Is the next big medical device rivalry Ohio vs. Massachusetts?

There’s no denying that California and Massachusetts are the most fertile U.S. locations for healthcare startups — the states combined to draw a whopping 77 percent of healthcare venture dollars last quarter, for example.

But while Ohio’s healthcare startup scene hasn’t reached the rarefied air of its counterparts on the coasts, credit the state’s medical device sector for engaging in a spirited back-and-forth battle with Massachusetts for the attraction of startups. Both Ohio and Massachusetts have racked up a few wins and a few losses in recent years in the competition for device startups. A few examples:

• Thanks in part to a state tax credit, Ohio pushed back against an acquisition bid from an unspecified Massachusetts company for Cleveland-based startup Cleveland HeartLab. While some may regard Ohio’s retention of the company as merely an upholding of the status quo, it should be viewed as a big win for the state. With explosive growth that’s boosted its employment numbers from eight to about 70 in fewer than two years, Cleveland HeartLab may be the most promising healthcare startup in the state.
• When Israeli device firm EarlySense chose Massachusetts for its U.S. headquarters, it technically wasn’t a loss for Ohio. But it certainly felt like one after the company had appeared confident it would choose Northeast Ohio, not to mention that one of the company’s key investors calls Cleveland home. In the end, the patient-monitoring-device company simply decided that Massachusetts made more business sense.
• For Ohio, Cleveland Clinic spinoff Intelect Medical is the big one that got away. Established in Cleveland with the help of a $7.6 million state grant, Intelect relocated to Massachusetts before being acquired for $78 million by Boston Scientific in January. Still, the Intelect sale returned a healthy $28 million sum to the Clinic, which certainly makes the company’s decision to skip town go down a little easier.
• Ohio scored a win recently when startup Securus Medical Group relocated to the state after being founded in the Boston area. That Securus recently hired a Cleveland-based CEO and landed a venture investor with an office in the city no doubt made the decision easier.

In addition to a flow of startups between Massachusetts and Ohio, talent and investment have also moved between the two states, said Baiju Shah, president of BioEnterprise, a Cleveland-based nonprofit that helps biomedical companies with business development. For example, Don Brown, CEO of stem cell developer and device firm Arteriocyte previously lived in Boston.

“One of the things we’ve heard is that we have a more vibrant seed and early stage environment in terms of infrastructure than Boston does,” said Shah.

By “infrastructure,” Shah was referring to state assistance provided to biomedical startups through Ohio’s Third Frontier technology acceleration program, the willingness of local institutions like Cleveland Clinic, University Hospitals and Case Western Reserve University to collaborate with startups, and state-backed groups like JumpStart and BioEnterprise that help young companies develop their businesses.

Of course, “poaching” of companies by one state from another is nothing new. Southern states, in particular, have seen great success in poaching large, well-established companies in a variety of industries, such as manufacturing, from states in the North and Midwest. And the competition for relocation of established companies has only become more intense in recent years as the economic downturn has made growing new businesses more difficult.

As for Massachusetts and Ohio’s medical device industries, “poaching” may be a bit of a strong word when it comes to luring away startups that typically have just a few employees. But if both states’ device industries continue to grow, and a rising tide lifts all boats, then a little healthy competition should make each region stronger — particularly from the perspective of an upstart like Ohio.

Clevelanders just wish their city could lure Bill Belichick back to the Browns from the Patriots.

Photo from flickr user Generationbass.com