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6 Hartford Business Journal • December 11, 2017 • www.HartfordBusiness.com Reporter's Notebook Matt Pilon | mpilon@HartfordBusiness.com Health Care/Bioscience, Startups & Entrepreneurs, Government/Law and Energy HEALTH CARE Medical device makers sweat tax revival T ime is winding down for medical device manufacturers that have been lobbying to delay (again) or repeal an Obamacare tax on their sales revenues. The 2.3 percent medical device tax took ef - fect in 2013, and was expected to generate nearly $24 billion over a decade, one of several new levies meant to help fund premium assistance for income-eligible Obamacare enrollees. Congress post- poned the tax for two years in late 2015, under Presi- dent Barack Obama. But unless lawmak- ers act again, it is set to be reinstated. "We're looking for full repeal," said Greg Crist, executive vice president of public af- fairs for the medical device industry as- sociation AdvaMed. That may not be in the cards, he admits. "The trend has been in recent days to where, if left to their own workings, Congress would al- low another one- to two-year suspension of the tax," Crist said. Connecticut has 128 medical device companies, accord- ing to AdvaMed. In 2015, those companies employed more than 7,000 people. According to the state Department of Economic and Community Development, the medical equip- ment and supplies manufacturing sector had just over $2 billion in sales in 2013. It's unknown what portion of those sales would be affected by the tax, which only applies to domestic sales, not devices sold overseas. The industry contends that the tax will take a bite out of both jobs and research and development efforts. Using U.S. Census Bureau data, AdvaMed announced earlier this year that the industry lost nearly 29,000 jobs between 2012 and 2015, when the tax was in effect. Crist insists that the bulk of those losses can be blamed on the tax, and predicts more losses if the tax returns. "If past is prologue, it is unfortunately very likely," he said. However, the industry's financial performance has been mixed. A U.S. Government Ac- countability Office analysis found that the industry's net sales had continued to rise in 2013 and 2014, despite the tax. Smiths Medi- cal is among the companies that would be impacted by the tax's return. The British multinational manufacturer has a facility in Southington that makes catheters and tra- cheostomy tubes. "The medical de- vice tax hinders our ability to invest in the ongoing research and continued development of these types of life-saving technologies, which ultimately negatively impacts patient care around the world," said Chris Holmes, CEO of Smiths' medical division. The industry has found some sup- port for its position in Connecticut. U.S. Sen. Richard Blumen- thal co-sponsored legislation earlier this year that would repeal the tax. STARTUPS AND ENTREPRENEURS Active 3Q yields $82.1M in CT venture funding Greater Hartford companies held their own in Con- necticut's strongest third-quarter ven- ture capital show- ing since 2014. During the three months ended Sept. 30, 10 Connecticut companies secured a combined $82.1 million in fund- ing, according to the latest PwC/CB Insights MoneyTree Report. That was up from $13.3 million raised by nine com- panies in the same quarter last year. Area companies on the list of top deals in the third quarter included Farmington's Bioarray Genetics, which is developing a diagnostic test to detect breast cancer ($5.2 million); Manchester's Woven Or - thopedic Technologies, which makes gripping sleeves for orthopedic bone screws ($4.2 mil- lion); and West Hartford's ReadyDock, which makes disinfecting stations for cell phones in healthcare and other settings ($1.9 million). The largest Connecticut deal was $50.5 million raised by New Haven biotech Trevi Therapeutics, which is developing a treat- ment for a skin condition called pruritis. Through the first three quarters of the year, Connecticut companies raised $176.7 million vs. $107.3 million raised during the same time period in 2016. U.S. employment in the medical-tech sector The medical device industry argues that reinstatement of the medical device tax would lead to job cuts. Medical technology manufacturers lost nearly 29,000 jobs when the tax was in effect, according to an AdvaMed analysis of U.S. Census Bureau data. Here's a breakdown of that data. Total Year-over-year Year-over-year Year med-tech jobs change percent change 2010 400,232 NA NA 2011 401,820 1,588 0.4% 2012 401,472 -348 -0.1% 2013 397,058 -4,414 -1.1% 2014 370,036 -27,022 -6.8% 2015 372,638 2,602 0.7% Total job losses (2012 to 2015) -28,834 -7.18% Source: AdvaMed GOVERNMENT & POLITICS CT still a prominent home for millionaires The wealthy are a crucial part of Connecticut's income-tax base, but the top-100 richest taxpayers have remit- ted less money to state coffers in recent years. There have also been fears, which some say are overblown, that millionaires are leaving the state. Regardless, this IRS data, compiled recently by the Office of Legislative Research, shows that Connecticut continued to be a top destination for millionaires between 2010 and 2015. Average number of millionaire income tax returns filed between 2010–2015 Average number of all income tax returns filed between 2010–2015 Average millionaire returns per 1,000 residents Connecticut 10,291 1,746,105 6 Maine 668 634,953 1 Massachusetts 13,189 3,294,588 4 New Hampshire 1,288 680,331 2 New Jersey 16,470 4,324,508 4 New York 42,817 9,434,149 5 Rhode Island 886 517,066 2 Vermont 421 321,710 1 Source: Office of Legislative Research; IRS Marcia Fournier, CEO and founder, Bioarray Genetics. Greg Crist, Executive Vice President of Public Affairs, AdvaMed A catheter made by Smiths Medical, which has a Southington facility. Connecticut has 128 medical device companies, according to AdvaMed. In 2015, those companies employed more than 7,000 people. PHOTO | CONTRIBUTED PHOTO | CONTRIBUTED