Israeli digital healthcare companies attract foreign investors
Israeli digital healthcare companies are ripe for foreign investment as the healthcare and tech sectors continue to converge, several industry sources said.
Triggered by initiatives from the 2010 Affordable Healthcare Act in the US, including those that require more efficiency in hospitals, as well as the shift in healthcare to the consumer - such as the rise of wearables, foreign companies looking to lead the digital healthcare space are on the prowl for solutions to give them the edge over competitors, they said.
Israel is increasingly attractive to foreign investors as valuations of local companies remain lower than global counterparts because less capital is available locally to startups in the space, Levi Shapiro, General Partner at Veritas Ventures Digital Health Fund in Israel and Lead Organizer of the mHealth Israel meetup community, said.
Globally, digital health companies raised over USD 4.1bn in venture funding in 2014, according to US-based digital health fund Rock Health.
In addition to funding opportunities, Israel is attractive for its talent and experience, a senior healthcare executive said, noting that Israel has over 20 years experience in the management of digital health records.
Data analytics and health IT
Israeli companies in fields such as data analytics, biotech and IT that are offering solutions that can further enable the personalization and consumerization in healthcare are likely to draw investor attention, sources said. EarlySense and MediSafe Project are examples, two industry investors said.
On 20 January, EarlySense, which develops a wireless patient monitoring device that utilizes analytics and health IT, announced that it raised USD 20m in a Series F round led by Samsung Ventures. The partnership will aim to bring EarlySense's sensing and monitoring technology, which has been commercialized in the hospital setting, to the home/consumer market.
Earlier this month it was revealed that MediSafe Project, which offers a cloud-synced mobile medication management system, raised USD 6m, including from Qualcomm Ventures. The company will move its headquarters to the US, which is its main market, and expand its business team to better scale up. The move is part of an overall trend where Israeli digital health companies are formed here and move abroad to scale up, Shapiro noted.
Other interesting companies include Treato and Tyto Care, the first industry investor said, adding that there are an estimated 200 Israeli companies in digital health.
Treato, which has raised at least USD 20m to date, offers a healthcare intelligence service that uses data analytics to provide insight on drugs and conditions to the public and healthcare communities. Tyto Care, which raised USD 4m in a Series A round in May 2014, has developed a platform and handheld device that enables physical examinations to be performed remotely by anyone.
Investors
As the industry is still nascent, most deals will likely be investments in early stage companies and range from seed level to Series B rounds, Shapiro said. Most investors will likely be corporate and strategic partners, said an industry consultant.
Companies looking in Israel range from consumer internet companies such as Apple [NASDAQ: AAPL], South Korea-based Samsung [KRX: 005930], and Microsoft [NASDAQ: MSFT] to retail chains such as Walgreens [NYSE: WAG], CVS [NYSE: CVS], and RightAid [NYSE: RAD]. Other players include healthcare IT companies, pharma, hospital chains, and insurance providers.
There is an active accelerator ecosystem in the US and Israel, as well, Shapiro noted. In 2014, Fortune 500 healthcare company Becton, Dickinson and Company (BD) [NYSE: BDX] partnered with Microsoft and US-based accelerator Healthbox to offer a healthcare-focused class in Microsoft's Tel Aviv accelerator.
BD is particularly interested in information-enabled devices, big data analytics/population health management solutions, and next generation sequencing, BD executives noted during a presentation during an mHealth Israel event on 19 January.
In addition to BD's joint accelerator effort, Inspire Healthcare Innovations, a joint venture between Holland-based Philips Healthcare [NYSE: PHG] and Israel-based Teva Pharmaceuticals [NYSE: TEVA; TASE: TEVA], won a tender in the summer of 2014 to launch a technological incubator focused on medical innovations and technologies.