"We at Philips need to be more serious about our activity in Israel," said Philips Healthcare Senior VP business development, strategy and M&A Arnaud Bernaert. "There were ideas, which when we first encountered them seemed too advanced for acquisition, and which were ultimately sold to competitors."
During his last visit to Israel, Bernaert met about 30 medical start-ups, and he expects to continue relations with at least 4-5 of them. "This is only the tip of the iceberg of what exists in Israel," he said.
There is no one more suitable than Philips Healthcare to establish investment operations in Israeli start-ups. The company specializes in imaging and home healthcare, and it already has a large development center in Israel, with more than 600 employees in a range of fields. In the past few years, the company acquired CDP Medical, which develops digital picture archiving and communications systems (PACS), and closely cooperates with Corindus Vascular Robotics Inc., which has developed robotic-assisted stent placement without the need of a doctor in the room, enabling more precise placement of stents and enabling the doctor avoid exposure to radiation.
"Robotics complements well with imaging; precision imaging enables precision robotics," says Bernaert. "We have a minority stake in Corindus, which obtained Food and Drug Administration (FDA) approval six months ago and has begun sales in the US, and we share in the distribution. We market the product side by side. We're definitely committed to invest in the company in later stages, so we can collect more clinical data and build a distribution channel. This is the first time that we're marketing a product with disposable material, and later, we may want to cooperate with other companies that sell such products, so that our distributors will 'improve' in this area, and we can build a distribution channel for disposables.
"Imaging-based non-invasive treatment is the big opportunity which we've marked for our future at Philips. Imaging as a diagnostic tool is already crowded and competitive, but when imaging-guided treatment is added, great value is created for the patient - fixing heart valves, ablation of heart tissue to prevent fibrillation, stent placement, catheter placement - all these are more precise when there is better imaging of the body's insides."
Philips Healthcare is also interested in clinical informatics. "At Sheba Medical Center we met a company called Radiologics, which has developed software to independently analyze images and prioritizes them for the doctor. For example, in the emergency room, the software can warn when it sees a patient hemorrhaging and should be examined. The software is a constantly learning artificial intelligence system. It doesn’t make clinical decisions for the doctor, but improves his work priorities. Today, a doctor goes to a patient based on appearance, or by the queue. It is still a small company, so I don’t want to raise false hopes, but it's fascinating."
Israelis advance with limited resources
In addition to imaging, Philips Healthcare is seeking to develop in home healthcare. "I was very pleased by the meeting with Neuronix (which is developing a treatment for Alzhiemer's with a combination of magnetic stimulation and computer games-based cognitive exercises - G.W.). I was surprised that it failed to raise capital on the Tel Aviv Stock Exchange (TASE)," says Bernaert.
Bernaert is also interested in InSightec Image Guided Treatment Ltd., a subsidiary of Elbit Medical Technologies Ltd. (TASE:EMTC). The company uses focused ultrasound to ablate tissue, using MRI to image the procedure. Philips Healthcare's praise of InSightec should not be taken for granted. It has a cooperation agreement with Philip's rival GE Healthcare and Philips has its own MRI-guided ultrasound treatment device.
"InSightec has not had a breakthrough for many years, because it entered the market via uterine fibroid ablation, where we also operate," says Bernaert. "But when a doctor carries out the procedure, he has to fight with other wards for an MRI, while the alternative, a hysterectomy, he can do himself. InSightec has now entered fields where its technology is unique and needed more - treatments of the brain and bone tumors. Neurology wards have an available MRI and indemnification should be high enough, so it pays for a doctor to fight for the MRI. Economics is finally working in their favor."
Bernaert also favorably mentions Elron Electronic Industries Ltd. (TASE: ELRN) portfolio company Kyma Medical Technologies Ltd., which has developed a miniature body penetrating microwave device for monitoring patients with chronic heart failure; Robert Taub and Dr. Adi Mashiach's Nyxoah S.A., which has developed an implant for treating sleep apnea; and home treatment company Vaica Medical Ltd., which allows a pharmacist to package medications that notifies when a patient remembers or forgets to take them.
"I am surprised how Israeli companies are able to move forward with such limited resources," says Bernaert. "We want to cooperate with Israeli companies at an earlier stage. I have a mandate from Philips Healthcare CEO to establish in Israel an incubator style infrastructure."
Published by Globes [online], Israel business news - www.globes-online.com - on July 25, 2013
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