We need to be very cautious in choosing the right technology that can truly bring clinical value and really make it to the marketplace in terms of integration in the later stage in the existing technology or IT of the medical facilities, shares Assaf Barnea, CEO, Sanara Ventures exclusively with Kusum Kumari of Elets News Network (ENN)
Sir, Sanara Ventures is a unique combination of a pharmaceutical major and a medical device major. Please throw light on how Sanara Ventures came up and what were the objectives behind its creation?
Sanara Ventures, which is a joint venture between Teva Pharmaceuticals and Philips Healthcare, is based in Israel. Overall, the idea was to establish an early-stage investment platform that comprises two aspects, including investing around a million dollar in start-ups primarily through the incubator platform. Of the entire budget available, we allocate the start-up companies the very first millions of dollars. We invest in a broad spectrum of medical devices and digital health technologies. However, we do not invest in pharmaceuticals and biotechnology. Most of our investments are mostly on technologies that are complementary to Teva Pharmaceuticals and Philips Healthcare. However, if we come across interesting technologies that might not be synergistic to these companies, we will still invest in them in an opportunistic way.
In total, we have about 20 incubators in Israel under the Office of the Chief Scientist (Israel), Ministry of Economy, Israeli Government. The early-stage investment through the incubator platform is of around 1 to 1.5 million dollars, which would be through the incubator platforms that are part of Sanara Ventures. These applications are processed by the Office of the Chief Scientist, Ministry of Economy, Israel. Our incubator programme is a very well-known and prestigious program worldwide. During the later stages, we invest somewhere between 3 and 5 million dollars in technologies that are complementary to Teva Pharmaceuticals and Philips Healthcare.
In a recent announcement, you mentioned to fund 10 companies by the end of 2016 by particularly focusing on medical device manufacturers, which is a great news for our young medical device manufacturers. In the light of the above, have you succeeded in identifying start-ups with high potential in the traditional sectors of healthcare?
We have dealt with over 500 technologies, which are mostly from Israel and some from other countries. As such, there is an increased flow of innovative technologies from hospitals, research institutions, private entrepreneurs, physicians, etc. In total, we currently have four companies in our portfolio. We are also right now working on two to three deals. Hopefully, we will have between eight and ten companies towards the end of 2016. These companies are currently undergoing the process of approval. The vision of Sanara Ventures is to be involved in about 50 start-up companies in the early stage in the next 10 years.
In most cases, when corporates meet early-stage start-up companies offering technologies or solutions of interest to them, they instruct them to clinically try the solutions on about 30 to 50 patients to make it resultoriented before they can be integrated in their system. As a result, corporates and start-up companies within a year and half lose communication and potential partnerships in the majority of the cases. Regardless of Philips Healthcare and Teva Pharmaceuticals, this has been typically observed across all corporates that are trying to do business with early-stage companies.
The principle objective of Sanara Ventures as an innovation-investment platform is to actually identify such early-stage companies and build a mechanism ensuring adequate capital injection to ensure right mentorship, offer assistance in commecialising their technology and find the right application within a certain cost. For this, we have an impressive advisory board comprising 60 people, 20 from Teva, 20 from Philips and 20 external advisory board members from both Israel and abroad.
|Sanara Ventures Key Takeaways|
Has a very well-known & prestigious programme worldwide
Brings true strategic value to start-up companies by delivering true knowhow & expertise exchange.
Aims to be involved in about 50 start-ups in the early stage in next 10 years
Applies generic venture capital criteria while selecting start-ups, such as interesting technology, potential to target a big market, good entrepreneurs, etc.
Looks for technologies that are also synergistic to Philips Healthcare & Teva Pharmaceuticals
Through the advisory board and other members, Sanara Ventures aims to support the selected companies in shaping their technologies, as well as guide them the way to select the right applications and market their solutions. Once start-up companies are selected, we conduct conference calls with the corporates to ensure matchmaking between them. Therefore, as a platform, we bring true strategic value to startup companies by delivering true know-how on market, regulation caps, information technology (IT), etc. and expertise exchange. On the top of the capital, we keep on adding values that we can be identified with the process to make a significant impact.
In Israel, the budget allocated for investing in the incubators by the Office of the Chief Scientist is very structured, which is 700,000 dollars. Sanara Ventures allocates capital on top of the above budget to ensure the total budget runs around 1 or 1.5 million dollars to ensure startup companies get into a fundable state and not fall into the state of debt after 2 years. Hence, our major contributions include additional capital and development of a system that integrates know-how and expertise. Interestingly, we work with start-ups with no strings attached and comparatively less-controlled capital. The selected companies are not obliged to work only with us or only with Teva Pharmaceuticals and Philips Healthcare. They are free to develop their own standalone products, as well as incorporate new changes and shape their products. They can sell their products and become an independent company. Overall, we offer a very open platform model with no exclusive rules and obligations.
With the introduction of economic reforms by the current Government of India to enable ease of access and remove other roadblocks witnessed while establishing business, how is SanaraVentures planning to tap this opportunity?
