Local medical-devices firms face tougher times

“In 2008, before the crisis, there was almost too much money in the industry,” Windhover Information Inc. managing director for medical devices David Cassak tells 'Globes.'

January 1, 2011 22:52
3 minute read.
PATIENTS SPEND 70,000 hospital days a year in hospital corridors, IMA Chairman Dr. Leonid Eidelman c

Hospital 311. (photo credit: Ariel Jerozolimski)


Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief


“In 2008, before the crisis, there was almost too much money in the industry,” Windhover Information Inc. managing director for medical devices David Cassak told Globes.

“Today, funds look like victims of the crisis. But during the financial bubble, they also shared in the feeling: There were too many companies and some of them were not carefully managed.

Be the first to know - Join our Facebook page.

Cassak was in Israel last month to attend the Healthcare Innovation Summit. It was organized by the Israel Life Science Industry and Tel Aviv University’s Lahav Executive Education Programs and was led by Tamir Fishman Ventures managing general partner Benny Zeevi.

“Today, we see a degree of recovery, and investors in funds are beginning to look for funds to return to,” Cassak said.

But he doesn’t believe all funds will recover, simply because they failed to achieve enough good returns.

“Total investment in venture capital fell,” he said. “Happily, the medical-devices share of the pie has remained more or less the same, even though there are companies that could have obtained financing in 2007 but not in 2011.”

The venture-capital funds that recover will have to deal with a new world in the medical- devices market, Cassak said.


“Due to the consolidation of buyers and prevailing uncertainty in the industry, exits almost never exceed $100 million any more,” he said. “It’s necessary to be cautious and invest no more than $25 million to $30 million in a company to get the hoped-for return.”

The problem is that the United States Food and Drug Administration has tightened procedures for obtaining K510 fast-track approval for medical devices, and it can now cost a company up to $40m. This is even before marketing expenses.

There has been less medical innovation over the past few years, Cassak said. The number of products approved under the K510 process has fallen. In addition, for a well-run US company, time to exit has lengthened from six to seven years, to an average of nine years today.

Venture-capital funds are also investing in products at later stages of development.

The most important factor is US President Barack Obama’s health-care reform, which is supposed to lower prices for medical devices when they reach the market. The reform might even initiate a vicious circle, by causing large medicaldevices companies to buy more carefully, thereby reducing exits.

“We don’t yet see a fall in prices for products on the market,” Cassak said. “For now, it’s only psychological.

“It’s possible that now, after the midterm elections and the Republican majority in the House of Representatives, the health-care reform will slow and weaken. If in the past it was clear that it would be possible to charge premium prices for a new and better product, that’s no longer clear.”

Globes: What are the hot fields in this freeze? Cassak: “The usual sectors, orthopedics and cardiology, are still holding on. Ophthalmology is also strengthening, and diagnostics has developed. I’d actually advise investors to look for the lukewarm sectors, because that’s where the opportunities are.”

Which Israeli companies seem promising to you? “There are so many of them, in cardiology, ophthalmology, urology and gynecology. Lumenis Ltd. is making a strong comeback; Given Imaging Ltd., despite its limitations, is marketing sexy technology; Biocontrol Medical Ltd. and Brainsgate Ltd., which are based on inventions by Yossi Gross, are telling great clinical stories, but it’s hard to know how the market will receive them; Cornidus Vascular Robotics Ltd., cofounded by Dr. Rafael Beyar, has developed a nice robotic device and will reach the European market.

“Most large companies hold the Israeli medical-devices market in high esteem. I’d take a risk and say that there are companies around the world that consider it even more interesting than the US.”

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

The Teva Pharmaceutical Industries
April 30, 2015
Teva doubles down on Mylan, despite rejection