MedShape Solutions, a startup biotech firm, is developing a device for reconstructive surgery on the rotator cuff. Not just for pitchers like John Smoltz, but for seniors with similar shoulder problems.

A $100,000 grant this year from the National Institutes of Health kickstarted the MedShape project. Now, says CEO Kurt Jacobus, the orthopedic device is expected to gain regulatory approval next year — and the company may pick up another $750,000 NIH grant.

NIH grants “can do wonderful things, in terms of leverage,” says Jacobus, whose Atlanta company has 15 employees.

Grants from the National Institutes of Health — the leading source of money for biomedical research — have an important economic footprint in Georgia.

A study from Families USA has placed Georgia fourth among states in the level of economic activity generated by each dollar of NIH funding. In compiling its state-by-state figures, Families USA, a Washington-based consumer advocacy group, used a multiplier similar to those calculating a Super Bowl’s financial impact on a host city. Economic activity includes new jobs, spending on equipment and purchase of services to support the research.

NIH funding “generates some very high-paying jobs and economic activity and great scientific discoveries,” says Dee Mahan, director of Families USA’s Global Health Initiative.

The report, though, points out that congressional appropriations to the NIH have been flat in recent years. That funding problem stalls scientific progress, Mahan says.

The NIH appropriation lag “is terribly shortsighted,” says David Lee, vice president for research at the University of Georgia. “It has a negative impact on the economy, a negative impact on the researcher pipeline.”

NIH grants are nurturing research at UGA on medical conditions such as influenza and pancreatic cancer. A five-year, $10 million grant will help support a Southeast consortium for stem cell research, headquartered at UGA.

Emory University gets the most funding from NIH — $251 million in the university’s fiscal 2008 — of any Georgia organization. Grants at Emory, for example, have gone to development of commonly used HIV drugs, and helped researchers working on an HIV/AIDS vaccine. That vaccine effort led to the creation of GeoVax, an Atlanta company, which later received another NIH grant.

Michael Cassidy, president of the Georgia Research Alliance, says National Institutes of Health funding “works great when you create companies that create high-paying jobs.” The research alliance is a partnership of Georgia’s business community, research universities and state government.

The state has built a stronger biotech presence over this decade. In 2006, the most recent ranking by Ernst & Young, Georgia ranked seventh among states in the number of biotechnology companies here, up from 12th in 2000.

Cassidy says 70 Georgia companies are recent offspring of research from universities.

One of them, MedShape Solutions, said the $100,000 from NIH moved the shoulder device from an idea to a working prototype. The firm’s CEO, Jacobus, says such funding “is an excellent turbocharger.”

“We couldn’t have done it without the funding — at least, on this timeline.”