Opportunities for Industrial Cooperation and Investment in Israel
Medical Devices
Overseas Investment Boosts Israel’s Medical Device Sector

Israel’s medical devices sector is increasingly the focus of major attention from overseas investors including global healthcare giants and venture capital funds. Other foreign investors have been attracted by several recent successful IPOs by Israeli medical device companies on Nasdaq. These investors are drawn by the convergence of Israel unique innovative capabilities in medicine, IT and electronics.
The most recent high-profile sale was the acquisition of capsule endoscopy (a camera in a pill) developer Given Imaging by Covidien for $970 million. This was the fourth acquisition of an Israeli company by Covidien since 2012. The Dublin-based company previously acquired pulmonary endoscope developer superDimension for $350 million, capnography respiratory monitors and modules manufacturer Oridion Systems for $346 million, and hernia mesh placement developers PolyTouch for $40 million.
In the past few years other major exits include Stryker’s acquisition of Surpass Medical, which develops flow diversion stent technology to treat brain aneurysms, for $135 million. Allscripts acquired Israel’s dbMotion, which has pioneered computerized healthcare information software systems, for $235 million, and Alma Lasers was acquired by Fosun for $240 million.
Several companies have raised money on Nasdaq over the past year including: veteran cosmetic surgery laser company Lumenis, which raised $75 million while ReWalk Robotics, which has developed exoskeletons that enable paraplegics to walk, raised $36 million.
In the past few years, Align Technologies acquired Cadent Holdings, which develops 3D scanning solutions for restorative dentistry and orthodontics, including intra-oral scanners, for $190 million, Johnson & Johnson acquired Omrix Biopharmaceutical, a provider of bio-surgery and passive immunotherapy products, for $438 million. Medical device and services company St. Jude Medical acquired MediGuide, a firm focused on inter-body navigation and minimally invasive cardiology, for $300 million, while Medtronic acquired heart valve developer Ventor Technologies for $325 million. Medingo, which develops a miniature insulin dispensing patch for diabetic patients, was acquired by Roche for $200 million including milestone payments for ongoing development..

IPOs and VC Fund Raising
Other Israeli medical device companies have raised funds through venture capital funds and public offerings. EarlySense has raised $46 million from VC funds for its early warning system monitoring patients who are not in intensive care, and has signed a strategic cooperation and US distribution agreement with Welch Allyn.
On the Tel Aviv Stock Exchange (TASE), there have been a number of successful offerings in the past few years including: IceCure (TASE: ICCM), which develops minimally invasive procedures to remove tumors using cryoablation; ETView Medical, which has developed a device for continuous visualization of the airways during thoracic surgical procedures, and ITGI Medical, which has developed a pericardium covered stent platform.
Other Israeli medical device companies traded in Tel Aviv include: Mazor Robotics, which develops and manufactures surgical robotic devices; LifeWave, which develops devices using electrical stimulation to treat chronic sores and Glycominds, which develops molecular diagnostic blood tests for personalized treatments for multiple sclerosis and Crohn’s Disease. MCS Medical Compression Systems, has developed non-invasive compression systems to prevent blood clots in the limbs during surgery. Exalenz Bioscience has developed an advanced breath-testing platform that enables the detection of the Helicobacter pylori bacteria and is in clinical trials for a variety of liver indications, and Itamar Medical develops non-invasive devices for procedures related to cardiovascular and autonomic nervous systems. Sialo Technology has developed root canal and dental implant products.

Other Leading Companies
Other leading medical device companies include: Brainsway, which develops and markets Deep TMS (Transcranial Magnetic Stimluation) systems for treatment of a wide range of neurological and psychopathological disorders and has FDA approval for its device. OrSense has obtained EU CE Mark certification to market its non-invasive continuous monitoring solution of hemoglobin and oxygen saturation to hospitals. Deep Breeze has received FDA approval to market its lung imaging system in the US and Biocontrol is developing implantable devices for the treatment of autonomic disorders, in which the nervous system ceases to function properly, and InspireMD develops mesh coated stents.
Medigus has developed the world’s smallest miniature video camera. The low-cost image sensor combines high sensitivity and resolution with dynamic versatility for a range of potential medical applications, including cardiology, bronchoscopy, gastroenterology, gynecology, and orthopedic and robotic surgery. The company specializes in developing innovative endoscopic procedures and devices. Johnson & Johnson and OrbiMed are major shareholders.
Israel has by far the highest proportion of any country of new patents in this sector per head of the population. Over 400 companies in this field in Israel, about half of the country’s Life Sciences sector, encompass a diverse range of medical disciplines including therapeutics, diagnostics, implantables, disposables, monitoring, telemedicine, imaging and medical equipment. Israel’s medical devices sector is part of a fast growing world market that provides breakthroughs in earlier and better diagnoses and medical treatments that bring clinical benefits to patients with cost savings to both healthcare systems and individual patients.

