Medical Devices Companies Move to the Forefront
New Directions are detected as Medical Devices and
Biotechnology Companies emerge as a new focus of investment
attention.
Background
The management skills acquired in the early 1980s are now being
put at the disposal of the startups of the current generation of
medical and biotech companies.
86 high-tech companies raised at least $ 200 million in the last
quarter of 2002
30% or $60 million of the total pie went into life science
companies
The life sciences sector became prominent in the last quarter of
the year
TopSpin Medical, (IHTIR 2/2003) a Lod, Israel-based company that
is developing a platform for magnetic resonance imaging that
does away with external magnets, and is working to miniaturize
the technology for cardiac applications. TopSpin raised $16.5
million in a second round that was over-subscribed. The
companys technology is appealing to investors but at least one
cardiologist has told IHTIR that he is sceptical that the company
can deliver on its promises.
Super Dimension Ltd., a Herzliya-based startup that is developing
products for the diagnosis and treatment of lung disease. It
recently obtained $13 million in a fourth round financing.
Iomai Corp., a developer of vaccine delivery systems to the skin
also received funding whose sum was not disclosed.
Brainsgate Ltd., a maker of medical devices for drug delivery to the
brain asl completed a financing round.
Percutaneous Valve Technologies Inc. announced the completion
of a $14 million second round. The lead investors in the round
included : Medtronic Inc., the worlds largest medical device
company and Boston Scientific Corp. which has a long history of
investment in Israels medical sector. Percutaneous Tech is
developing an alternative product for heart valve replacement.
The BIRD Foundations choices for R & D grants also shows a
growing bias in favor of life sciences.
Dov Hershberg, outgoing head of the BIRD Foundation was critical
of the venture capital industry. He said that "many venture capital
funds are floundering without direction. Ineffective decision
processes, which led to the creation of the investment bubbles
that collapsed over the past two years, are now resulting in an
almost total lack of investment, with many missed opportunities.
Global markets, which until recently were very promising, are now
in a slump. The communications market, the semi-conductor
industry, life sciences and other fields, have reached their lowest
point in years. Therefore, this is an opportunity to invest. This is the
time for experts and well informed investments with long-term
strategy."
Of the total grants approved by BIRD, approximately $6 million,
representing 42% of the total grants, is being invested in seven life
sciences projects, with a combined budget of $16 million.
From a total of 15 companies, BIRD-F approved a $1.0 million
funding for C2Cure, formerly CByond, towards its R&D project
titled Urological and Gynaecological Endoscope Development.
IHTIR has published a CByond report in its October 2002 issue
which also appears on the IHTIR web site
http://ishitech.co.il/1002are3.htm.
Israel continues to have the highest number of physicians per
capita in the world. They are providers of a high level of medical
services to a population which has been become pampered by the
availability of excellent medical care in terms of the quality of the
medical profession along with a well developed infrastructure of
hospitals and private and public clinics. The hospitals and clinics
have the benefit of substantial support from the Ministry of Health.
The countrys legislators are well aware of the populations
penchant for a high quality of medical care and do not hesitate to
allocate increases in the annual budget for health care.
From time to time, we report on medical research in the countrys
medical schools and and hospitals. The high level of expertise
accumulated there was rewarded as the US Food and Drugs
Administration, nearly a decade ago designated Israeli hospitals
as suitable for participating in clinical trials of pharmaceuticals that
were building scientific evidence of their efficacy and prior to
requesting FDA approvals as to their suitability for sale to the
public. As early as in the 1970s novel medical devices were
developed in this country. Some of them such as the CO2 surgical
laser and the CAT scanner were in the forefront of medical
technology, In the 1990s Israel attracted global medical industry
attention with the development of medical cardiac stents, the small
coil like devices that are inserted into cardiac and other blood
vessels, to prevent their collapse.
Medical Devices Companies on the Move
They attract 24% of all research and development grants from the
Office of the Chief Scientist
It is being suggested in the Israeli oriented venture capital
community that that the medical devices field will not suffer a drop
in demand similar to the one being experienced by the information
technology and telecom industries worldwide. From a business
point of view the aging populations in the developed world,
government healthcare reforms and widespread evidence of
improved fundamental and applied science all contribute to their
belief that this is the area where money should be invested.
Who are some of the companies that are obtaining investment
support?