"I made some people in Israel rich"

Lewis Pell

Legendary medical device investor Lewis Pell talks about what he brings to inventors, breaking up with Shlomo Ben-Haim, and healthcare's future.

Lewis (Lew) Pell is a legendary figure in Israel's healthcare industry. In the late 1990s and early 2000s, the names Lewis Pell and Prof. Shlomo Ben-Haim were synonymous with huge successes in the medical devices sector, partners who recorded one impressive exit after another, and set a new standard for hopes and dreams in this sector. But then, the partnership suddenly collapsed.

According to documents now made public as part of reciprocal lawsuits between Pell and his former lawyers, in 2005 Ben-Haim invited Pell to a restaurant and informed him that he wanted to dissolve the partnership and set out independently. An affidavit filed by Pell claims that Ben-Haim even told him, through mutual acquaintances, that he would "destroy him." "We were very close, like brothers," Pell sighs in his first interview in 15 years. "Or maybe like a father and son, because I'm much older than him. When Shlomo had surgery, he stayed at my house for weeks; I visited him in the hospital every day."

What led to the deterioration in a relationship that was so close? Pell prefers not to elaborate. In a mediation process, he and Ben-Haim reached a financial compromise after the dissolution of the partnership, which had very much mingled their assets. In a 2012 lawsuit, Pell claimed Ben-Haim refused to transfer Johnson & Johnson shares to him that he held in trust. Ben-Haim, for his part, claimed that he was owed money for investments in certain companies made on Pell's behalf. It ended in a compromise, but the dispute spawned another, between Pell and the lawyers who represented him, and the legal saga continues.

"These brilliant people wouldn't have succeeded without me"

Along with Ben-Haim, Pell had other partners in the same legendary group of healthcare entrepreneurs. Among them are the brothers Motti and Rafi Biar, and Oren Globerman. "I made some people in Israel rich," says Pell. "I have always loved working with brilliant people. Shlomo is one of the most brilliant people I have ever known.

"I'm not as brilliant as these people. I'm also not the best operational manager. But I have the ability to make things happen, and I'm afraid that if I hadn't been in the picture, they would still be very brilliant but wouldn't have been able to translate their ideas into such successes. I'm afraid they didn't quite understand that."

Pell today has a network of new good friends, which includes Israeli Dr. Uri Geiger, who leads American private equity fund Accelmed. The two invested together in Cogentix Medical, which was sold for $ 240 million in 2018. "I love Uri," he says." He's a genius. I never invest in venture capital funds, but I invested in his. "

Pell acquired his legendary status in Israel after leading a number of healthcare companies to successful exits with his partners. In 1996, together with Ben-Haim and other partners, he sold InStent, which developed technology for non-surgically inserted stents, to Medtronic for $200 million.

A year later, the two sold BioSense, which had developed real-time 3D mapping technology based on Ben-Haim's invention, to Johnson & Johnson, for $427 million - a sensational amount for the medical device industry in those years. BioSense has since become one of the Johnson & Johnson group's main companies, and an important development center in Haifa. The company is considered a great success to this day, and its is still based on the products developed then.

In the following years, Pell and Ben-Haim, together and separately, sold additional medical device companies, for smaller amounts. Entrepreneurs who worked with them said things like, "Connecting with them was the best thing that ever happened to me and the most difficult thing that ever happened to me," with no little criticism levied against the two. Documents in the current legal dispute with Pell's former attorneys over fees that the attorneys claim he owes them, reveal his communication style. He has no problem using very everyday language in official correspondence, calling people "idiots" to their faces, or worse behind their backs. On the other hand, he readily expresses enthusiasm, and speaks openly about his positive feelings towards his current partners, the affront he suffered from previous partners, and about his concerns.

How did you get into the medical devices field?

