years old
Exports: Substantial
Manufacturers export EUR
7.2bn (CHF 8.8bn) (5.5% total
Swiss exports)
20% to the total of the Swiss
trade surplus from medtech
Source: Survey among 321 medtech companies based in Switzerland (SMTI 2012).
2. The example of the Swiss medtech industry
Switzerland is highly attractive for international
medtech companies.1)
No. Company2)
Sub-section of marketHead-
quarters
Employees in
Switzerland
Global sales
2011
[CHF m]
1 J&J MedicalOrthopaedics, neurosurgery,
cardiology, surgeryUSA 4,500 25,570
2Roche
DiagnosticsIn-vitro diagnostics CH 2,110 9,700
3 Medtronic
Implants to treat cardiac rhythm,
cardiovascular and neurological
diseases and spinal disorder3)
USA 1,200 15,787
4 Sonova Hearing systems CH 1,200 1,620
5 Zimmer Orthopaedics USA 950 4,370
6 B. BraunOrthopaedics, hospital aids and
devicesDE 940 5,530
7 Straumann Dental implants CH 830 694
8 Ypsomed Injection systems CH 800 249
9 Stryker Orthopaedics USA 650 7,200
Source: Annual company reports and press offices, SMTI 2012.
1) Approximately, manufacturers only, figures for reporting year 2011/12, exchange rates used: 0.9693 USD/CHF2) The authors believe that among the 10 biggest medtech employers Hamilton Medical should also be listed. However, Hamilton Medical is not willing to
communicate any company data3) Swiss made devices only
2. The example of the Swiss medtech industry
Switzerland has a strong medical technology cluster.
BioAlps / Greater
Geneva Berne
Area
Berne Capital
Area
Basel Area Greater Zurich
Area
Biopolo
Ticino
Total 1,600 medtech
companies in
Switzerland
Watch making
industry
Mechanical
engineering
industry
Source: Adapted from a survey among 321 medtech companies based in Switzerland (SMTI 2012).
2. The example of the Swiss medtech industry
Switzerland has a complete value chain in
medtech…
Examples of specialized companies and organizations as part of the value chain
Source: Logos copyright of respective companies/organizations.
2. The example of the Swiss medtech industry
…based on a strong innovation system.
Source: Logos copyright of respective companies/organizations.
Examples of specialized organizations in the Swiss medtech innovation system
2. The example of the Swiss medtech industry
The Swiss medtech industry is embedded in a unique
ecosystem.
2. The example of the Swiss medtech industry
Adjacent industries
Technical &
Commercial
Talent Pool
SWISS MEDTECH ECOSYSTEM [illustrative] COMMENTS
Core Medtech Industry
HEALTH-
CARE
POLICY &
REIMBURS
EMENT
Mechanical
engineering
The Swiss medtech industry is
embedded in a unique ecosystem. Its
main success factors are:
Collaboration, long-term
relationships and quality
dedication
Sharing the same culture, mindset
and approach of doing business
domestically and across borders
High number of family owned
SMEs with a long-term
perspective
Travelling times are short, high
degree of spatial proximity
MANU-
FACTURERSSUPPLIERS
UNIVERSITY
R&D/EDUCATION
TRADERS &
DISTRIBUTORS
SERVICE
PROVIDERS
HEALTHCARE
PROVIDERS
Medical
Talent Pool
ElectronicsWatch makingPharma/
Biotech
FINANCING
& INSURANCE
SUPPORT
ORGANIZATIONS
Source: SMTI 2012.
Eight clear assets help to nurture the Swiss medtech
cluster.
2. The example of the Swiss medtech industry
Stable political
environment
Free and open job market
especially for talent and
management skills
Highly qualified personnel
Cutting-edge research1) at
hospitals and universities
Highly capable suppliers
in close proximity
Favorable tax systemAttractive living conditions
and infrastructure
“Swiss made“ quality
Source: SMTI 2012.
Straumann – Origin of two globally leading companies.
Source: Straumann.com, DePuy Synthes, Wikipedia.
1954 Reinhard Straumann founded the Dr. Ing. R. Straumann
Research Institute AG. Until 1970, the company specialized in
materials testing and alloys for timing instruments.
1960 The Swiss Association for the Study of Internal Fixation
(AO/ASIF) is looking for a company that is capable of
providing materials for internal fixation implants. A few years
later Straumann begins with the manufacturing of
osteosynthesis implants.
1974 The first dental implants are developed at Straumann and
undergo successful clinical testing at the University of
Berne.
1990 Management buy-out of the osteosynthesis division, creation
of Stratec (subsequently DePuy Synthes) as a separate
company.
Beginning of the Straumann Group focused exclusively on
dental implants.
Today DePuySynthes: 18’000 employees, USD 10bn turnover
Straumann 2’400 employees, EUR 580m turnover
Prof. Reinhard Straumann
2. The example of the Swiss medtech industry
Hocoma – Success with innovation and local networks.
Source: Hocoma.com.
1996 Funding of the company by two electrical and biomedical
engineers and an economist. Start of the development of a
automated treadmill training.
2000 Market maturity of the Lokomat that was developed in
cooperation with the Balgrist University Hospital Zurich.
2004 CEO Gery Colombo is awarded by EY with the Entrepreneur
of the Year Award.
2005 Enlarging of the product portfolio, focus on robotic
rehabilitation therapy for neurological movement disorders.
2012 Hocoma and the ETH Zurich win the most prestigious prize in
European robotics, the Technology Transfer Award for the
successful technology transfer among science and industry
that lead to the launch of the ArmeoPower end of 2011.
Today 150 people work for Hocoma, the company has subsidiaries in
the U.S., Singapore and Slowenia.
Dr. Peter Hostettler
Dr. Gery Colombo
Dr. Matthias Jörg
2. The example of the Swiss medtech industry
Two main groups of clusters reflect two different
approaches to clustering.
Cluster
characteristics
• “We want to copy the success of
the Silicon Valley”
• Top-down implementation
• Often driven by economic policy
• Attracting companies with tax
incentives
Wishful thinking clusters
• “This industry has a long heritage
here”
• Basically bottom-up process
• Industry driven
• Politics focusing on ensuring an
optimal business environment
Real clusters
Clustering process rooted in the
industry, self-reinforcing process of
clustering
High risk of failure if disruptive
technology makes specific industry
obsolete
Clustering process highly
depending on public money/
support
High risk of failure if top-down
approach not also supported by
the industry or if public support is
too small or is stopped
Estimation of
all “clusters”
90% 10%
Source: Own illustration.
3. Growing a cluster or letting a cluster grow
Get additional insights into the Swiss medtech industry,
visit our website www.medtech-switzerland.com.
Download the
Swiss Medtech
Report
Search our database for products and
competencies of Swiss medtech companies
and stakeholders
Download the Swiss Medical
Technology Industry Survey
Thank you for your attention.
www.medtech-switzerland.com
• Dr. Patrick Dümmler, Managing Director
• Medtech Switzerland
Wankdorffeldstrasse 102
Postfach 261
CH-3000 Bern 22
• Tel. +41 76 532 53 16
• Mail [email protected]
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