Bigger than you think: viewing the health industry as a cluster of interdependent companies.

• Author: Lange, Wade

THE HEALTH INDUSTRY (a.k.a. life sciences or biotech) has received much attention as an important part of Indiana's economic future.

It's an industry' that directly employs more than 274,000 people (and indirectly" leads to another 300,000 Hoosier jobs), at wages significantly above the state average ($79,000 in medical manufacturing), is expected to create up to 45,000 new job openings by 2008, and is growing at a rate double the national rate. As such, the health industry represents a clear opportunity for job growth and wealth creation in our state.

However, common understanding of what comprises the health industry is often limited. People are likely to equate the health industry with the major medical manufacturers such as Lilly, Roche, Zimmer, DePuy, Cook or Hill-Rom, to name a few, or health-care institutions. To be sure, the list of industry-leading companies in the health sector that call Indiana home is astounding and the reason why we're in the top five of pharmaceutical and medical-device manufacturing states. But the health industry is much broader than commonly understood.

The highly specialized suppliers, support organizations and support services firms that can be found throughout Indiana are key to the growth of the core pharmaceutical, medical device and healthcare companies, yet they also benefit from the growth of the core firms. What kinds of companies are in the health-industry cluster? The Indiana Health Industry Cluster Model (www.ihif.org) identifies three primary groups of organizations in the health-industry supply chain:

* Suppliers of specialty materials, specialty services and laboratory and process equipment

* Support organizations, including incubators and research parks, higher education and cluster organizations

* Support services, including investment capital and professional services

Viewing the health industry as a cluster is important to understand how the industry contributes to our economy,: The Milken Institute, in its October...