When the Dell Medical School at the University of Texas opened its door to students in 2016, tech leaders and city officials had high hopes that it would be a boon to the health care sector of Austin’s economy.
Now, industry leaders say, they are starting to see results.
The Greater Austin Chamber of Commerce reported an increase in the number of life science companies in talks with the city and the number of companies that end up moving here since the opening of the medical school. The region now has more than 250 life science companies, which the chamber defines as biologics, medical devices, diagnostics, pharmaceutical, contract research and others.
When the $436 million Dell Medical School opened in 2016, “the interest level jumped pretty high,” said Charisse Bodisch, the chamber’s senior vice president of economic development. “We’ve continued to see more companies come here.”
Bodisch estimates that more than 40 life science companies have started operations in Austin in the past two years. And in 2016, the chamber spoke to 32 companies who expressed an interest in working in Austin — more than double the number of companies expressing interest to the chamber the year before.
“We’re only into a couple years with Dell Medical being open, and I can hands down tell you it has had impact in our community,” Bodisch said. “When we are talking to companies, they’re very excited about what’s going on and what the future can hold with this partnership.”
‘Arms wide open’
For smaller health tech startups, Austin seems like a perfect place to put down roots, startup experts say.
According to Joshua Baer, founder and CEO of downtown Austin startup accelerator Capital Factory, there are more health tech companies than any other industry vertical at Capital Factory. That’s compared to zero health tech companies at the high-tech incubator just four years earlier.
One of those companies is Advanced Scanners, which is aiming to use 3-D technologies for doctors performing brain surgeries. The startup is also part of Dell Medical School’s health catalyst program, which aims to accelerate the transition from research to health products.
Austin’s robust technology community is part of why health startups have started flocking to the city, said Jeff Levine, co-founder of medical tech startup Advanced Scanners. Before the Dell Medical School, it was difficult for smaller companies to get within the walls of UT.
“But with the Dell Medical School, their arms are wide open and they’re really welcoming,” Levine said. “It was really a matter of time before health care started catching up.”
‘The future of this city’
One of the most obvious examples of the medical school’s impact on Austin’s health ecosystem is Merck Sharp & Dohme Corp.’s announcement last July that it would move forward with plans to develop a major technology innovation center in Austin. Merck Sharp & Dohme is a subsidiary of pharmaceutical giant Merck and Co.
Even the possibility of a Merk hub in Austin spurred interest from companies that the chamber previously tried to recruit with little luck, officials there told the American-Statesman last year.
The center will be in the medical school’s Health Discovery Building and is expected to create as many as 600 jobs. A spokeswoman for Merck said the company decided to locate the IT office in Austin because “it is a creative, collaborative community with a strong technology base.”
“Austin was not on the Merck map” before the opening of the Dell Medical School, according to Texas state Sen. Kirk Watson, D-Austin, who was instrumental in establishing a medical school at the University of Texas.
Watson said he always envisioned the medical school as a catalyst for the city’s health ecosystem.
“I think that 25 years from now people will look back on the creation of the medical school and think of it as the seminal part of the future of this city,” Watson said.
The medical school has also made a point to partner with a number of health care-focused companies.
In July, the Association of British HealthTech Industries made headlines for sharing a co-working space at the medical school as it tries to break into the local and national health care market.
That’s just one piece of the puzzle, according to Mellie Price, executive director of commercialization at Dell Medical School. The medical school has seen an increase in the number of applications for its Texas Health Catalyst, a UT collaboration that helps researchers and entrepreneurs accelerate health products.
Price said there has also been an increase in the number of startups that want to do joint ventures with Dell Medical as part of its commercialization activity.
“I think we’re getting a lot of attention on the life sciences piece,” Price said, adding that diagnostics, software and digital tools often get left out of the equation when talking about Austin’s health economy.
Shakeel Rashed, accelerator director at Capital Factory and health tech angel investor, agreed. He’s focused on artificial intelligence and machine learning, which play a growing role in health care these days.
“The thing about Austin is it has really good software engineers,” Rashed said, adding that the combination of data scientists, software engineers and health care “will take off in terms of health care startups in Austin.”
The Dell Medical School isn’t the only thing luring bioscience companies to Central Texas.
Austin Community College, Texas State University and the city of Georgetown all have bioscience incubators that provide wet lab space for the region’s growing biotech industry.
“You take a look at the incubators that are full… they’re thriving,” said Tom Kowalski, president and CEO of Texas Healthcare and Bioscience Institute, an advocacy group for the health care and bioscience industries. “We’re on the cusp of some amazing things.”
Health advocates have high hopes for health care and biotech growth along the Interstate 35 corridor, which links much of the state.
“You can look at the I-35 corridor, and you can see the life science activity in San Antonio,” Kowalski said. “I think other companies will sit back and take notice and say, ‘You know, we should look at Austin.’”
In fact, the state is one of the leading biotech states in the country, according to the Texas Economic Development Corporation. There are more than 5,000 life science firms in the state — a number that likely does not include health tech startups — and 11 medical universities. The economic development corporation pulled data available from the Bureau of Labor Statistics, which does not specify the size of companies.
Those numbers include large corporations like Kimberly-Clark and Celanese. Industry leaders like Abbott, Allergan, Galderma, Johnson & Johnson, McKesson and Novartis, among others, also have major operations in the state.
The most tangible example in Austin is the medical school’s innovation zone, an area that connects innovators, academia, nonprofits and small and large tech companies in downtown Austin.
Chris Laing, executive director of the nonprofit Capital City Innovation, said he’s not only focused on the four blocks of the innovation district. The organization, founded last year to grow the hub, created a group to provide wet lab facilities and resources to startup companies.
“I think to have a strong ecosystem, we need to have that whole spread,” Laing said. “I’m hoping that beyond Austin’s innovation district, we become part of a stronger innovation corridor through here.”
Top photo: The exterior of the Dell Medical School Health Discovery Building on Wednesday, July 18, 2018. (Amanda Voisard/Austin American-Statesman)