Tuesday, September 1, 2015

Singapore cements status as MedTech hub as Isreali & Chinese incubators set up base

The entry of two new medical technology (medtech) incubators into Singapore is set to position the city state as a major Asia Pacific (APAC) medtech node.

Israel-based Trendlines has set up a Singapore arm, while Incubator in China, which is among the newest and largest medtech and pharmaceutical incubators currently in the startup space, has established a presence in the city-state via Venturecraft.

According to a Business Times report, these incubators will establish a base in the city-state to develop healthcare products for commercialisation in bigger markets, such as China and the US. The report quoted Dr Todd Dollinger and Steve Rhodes, co-chairmen and chief executives of Israel-based Trendiness,as stating, “Now is an opportune time for medtech.”

In a statement to the Business Times of Singapore, they explained, “In China, health spending as a share of GDP was 5.6 percent in 2013, well below the OECD average of 8.9 per cent, while that of the US is 16.4 percent. Clearly, China must increase spending while the US must bring down costs. Regardless, both countries need quality health products at economically appropriate prices. This presents a tremendous opportunity for medtech.”

Their establishment in Singapore is rooted amidst a push by biotechnology majors seeking to capitalise on growth in emerging markets. The city-state is a global trading hub, and a major re-exporter of pharmaceuticals, with pharmaceutical sales projected to grow 9.3 percent annually until 2019.

Besides Israeli and Chinese firms, existing middle market European and American pharmaceutical companies are expected to invest in Singapore’s pharmaceutical space as they seek a base to access the new markets being opened by economic growth in the Asia Pacific (APAC) and a highly educated workforce.

Focus on Trendlines

Founded in 2007, Trendlines invests in up to 10 startups every year and currently maintains more than 50 ventures in its portfolio. The Singapore edition of their incubator is slated for launch in Q1 2016 and will be looking to recruit staff with a background in business development, all of whom will undergo training in israel.

Despite the city-state’s alcove an agricultural market, its technology, research, hospital, logistics and food processing capabilities were factors that persuaded Trendlines to explore the potential presented by the city-state’s economy. The incubators specialises in developing, building and investing in medical and agricultural technology ventures.

The opening of a Singapore branch comes amidst midst plans to conduct an initial public offering on the Singapore Exchange (SGX) in November 2015. According to the Israeli publication Haaretz, as of July 2015, Trendlines, operates three technology incubators for medical and agricultural startups.

The IPO in Singapore would value the company at between US$80 million and US$100 million. The Haaretz report that Trendlines withdrew from a planned IPO in Toronto in 2014 aimed at raising $20 million.

The IPO in Singapore would see it join four other Israeli firms traded on the Singapore Exchange, including the medical device maker QT Vascular and the computer-vision maker Artivision Technologies. These IPO plans could be linked to effort to persuade Israeli firms to list in Singapore.

With an Israeli team in excess of 30 engineers, scientists and business analysts screening and vetting approximately 500 medtech proposals every year, Trendlines is unique in its approach of taking a large initial equity position – often between 50-100 percent – and their role as activist investors.

Trendlines portfolio firms receive up to $1.1 million in funding; an Israeli government grant of about $558,000, a Trendlines’ cash investment of about $98,000 and a follow-up in-kind investment of US$400,000. To date, at least six of the companies its portfolio have exited via a trade sale or public listing

They do not function like traditional venture capitalists (VCs), with Dollinger explaining: “Venture capitalists are always looking at the clock. At Trendlines, we are not committed to exit our companies at a certain stage or invest at certain times.”

With high net worth individuals and corporates from Singapore investing in Trendlines, Dollinger and Rhodes concluded: “Singapore and Israel have a long history of R&D and government engagements. Singapore also has a strong interest in Israeli technology and entrepreneurial knowhow, and is both a wonderful ecosystem and a welcoming environment,” they added.

China-Singapore incubation

Incubator in China, amongst the newest and largest medtech and pharmaceutical incubators currently in the startup space, has established a Singapore presence via Venturecraft.

Venturecraft recently partnered and invested in the Chinese incubator, targeting to make it a comprehensive platform in the city-state for entrepreneurial ventures seeking to commercialise medtech products or drugs in the Greater China market. This comes amidst a growth in business formation and entrepreneurial activity within China.

Venturecraft’s services in China through this partnership would include the provision of access to clinical trials, distribution to hospitals and localised marketing strategies. Meanwhile, higher level work involves Venturecraft facilitating regulatory approvals and grants from the Chinese government.

“This is all part of continuing efforts to become a leading bridge in Asia for Singapore and global companies to foray into China,” said Isaac Ho, managing partner of HealthTech, the private investment firm behind Venturecraft.

More recent development on the part of Venturecraft involve it providing rent-free offices for startup ventures at its premises in Hangzhou – the hub for technology startups in China and the hometown of the Alibaba Group.

Ho explained that Incubator in China has significant social capital, given the presence of and participation in Incubator in China by leading mainland Chinese experts, in addition to government and private hospitals chiefs, IP and regulatory experts, distribution partners, R&D laboratories and government agencies.

Ho added that an IPO in what was termed “an appropriate market” was being explored by Venturecraft, saying, “Since Venturecraft operates as an evergreen structure, in the future when we have built enough portfolio and assets, we will explore a listing in order to unlock our shareholders’ value.”

This follows developments in the city-states medtech industry, whose prospects have been boosted by recent developments. EDB Investments (EDBI), the corporate investment arm of the Singapore Economic Development Board (EDB), announcing its investment in Massachusetts-based life science tools company Rapid Micro Biosystems.

In addition, seed accelerator JFDI has partnered the German Medical Innovations Incubator to ” pioneering medtech startup bootcamps and an accelerator in Germany; both are said to lead to technology transfer and job-creation opportunities here. With challenges posed by ageing demographics, there is tremendous scope for ventures to test and validate in the Singapore market, particularly in telemedicine.