Medtronic ($MDT) snagged a grant from the Israeli government to launch a digital medicine incubator in the country, expanding its international footprint and joining other tech companies to nurture promising startups in the field.
The company will work with tech giant IBM ($IBM), Pitango Venture Capital and Haifa, Israel-based Rambam Hospital on an incubator dubbed "HealthO2" to help fledgling companies vet ideas and develop business to secure funding, MedCity News reports. The incubator is part of a larger program run by Israel's Office of the Chief Scientist of the Ministry of the Economy, which focuses on startups with innovative ideas "that are too risky for private investments" and turns them into viable, independent companies, according to the program's website.
As part of the program, projects get two years and between $500,000 and $800,000 to develop their idea. About 15% of the budget is financed by the incubator, and the government chips in 85% of financing through a grant that incubator companies pay back "only upon success," the Ministry said on the program's website. Incubator companies will also fork over 3% to 5% in royalties to the government until the full amount of the grant plus interest is paid back in full.
This is not Medtronic's first foray into Israel. In April, the company grabbed artificial pancreas technology from DreaMed Diabetes for its insulin pumps, sinking $2 million into the Israeli devicemaker as part of the deal.
And other companies are eager to jump into the market, with med tech titan Philips ($PHG) and pharma heavyweight Teva Pharmaceutical Industries ($TEVA) kicking off operations for the companies' new med tech incubator in Israel earlier this year. The incubator, dubbed Sanara Ventures, also grew out of a grant from Israel's Ministry of the Economy, and will invest up to 100 million shekels ($25.3 million) in early-stage healthcare companies covering areas such as digital health, monitoring and imaging.
Philips and Teva have already gotten the ball rolling on the incubator, unveiling two investments in July. Sanara will fund two or three more companies by the end of 2015, the companies said at the time.
"Israel has a major record of achievement in innovation, which Philips is a partner to through our extensive R&D investments in the country," Philips CEO Frans van Houten told Globes earlier this year. "I am convinced that this step will promote and strengthen even more healthcare innovation in Israel."
- read the MedCity News story
- here's the program website
Special Report: How did Israel become a hotbed for medical devices?