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European Venture Capital snapshot

European Venture Capital snapshot – released 16 August 2011

There appears to be a trend of retreat by Venture Capital funds in Europe. At the same time, an increasing number of U.S. based medical technology and device projects are encountering difficulty in fundraising amongst other as a consequent of the less predictable “510k” regulatory pathway with the U.S. Food & Drug Administration (FDA).

In this context it seemed important to gain insights from an experienced investment practitioner (who prefers to answer our questions, one of the last days of July 2011, off-the-record for the sake of simplicity)

1. A-Medica: What are your role and organization?

“I am the head a regional Venture Capital fund in Europe actually in the process of launching one (of the very few) new funds.”

2. What kind of deals are you focusing on?

“Like most others we focus on buy-outs and growth projects.”

3. Could you describe the dynamics of European Venture Capital industry currently, is there a retreat of banking groups and difficulties for some VC funds to attract new money?

“Banks and insurance groups in Europe are selling off assets to reduce their balance sheet. The capital allocation required for “risky” asset classes is high, so Private Equity is up for sale. This is a consequence of the financial crisis started in 2007 and further driven by the new “Basel 3” regulations.

In addition, the increased weight of “compliance” within the financial institutions means that for instance co-investment in a project by an a priori perfectly legitimate fund but based in “tax heavens” like the English Channel islands has become very difficult.”

4. How do you analyse the European situation as to availability of funding for advanced technology projects, compared to other global markets like U.S., Asia?

“Except for university funding, some grants and rare thematic funds, there is practically no venture capital for start-ups and seed stage ventures in Europe. Going back in time there was still early-stage capital funding in the U.K., but not really any longer. “Business Angels” investment is also shifting from early stage to growth. These tendencies started about 10 years and have now accelerated and become a trend across the Western world.

The major 5 – 6 (family owned) conglomerates in India, who dominate the local economy, are also venturing internationally and actually investing across Asia, Europe and North America…

The dynamics for projects attracting early stage funding is shifting from the “Atlantic Rim” to the “Pacific Rim”.

In Europe, the “Lisbon agenda” is dead and there is nothing taking its place”

[Note: the Lisbon agenda’s objective was to transform Europe into “the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion”, by 2010 – according to the Lisbon European Council Presidency Conclusion]

5. What do you think are the implications for early-stage advanced technology entrepreneurs from these developments in European VC markets?

“I do not see any indication of change in the near term. There is a tremendous funding gap for early stage projects needing “small” amounts and this problem is most important in Europe’s “old” economies.

The possibilities are within universities, “Friends & Family”, grants & subsidies…”

6. What would you recommend advanced technology entrepreneurs to do in bridging from prototype to commercial phase?

“Twenty years ago we saw a lot of spin-offs from multinational groups but lack of Venture Capital funding is now constraining it. So it becomes a matter of out-licensing.

For entrepreneurs, the only alternative if funding is not available is to be able to sell off the Intellectual Property Rights early.”

Note: Any opinions expressed represent only their author.
© 2012 A-Medica Sprl and respectively Health Consumer Powerhouse, Ltd.

A-Medica www.a-medica.com supports advanced medical technology entrepreneurs on both sides of the Atlantic, from a prototype stage through commercial revenues, with

– Clinical validation, regulatory approval, reimbursement, product development & manufacturing
– “Return on investment” through M&A, licensing, distribution
– A range of funding solutions, including from non-traditional sources – increasingly important to enable business development

European Health Care snapshot

European Health Care snapshot – released 21 January 2013

1. A-Medica: Please tell us about your organization, its role, purpose and objectives?
Dr. Arne Bjornberg, Chairman and COO of the Health Consumer Powerhouse (HCP): The Health Consumer Powerhouse is a private company. Our mission is to fill the gap of European Healthcare being traditionally very weak at monitoring
a) What it does
b) How much it does, and
c) How well it does it
by developing open benchmarks, comparing the performance of national healthcare systems as seen from the angle of the patient/consumer.”

2. What are your main product, who are your customers?

“Our main product is the Euro Health Consumer Index (EHCI), the 6th edition of which was published May 2012, comparing pubic healthcare systems of 34 European countries on 42 indicators. In addition, we have published ~40 indexes covering other geographic areas and/or specific diseases.
We do not have customers – we have project sponsors, financing Index projects on “unconditional development grants”. All results are available free of charge on www.healthpowerhouse.com .”

3. Which are the main trends affecting European health care?

“Public systems are fighting to keep up with the success story of the ever-increasing capability of healthcare services. That we are facing an “ageing Europe” is largely a manifestation of the success of modern healthcare.
Outcomes quality keeps improving. Traces of the financial crisis can be seen mainly in restrictions on deployment of innovative new medicines, and to some extent in increased waiting times for costly procedures and private out-of-pocket payments.”

4. Would you see any noteworthy specificities for countries like Germany, UK, Italy, Spain, Scandinavia?

“Netherlands: No matter which indicators are applied, the Netherlands keep topping the EHCI
Germany: Very generous healthcare system, but not top quality, mainly because of a multitude of small, non-specialized hospitals.
UK: After years of efforts, resistant hospital infections and waiting times are no longer as bad as they used to be, but still not on par with top countries.

Italy: Very uneven. Tends to get a Yellow score on everything as a result of Northern Italy scoring Green and the south scoring Red.
Spain: “If you want good or timely healthcare services – Go private!”
Norway has joined Sweden as the only countries scoring full marks on actual treatment results (Outcomes), but unfortunately is also the only country having worse accessibility to healthcare services than Sweden.
Slovakia: Has made radical improvements, and now rank together with the Czech Republic as the best in CEE. “

5. If you were to compare high-level, between US and European health care, what would you note? [Other than the US is spending in absolute and in % of GDP ca x2 Europe]
“American healthcare is much more of an industry, meaning that they actually do ROI (Return On Investment) calculations on IT and other investments. This means that US healthcare is not as under-invested and over-staffed as European.
The most pronounced endemic condition of European healthcare is management deficiency.
Unfortunately, the US suffers from severe socioeconomic stratification, which is visible on indicators such as Infant Mortality, where the best American state (out of 50!) would not score Green in the EHCI.
In addition the US healthcare costs are severely affected by its legal system.”

6. In the context of budgetary constraints across most of Europe, which threats & opportunities would you pin-point for new medical devices?

“European healthcare is under-invested and over-staffed. Multinational rich corporations are easy targets in times of financial constraint. Therefore, and in the general absence of ROI calculations, seemingly expensive investments in medical devices and deployment of new, innovative medicines tend to be favorite areas for cost-cutting.”

Note: Any opinions expressed represent only their author.
© 2012 A-Medica Sprl and respectively Health Consumer Powerhouse, Ltd.

A-Medica www.a-medica.com supports advanced medical technology entrepreneurs on both sides of the Atlantic, from a prototype stage through commercial revenues, with

– Clinical validation, regulatory approval, reimbursement, product development & manufacturing
– “Return on investment” through M&A, licensing, distribution
– A range of funding solutions, including from non-traditional sources – increasingly important to enable business development