At Sanara Ventures, we are looking forward to investing in technology in Israel and abroad to bring disruptive solutions to various corporates, including Teva Pharmaceuticals and Philips Healthcare. Currently, we are not sure whether we can inject capital in the Indian companies as this is not our focus area; we might look into this at a later stage. We can definitely build up collaborations that are relevant. We can assist corporates in identifying the potential start-ups and can also bring such companies into the fold of Teva Pharmaceuticals and Philips Healthcare if they meet their requirements. As such, we are constantly in search mode by talking with Teva Pharmaceuticals and Philips Healthcare to enable investment on their behalf. In case any need arises, we are ready to open up and invest or exclusively license technology from Indian research institutions, hospitals, universities, etc. and fund start-ups.
What are Sanara Ventures policies and criteria for selecting start-ups? Please provide the details of parameters on which they are selected.
First of all, we proactively search potential companies by meeting technology transfer organisations (TTOs), start-ups, projects of private entrepreneurs, etc. looking for capital for investment. Post identification of such companies, we conduct one-to-one meetings with them. During the entire process, we apply generic venture capital criteria. These companies must offer interesting technologies and have the potential to target a big market, among other factors. Additionally, the entrepreneurs need to establish their leadership skills. We also look for technologies that are synergistic to Philips Healthcare and Teva Pharmaceuticals.
|Sanara Ventures – Key Features|
Invests in a broad spectrum of medical devices & digital health technologies
No investment in pharmaceuticals & biotechnology
Has about 20 incubators in Israel under the Office of Chief Scientist, Ministry of Economy, Israel
Has an impressive advisory board comprising 60 people – 20 from Teva Pharmaceuticals, 20 from Philips Healthcare and 20 external advisory board members from both Israel and abroad
Due to the increased focus of Philips Healthcare on pre-hospitalisation technologies focusing on prevention and awareness, if we stumble upon such a technology that is relevant to the home care division of Philips Healthcare and makes sense to us, we will probably conduct a conference call with the relevant people of Philips Healthcare.
We are looking for technologies that understand more about patients. We have a very close relationship with various divisions of both Teva Pharmaceuticals and Philips Healthcare. Hence, if a technology makes a sense as complementary solutions to these companies, then we run a gating process with the relevant division. Post checks, we try to structure a deal with these companies.
In this gating process, post selection we submit an application to the investment committee of the Office of Chief Scientist and finalise the cost. In case of non-submission of application to the Office of Chief Scientist, the entire capital will be invested by the investment committee of Sanara Ventures. We are using various vehicles to make Sanara Ventures an open and flexible platform. We may also not necessarily go through the Office of Chief Scientist stage during this entire procedure for a later-stage deal.
Please enumerate the current key challenges in the healthcare ecosystem?
Within the digital health segment, we as investors have to take decisions on a lot of technology from the patent point of view as applicable to medical devices. Internally, its a challenge for us to be open-minded about not necessarily check or look for such patents in digital health as they are not relevant for such applications. Externally, we come across companies that promise the sky in terms of patient care, predictions and analytics, which are truly beyond someone’s reach. Such companies need to ensure that their offerings undergo a long validation & regulation process to prove the level of feasibility and acceptance of their offerings as a global solution.
We as investors need to truly look into such solutions to develop a deep understanding of the product in terms of offerings. We need to be clear whether the product offered is a support system, disease management tool, a solution for chronic diseases, etc. More importantly, we need to decipher the clinical efficiency or value that these companies are claiming to bring. These companies should really be able to get close to what they claim or promise.
|India as a Market|
In case any need arises, we are ready to open up and invest or exclusively license technology from Indian research institutions, hospitals, universities, etc. and fund start-ups.
In the digital health space, we have seen more than hundreds of technologies from world over, with many companies having long procedures and solutions that are not necessarily feasible. These companies need to shape their technologies by following all standards. We need to be very cautious in choosing the right technology that can truly bring clinical value and really make it to the marketplace in terms of integration in the later stage in the existing technology or the IT of the medical facilities. Additionally, it should not affect the workflow of the physicians and truly reduce both time and cost. At the later stage, what matters are integration and appreciation within day-to-day workflow.
What are your recommendations to the startups before they venture into the marketplace?
I would say if the entrepreneurs have good ideas, addressing the initial requirements of the physician is just one aspect. One of the very important requirements is that the start-ups must ensure accurate & true clinical value of their technology. The performance of those clinical values should be very cautiously fine tuned and not be hyped up on the basis of high-level promises. Secondly, they really need to look into the methodologies to integrate any new technology into the existing legacy technologies within hospitals and clinics. Lastly, what matters the most is how the market appreciates and accepts such technology, not just from technological integration point of view, but also from the perspective what such a technology can offer to the physicians, nurses, etc.
Which are the key markets for you in the coming years?
Lets make a distinction between Sanara Ventures approach and that of Teva Pharmaceuticals and Philips Healthcare. For Teva Pharmaceuticals and Philips Healthcare, India is part of their strategy. For us, India is part of the global market. As the CEO of Sanara Ventures, we are looking to tap into the markets that we define as the hubs of innovation, such as Israel, the Boston area, Silicon Valley, Paris, etc. which are getting bigger and larger in terms of medical devices. According to the World Bank, the hub of innovation is also rising in India in terms of the startup community and community of innovation. This transition is evolving more and more. We will definitely try to identify opportunities to license new technology and connect startups with Teva Pharmaceuticals and Philips Healthcare.