Ofer Sachs, Aviv Barzilay, Dr. Louiza Chitour

Ofer Sachs is CEO, Herzog Strategic Ltd.

Aviv Barzilay is an Associate at Pitango Venture Capital, and formally Head of Strategy at Herzog Strategic. 

Dr. Louiza Chitour is heading the  HealthTech program by Plug and Play Middle East

It has recently been announced that the department of health Abu Dhabi (the DoH) and the Israel Innovation Authority (the IIA) have signed a strategic and historic agreement to enhance technological advancements in the healthcare sector. By establishing new channels and platforms for foreign investment, building supporting Infrastructure for start-ups in the field, and forming new partnerships between local and international leaders in healthcare, the collaboration agreement is designed to enhance the healthcare industry and the health-tech industry specifically.

The agreement is the first outcome of an in-depth process, led by the DoH and the IIA with the support of Plug and Play Abu Dhabi, Pitango Venture Capital and Herzog, Fox & Neeman via its consulting arm HS. , which aims to create new platforms and links between the two ecosystems, joint ventures and environment for bilateral transfer of knowledge and tech. Further, the agreement initiates the formation of a bio-convergence alliance, an alliance that will be focused on enhancing applied (and basic) multidisciplinary and transdisciplinary research in the field.

This agreement was designed to facilitate the formation of appropriate infrastructure that will permit the co-creation of an environment in which public and private sector entities can work together to build upon these new platforms. Along with forming a bio convergence alliance, the collaboration agreement is designed to create new opportunities using different platforms: innovation engines, financial partnerships, academic collaborations, and knowledge sharing mechanisms. Accordingly, the new churidar must be shaped according to each ecosystem’s unique characteristics, as well as the most current trends and innovations. Hence, thought leaders from both parties have been exchanging knowledge during 2 summits, one held during 2021 and was facilitated by Herzog Fox, Neeman and Plug and Play Abu Dhabi and the most recent one which took place earlier this month by Pitango Venture Capital and Plug and Play Abu Dhabi.

The multidisciplinary agreement should be treated as an enabler for many opportunities, including establishing joint ventures, creating cross-border mechanisms to fund and support Proofs of Concept and clinical trials, exploring new bases for medical data to be shared and used, and testing IP and research in new frontiers.  Furthermore the agreement aims to facilitate cross-border investments and resources allocation in a way that will improve the value expected from the involvement of leading investments bodies and private equities firms in various stages of health-tech innovation cycles, encouraging the appropriate utilization of industry-focused business models, and supporting new partnerships between startups, researchers, innovation centers, academia, healthcare providers, and pharma companies.

The DoH has created an open innovation platform for digital health players combining “hands-on” and “need-based” methodologies along with major catalysts of the healthcare industry. As part of it, the department has built the Abu Dhabi Digital Health Hub, a  platform based on differentiating factors such as the Malafi-based system that allows the transfer of medical data into medical predictions. The IIA has been recognized as a global leader in the digital health industry, leveraging an “ecosystem approach” covering all needs from community services, prevention, education, all the way to the needs of hospitals, aiming to address the challenges presented by the difference between creating innovation in the healthcare domain and actually implementing it into the healthcare system.

Investments in health-tech have the potential to address some of the challenges the industry is facing. It is undeniable that startups and innovations in the discussed spaces took longer to accelerate and incubate as a result of the heavily regulated environment, the impact on human lives, the heavy reliance on existing systems, and the high costs of change and research. Those factors are presenting challenges for acceptable funding models and require public sectors to share the risks presented by early-stage opportunities in the field, given their role in promoting health as a public good. It is also likely that the same factors will lead to opportunities for syndication with other investors, strategic partnerships at inception, and more decentralized knowledge sharing platforms.

Examining elements that typically affect health-tech ecosystems reveals differences between the two ecosystems, such as the structure of healthcare systems, the volume of funding opportunities and access to capital, regulations, insurance and public health policies. In addition, we are witnessing different needs resulting from demographic differences, nutrition, awareness and cultural differences. However, it can be argued these differences along with similarities such as the governmental support agenda, the engagement models between the public and the private sector and more, can create a sustainable and healthy but also financially attractive health-tech industry. The health-tech industry requires a niche-focused approach. Challenges presented to Genomics focused startups for example are much different than the one presented to companies focusing on developing new diagnostics tools, therefore a broader network of syndications might support entrepreneurs to overcome these challenges. Focusing on niche segments will develop new growth avenues for health-tech companies to extract insights and scale leveraging new and unfamiliar demographics under a supportive but yet effective regulatory framework.

Israel is one of the most important R&D centers in the world, which over the years has grown a large number of companies in the fields of life sciences, medical devices and health IT. A strong structural connection between academia, HMOs, local and global industries as well as a deep connection to the US and EU markets are the strengths of the ecosystems. Over the years, the IIA has become an influential player that promotes those trends in which market failures exist and in which financing is an exceptional challenge. However, the local Israeli market presents challenges such as the size of market and the ability to scale. The UAE has established itself as a launchpad for the entire MENA region and therefore creates interesting scaling opportunities for startups in the fields. The new agreement is not only good news for international relations; it is good news for science and the health-sector.