"In the '70s I was an investor on Wall Street. The market was going up and down, my first son had just been born, and I thought that perhaps I had better invest in something more stable. When the market was strong, medical device performance was good, and in a weak market, it still had a floor. The rise in the standard of living increased the demand for medical equipment, regardless of the public's financial situation. I started some companies with a Japanese partner, then with Prof. Maurice Buchbinder of Stanford University, who connected me to the Technion. That's how I met Motti Biar. We started InStent, we succeeded in floating it and then selling it, and the rest is history.

"We were dealing in cardiology then; it was a good time for cardiology. BioSense was one of the great successes, and Shlomo invented it. Today, Johnson & Johnson records billions of dollars in revenue from this company. They retained the Israeli activity, expanded incredibly, and Shlomi Nachman, who was CEO, became a very important person at Johnson & Johnson. Other Israelis have become senior executives at this company. We were all very happy about it. "

What do you think were the reasons for the success?

"I met the most brilliant people at the right time and in the right place. It was an amazing time for medical equipment."

"Google will be a leader in health"

The end of the first decade of the millennium marked a less favorable period for medical devices. "The biotech industry suddenly exploded; everyone left medical equipment and moved to it. Medical equipment dimmed a little. Now it's back. Medtronic and Johnson & Johnson are very successful. The connection between devices and biotech, which started with the drug-coated stent, and the integration of medical equipment and digital health - that's the future."

Pell believes the recently hot area of telehealth is about to cool down, "because it really got too hot," he says. "Now Big Data and Artificial Intelligence are hot. I'm involved with two companies in the US: one in pulmonology, the other in neurology. The barrier to entry in this field seems to be low, but the algorithms have got to be based on huge amounts of information.

"I think wearables will be an amazing field. Today, you can do an ECG by phone, another product lets you know when you're dehydrated. The problem is that Google and Apple are inside. That's difficult because you have to adjust to the trends they dictate. But it's also good because they might buy you. Google will lead the healthcare world in the coming years. In the future, only surgery will be performed in hospitals - everything else will happen at home."

Another area Pell believes in is robotics. "All the big companies are buying companies in this field. It's a huge market, and I don't think it's overpriced right now. Robotics, along with artificial intelligence and neuromodulation (nerve stimulation), will change the medical device world of the future."

What's your method for choosing companies?

"No method. If I like people and the idea seems good to me, I go for it. It's totally intuitive. I've been burned a few times. Sometimes you get conned. If you're an open personality who loves people and don't protect yourself, you get hurt, but I have a lot of friends. I'm shy on the inside and extroverted on the outside, and I wouldn't want to be anyone else. I've made some mistakes, but bottom line, I've made a good choice. There's no investor who hasn't made mistakes and failed. Venture capital is risky."

How do you contribute to the companies you're involved in?

"I know how to manage a team. That's my advantage. In Israel, there are many people with reasons and the desire to help me. In every exit I've made, I let others benefit, so they'll come back to me. If I make $300 million, I can leave 25 for the team. It won't make a difference to me, but it will make a big difference to them."

"Your Israeli industry is so prolific"

In June, the testimony phase in the trial currently taking place will begin, and Pell will come to Israel to testify. Despite the circumstances, he's excited about coming; it's an opportunity for him to do business as well. "I really like Israel and your strong industry. I'm currently involved in several companies. All this business with the lawyers ruined my mood," he says, but he is still interested in the local industry, especially in areas such as neurology, cardiology, orthopedics, and the integration of those with biotech and artificial intelligence.

The Israeli companies that Pell is involved with currently operate outside the media searchlight. One is Cardiac Implants, which develops implants for replacing or repairing heart valves, one of the hottest and most complex fields in the world of cardiology. Another company is Synapstim, founded by Sasi Solomon, which is developing a bioelectric nerve stimulation system, initially for the treatment of overactive bladder (OAB) syndrome. Another company is Vensica, the developer of a urinary bladder drug delivery platform, founded by an entrepreneur named Avner Geva.

"I'm sure there are hundreds of companies in Israel that I don't know about, because you're so prolific," says Pell. "I wish there was peace. You could be the Switzerland of the Middle East."

Published by Globes, Israel business news - en.globes.co.il - on May 25, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

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