Israeli medical device company CathWorks has signed an agreement with international medical technology solutions giant Medtronic for marketing of its products in Europe, sources inform "Globes." CathWorks developed and markets non-invasive imaging technology for coronary arteries during catheterization. The company published trial results demonstrating its ability to detect when there is no need to use stents for treatment of heart disease.
This is Medtronic's third marketing agreement this year with an Israeli medical technology company. Medtronics signed a successful marketing agreement with Israeli company Mazor Robotics in 2016, and eventually acquired the company for $1.64 billion two years later, after which the two companies' products were fully integrated with each other.
Early this year, a marketing agreement was signed with Alpha Omega, which developed a product imaging and directing medical devices during brain surgery. This product complements the brain surgery devices marketed by Medtronic. A month ago, Medtronic signed an agreement with EDP, now owned by Philips, but which operates from Israel and markets systems for guiding devices for treatment of heart arrhythmia.
An unusual approach
A string of three marketing agreements by a large international company with young Israeli medical companies in the short span of six months is unprecedented in the sector. It indicates a strengthening of Medtronic's connection with Israel, but also a new attitude by the corporation towards signing agreements with young companies. Similar agreements were signed with other countries around the world in recent years.
Through these agreements, Medtronic is gaining ownership of the marketing of imaging products used to direct its medical devices. In this way, it can offer doctors a more attractive overall package, while at the same time upgrading its devices and the imaging systems of its partners, so that they can work well together. It is possible that one of these agreements will lead to a future acquisition, as happened with Mazor. Joint marketing enables Medtronic to see the true value that its customers attribute to the product, and to view from the inside the behavior of the company with which it is cooperating.
On the other hand, if the company's revenue increases following its cooperation with Medtronic, and consequently its value as perceived by its investors, the US company will eventually have to pay more for the acquisition, as happened in the case of Mazor. This may be the reason that not all of the medical device companies adopt this approach. Medtronic itself adopted it only recently. It appears that Medtronic's management has decided as a matter of policy to reduce the risks in future acquisitions, even if it has to pay more for those acquisitions as a result.
Marketing cooperation with an enormous international company does not always guarantee the local company's success. For example, GE Healthcare, the health division of General Electric, previously signed several exclusive marketing agreements with Israeli companies (Insightec, WideMed, Arineta), some of which went well, while others were less successful.
The promise was fulfilled
Medtronic has been very active in Israel in recent years. The network of companies that it acquired in Israel already constitutes its largest R&D center outside the US. In 2018 alone, Medtronic acquired Mazor for spinal surgery, diabetes information company Nutrino Health, and Visionsense, which specializes in imaging for brain surgery.
In December, Medtronic CEO Omar Ishrak visited Israel and took part in the International Conference for Innovations in Cardiovascular Systems (Heart, Brain and Peripheral Vessels) and High-Tech Life Science Industry. He visited the company's employees in Israel (mainly at Mazor), and met with young Israeli companies. The marketing agreements developed over the past year were primarily due to seeds sown on this visit. On the same occasion, Medtronic Israel country director Yaron Itzhari said that there were more deals in the pipeline, and his statement has indeed been confirmed.
Kfar Saba-based CathWorks was founded in 2013 by president Guy Lavi and cardiologist Prof. Ran Kornowski, with help from Mor Research Applications, the technology commercialization company of Clalit Health Services. The company has raised $50 million to date from international investors such as the Quark Ventures fund, the Corundum Fund, Deerfield, and Biostart Ventures, in addition to initial Israeli investors Triventures and Pontifax Venture Capital. Jim Corbett, CathWorks' American CEO, is a former senior executive at medical companies, including Boston Scientific and Baxter. CathWorks markets its products in the US with approval from the US Food and Drug Administration (FDA).
Published by Globes, Israel business news - en.globes.co.il - on June 17, 2019
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