Global biotech giant Amgen Inc. (Nasdaq: AMGN) is investing in Israeli digital health incubator eHealth Ventures. This is Amgen's first major investment in Israel and it will join the other partners in eHealth Ventures, Maccabi Health Services, Medison Pharma (Amgen's Israeli distributor), Cleveland Clinic Innovations, and Shanghai Creation Investments (SCI) and other private Israeli and US investors in the Tel Aviv incubator. The partners have an 8-year franchise to run the incubator from the Israel Innovation Authority (formerly Office of the Chief Scientist).
Cleveland Clinic Innovations business development manager Thomas Sudow who sits on eHealth Ventures advisory committee, says that the incubator has broad areas of activity. "We are not developing medical equipment or pharmaceuticals but operating in the fields of IT management for hospitals and clinics, apps for changing behavior, gaming systems for improving health and more."
The incubator expects to take in 40 startups over the next eight years. To date eHealth Ventures has raised $12 million from its stakeholders for investment in early stage companies and plans raising more money for follow-up investments in companies that will leave the incubator after two to three years. The fund set up by the stakeholders in order to operate eHealth Ventures have already made one investment outside of the incubator in Intendu, which is developing medical games for stroke, dementia and head injury sufferers. The stakeholders also hope to bring in an electronics company as a partner in order to provide support for that aspect of the operations of digital health companies.
Why did the stakeholders decide that the incubator should focus on digital health rather than other areas of medicine?
Sudow said, "This is a growing field and there is not a lot of competition from really good companies and it is a field in which we at Cleveland Clinic invest no small amount. Although we are five years behind the Israeli health system in personal records medicine, we are 10 years ahead of most of the US."
"Cooperation between these organizations - a pharmaceutical company, hospital, health service provider, which is also an insurer (Maccabi) and a Chinese investment fund allows us to examine these companies from every direction before they come into the incubator. Then we can give them the full raft of mentoring, and subsequently we would be interested in having them work in a limited capacity within Cleveland Clinic, even while they still remain in the incubator. We are currently checking out companies and if their business model is realistic."
Do Israeli digital health companies understand the US market?
"Some of them very much understand it but it is a system that is changing so you really need to be living in the market to understand it. For example, I recently advised a digital health company not connected to the incubator that wanted to integrate into our medical records system but did not understand that nobody wants to complicate a system that is already up and running, even if they do have a good product. We gave them help on integrating their product into the product of one of our existing suppliers."
Who are you Chinese partners?
"SCI was founded by a businessman called Donald Tang who sold a company and then set up a network of 1,000 entrepreneurs in China that invest together with him in early stage companies and help those companies enter markets and raise more capital. Most of the activities of the fund are in the health sector even though most of the entrepreneurs in the club do not come from the health sector."
"Tang came to Israel for the first time a year ago and has since been back four times accompanying Chinese entrepreneurs that he acquaints with the Israeli market. We connected with him due to two investments he made in the Cleveland region and when he mentioned Israel, I introduced him to a range of people from Israel and afterwards he joined the incubator. He represents people with capital worth $3 billion. His model resembles John Medved's OurCrowd and the two have met and conferred together."
"The Asian market is very large with a lot of capital flowing there. Not many medical companies have been built there. The entrepreneurs working with Donald Tang mainly made their money in traditional markets but now they are investors. They can connect us up with distribution networks in China or become distribution networks themselves but that's not the first thing that they are looking for." Cleveland Clinic cooperates with Israeli publicly traded company Merchavia Holdings and Investments and the two have invested in CDX, which grew up in Cleveland Clinic and is managed by an Israeli Dr. Arnon Chait. The company develops biological markers to identify the progress of cancer without the need for a biopsy. In the first stage the product will be used for prostate cancer. SCI has also invested in the company.
Published by Globes [online], Israel business news - www.globes-online.com - on November 3, 2016
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