“If the coronavirus (Covid-19) crisis has taught us anything, it is the importance of knowledge-sharing, both within Israel and between Israel and the international community,” Assaf Barnea, CEO of Sanara Ventures and the chairman of the Israel Exports Institute’s Life Science Advisory Board, said in an interview with Ctech. “I tell all our portfolio companies that they must pay attention to what is happening around the world so that they can learn from the experience of others and also seek opportunities.”
Barnea started Sanara—a healthcare innovation fund backed by industry giants Phillips and Teva Pharmaceutical Industries Ltd.—six years ago. Today, it supports 16 portfolio companies active in the digital health and medical equipment sectors. One of Sanara’s key features is its 100-person strong advisory board, made up of top professionals at Philips and Teva as well as dozens of experts from universities, hospitals, and medical organizations from Singapore and Japan to Brazil and the U.S.
“We set up meetings between our portfolio company founders and 15 or 18 world-class advisors who can provide input based on what they see on the ground. Their insights can help the company understand what is going on beyond the statistics, which helps them refine their product and find opportunities anywhere in the world,” Barnea said.
According to Barnea, the Covid-19 pandemic was both a blessing and a curse for the life science sector. On the one hand, it expedited an ongoing trend towards innovation in medicine, but on the other, it dried up investments and shifted focus away from anything that is not coronavirus-related.
“Like the New York Times said in a headline that stuck with me, we experienced 10 years of change in one week,” Barnea said. “All of a sudden things like telemedicine, remote diagnostics, patient engagement, and AI-powered decision support went from mere aspirations to immediate necessities. One of our portfolio companies, MyHomeDoc, which has developed a system for a fully remote clinical examination, is currently in talks with people in 20 countries, including in growth markets, to see how its technology can be implemented.”
“It is as if a psychological barrier was shattered and suddenly everyone, insurance companies, hospitals, health maintenance organizations (HMOs), all understand that it is time to adopt a virtual first approach to treatment. It’s all about the mindset,” Barnea said. “People don’t want to sit in doctors’ waiting rooms anymore and with the help of technology, they don’t have to.”
Israel is extremely well placed to benefit from this psychological breakthrough. With roughly 500 medical startups, Israel is second only to the U.S. in the number of companies researching and developing medical technology. In 2018, the Israeli government approved a $300 million budget to support digital health as the country’s next strategic economic growth engine and, earlier this year, government investment arm, the Israel Innovation Authority (IIA) invested tens of millions more in life science companies, particularly those who offered possible solutions for curbing the pandemic.
In addition to the government, there is also a vibrant investment community for Israeli medtech, which includes angel investors venture capital firms, incubators, innovation hubs, and growth accelerators.
In his role as chairman of the Israel Exports Institute’s Life Science Advisory Board, Barnea tries to help turn innovation into products that can be exported to locations around the world.
Israeli life science technologies bring in $9 billion a year, a little under 10% of the country’s total exports,” Barnea said. “Our main concern now is business continuity. We want to make sure we maintain the trade relationships we had in place before the Covid-19 outbreak.”
Asked whether the rush to produce and adopt new products and services did not pose a risk to existing diagnostic and treatment standards, Barnea conceded that it was something people and governments needed to be mindful of, but said he believes there is no danger to the level of treatment. “Yes, there is a realization that the bureaucracy has to change and become more relaxed, but that doesn’t mean treatment will suffer. I believe the opposite is true. At the end of the day, all of these tools are there to support the healthcare establishment, they help doctors and other medical practitioners be more efficient, they don’t make decisions for them.
Artificial intelligence can help narrow down diagnostic options, but the human doctor is the one who determines the diagnosis and recommends treatment,” he said. “Decision-makers will have to set policy to ensure, for example, that medical data remains private or that people have access to the care they need.”
While Covid-19 presented blue skies for some companies, others got stuck in grey, murky waters. The pandemic has absorbed so much of the attention that there is a risk of neglect to other health challenges that predated it. “Sure, we need to find solutions for coronavirus, but there is another ‘little known disease’ out there called cancer for which funds and innovation are surely no less important,” Barnea said.
Barnea confirmed that the trend of recent months, in which investments in early-stage companies were decreasing, is affecting the medtech sector as well. “With so much uncertainty, investors—especially angels—prefer to back their existing portfolio companies.”
The veteran executive and investor, who also advises the World Bank’s International Finance Corp.’s venture capital team, has some suggestions for entrepreneurs trying to establish their companies at a time like this and most of them have to do with being able to precisely characterize and explain their technology.
“Young founders need to go to investors with a tight and well-defined business model. Be focused. Take your time. Understand what it is you do and how it relates to the current needs. Investors are extremely selective now and if you don’t fully understand who you are and what you do, no one else will,” urged Barnea. “Define yourself and re-define yourself again and again, for as long as it takes. In the meantime, reduce your burn rate and stretch out the funding you have.”
According to Barnea, it all comes down to sharing knowledge, because only when everyone understands where they are and where they are going can problems be solved. “One of the negative effects of the crisis was the cancelation of conferences. They were a great source of information, knowledge, and opportunities, and unfortunately, the subtleties addressed at such meetings cannot be replicated on a Zoom call or a shared document,” he said.