Merck Global Health Innovation Fund, the corporate venturing unit owned by pharmaceutical firm Merck, has quickly become one of the biggest corporate venturing players in the digital health segment and is dedicating a sizeable amount of its $500m fund to larger deals with private equity and other strategic partners. Given the significant impact it has made over a short period of time, there was a significant number of votes from our advisory board to make it unit of the year.
Speaking at the Global Corporate Venturing Symposium last year, William Taranto, head of Merck Global Health Innnovation Fund, said: “If you look at the continuum of healthcare, from pre-diagnosis to death, the question for Merck was: ‘how do we participate in that continuum where the pill or the vaccine makes up only one piece of healthcare?’
“There is a great deal of stuff beyond what we do as a core business that happens in healthcare, and can we actually have an impact broadly around healthcare where, again, the pill only supplies one piece of it?”
Securing blockbuster drugs is only part of the overall investment path for pharmaceutical companies, now that digital health is combining the know-how of big data, health technology and life sciences. The synergy between the IT and healthcare corporate venturing sectors is helping accelerate lab studies and investment realisations, something that big pharma welcomes with open arms.
Taranto moved to the US-based pharmaceutical group as it made a push into non-pharmaceutical healthcare and sought a leader to be managing director of its newly formed Global Health Innovation Fund. The $500m fund has since invested more than half of its commitments.
“Most pharmaceutical manufacturers rarely look beyond the pill and invest outside their core business,” Taranto says. “Merck was very interested in being the best healthcare company in the world and that entailed creating a venture firm that would allow Merck to look beyond the pill and give them optionality around the future.
“I came to Merck in April 2010 and recruited a team of venture experts in the adjacency healthcare space that are very good at what they do.”
Taranto says the biggest change for the Global Health Innovation Fund when it first deployed capital was its movement into bigger deals through private equity, as well as mergers and acquisitions.
Today the fund is executing bigger deals with private equity and strategic partners. Taranto says the team is looking to invest in several digital health segments, including interactive cloud, security and privacy and technology-enabled care.
Notable deals include Physicians Interactive (PI), a digital healthcare media and sales technology company. The fund first invested in 2012 when it committed $8.5m, with a further $8.5m in milestone payments pledged. It subsequently took a controlling stake in the company in August 2013.
Merck Global Health Innovation later financed PI’s acquisition of MedHelp, the financial details of which were not disclosed. MedHelp enables consumers to use the web and mobile devices to track their own health, share information and receive support from their physicians. The software can also be combined with health and fitness technology, such as Fitbit.
Other deals include WellDoc, a US developer of a prescription app for managing diabetes, which raised $20m in strategic financing in January 2014 from Merck Global Health Innovation Fund and venture capital firm Windham Venture Partners. WellDoc had previously raised $35m in debt and equity from angel investors.
“We have a belief that data will be the currency in healthcare, and that better use of this data will improve the quality of health care while lowering system costs. This thesis is the foundation for our investment strategy,” says Taranto.
Shortlist
Comcast Ventures
GE Ventures
Google Ventures
IBM Venture Capital
Intel Capital
Merck Global Health Innovation Fund
Naspers
Nokia Growth Partners
Novartis Venture Fund
Qualcomm Ventures
Samsung Ventures
SR One
SVB Capital
USAA