Inter-Disciplinary Capabilities

Israel’s strength in medical device stems from inter-disciplinary capabilities
Israel’s strength in this sector stems from inter-disciplinary capabilities, which bring together medicine, clinical expertise, materials science, electronics, software expertise and engineering know-how. Some of the world’s leading universities with renowned R&D faculties, leading edge medical centers, the world’s highest per-capita number of physicians, and a flourishing high-tech sector combined with a spirit of entrepreneurship have all contributed to the country’s dynamic growth in medical devices.
When compared to non-medical high tech, investments in the life science sector is at times costlier and a longer process before reaping financial rewards. However, it is a more stable investment avenue as demographic and economic trends ensure the sustained interest and need for new technologies and therapies.
Holding and investment group Elron Electronics has a strong medical device portfolio that includes BrainsGate (30%), develops electrical stimulation based therapies for central nervous systems diseases; Pocared (41%) develops an innovative laboratory system for real time diagnostics; Kyma (37%), which has developed non-invasive remote monitoring of chronic heart failure patients; Notal Vision (23%), and cartilage implant developer Cartiheal (24%).
According to the Israel Advanced Technology Industries (IATI) by far the largest sub-sector in medical devices, which represent 53% of all biomedical companies, is therapeutics (41% of companies) including both disposable and implantable devices. Diagnostics comprises 14%, medical equipment 10%, imaging 9%, monitoring 6% and drug delivery 4%. These medical device companies cover the full range of medical disciplines. But Israeli firms are especially strong in the cardiovascular arena, followed by other disciplines such as ophthalmology, orthopedics, ob/gyn and oncology.

Diagnostic Imaging
Israel’s medical device sector evolved from the country’s highly successful medical equipment industry, which was pioneered in the 1980’s and 1990’s by Elbit, which developed diagnostic imaging technology including innovative nuclear and magnetic resonance imaging and ultra-sound equipment. Elbit eventually sold its diagnostic medical imaging using computer tomography to General Electric’s Marconi division, which in its turn was acquired by Philips Medical Systems. Based near Haifa, Philips Medical Systems has annual sales of about $175 million. Similarly, Elbit’s diagnostic ultrasound and nuclear and magnetic resonance imaging were sold to GE Healthcare, which today generates annual sales of $250 million in Israel.
This is a stable investment avenue as demographic and economic trends ensure the sustained need for new technologies and therapies
Elbit and GE Medical Care’s partnership has spawned one of the country’s most promising medical device firms – InsighTec. Established in 1999 by Elbit and General Electric, ExAblate 2000, InSightec’s first product, is FDA approved, and integrates focused ultrasound thermal ablation with magnetic resonance imaging capabilities to provide a non-invasive method for destroying or ablating targeted tumor tissues. Elbit Medical Technologies has a major stake in Insightec and GE Healthcare, York Investment and Chinese investors are partners.
Another veteran Israeli medical device company is Lumenis, which develops, manufactures, and markets state-of-the-art proprietary laser and intense pulsed light devices for dermatology and aesthetics. Sister company Syneron Medical (Nasdaq: ELOS) develops and manufactures a range of electronic devices for nonsurgical cosmetic procedures, such as hair removal, wrinkle reduction and skin tightening.

Other Multi-National Acquisitions
Johnson & Johnson’s acquisition of Omrix was by no means its first major investment in Israel. The US giant had previously acquired Biosense through its Cordis Division. Biosense provides solutions for endocardial diagnosis and therapy. Johnson & Johnson has also invested in Contec Medical, which develops multimedia information solutions for point of care applications and NESS (Neuromuscular Electrical Stimulation Systems), which provides technological solutions for patients suffering from paralysis due to neurological disorders. The company has also made an investment in Impulse Dynamics- a developer of an active implant to treat chronic heart failure.
Boston Scientific acquired SI Therapies, which develops cardiology products, for $24 million, and Mel – Medical Enterprises Group, which develops minimally invasive therapies for the treatment of cancer with a flagship product that induces remission and reduces recurrences of cancer of the bladder; Remon Medical which uses wireless communications to exchange energy and data with minute devices placed deep inside the body. Boston Scientific has also invested in Sightline, which specializes in the design and development of medical endoscopic systems. Boston Scientific also invested in BrainsGate, which is developing an implantable neuromodulator to treat brain tumors and other neurological disorders and in VisionCare Ophthalmic, which has developed an implantable telescope to treat the dry form of Age Related Macular Degeneration.
Guidant Technologies acquired X-Technologies for about $150 million. X-Technologies, which developed a pull wire for use with catheters in balloon angioplasty, which effectively treats artery narrowing. Kodak Health acquired Orex Computed Radiography. Orex is developing, manufacturing and marketing low cost computerized radiography products, based on innovative phosphor plates. The technology captures X-ray images digitally, eliminating the need for film development processing.

New Funds Promise Future Investment
Some of the $222 million VC fund established by the government, and managed by OrbiMed is being invested in medical device start-ups. Orbimed has invested in Medigus, brain clot protection device company SMT R&D, Keystone Heart, which develops an embolic protection device for interventional cardiology procedures, and Ornim Medical which develops devices monitoring hemoglobin blood oxygen saturation.
Other start-ups include Pneumedicare which is developing a monitor for lung ventilation in mechanically ventilated patients, and Nephera, which is developing an instrument based on electrical stimulation of the urinary bladder to break the vicious cycle of cardio-renal interaction. Medical Surgical Technologies has developed a robot, the AutoLap, which tracks the surgeon’s movements and moves the camera accordingly. Among the start-ups in the Trendlines incubator in Misgav in the Galilee are: CoreBone, which has developed a highly bioactive, 100% mineral, strong bone graft material for dental, orthopedic and spine applications, and Futura Graft, a high-throughput robot for plant grafting while LapSpace medical has developed an inflatable laparoscopic retractor.

Produced By: Daniel Uzan Media & Communications