Last year international rating agency Moody's raised the outlook for international healthcare giants like Johnson & Johnson, Medtronic and Boston Scientific, companies that have made many major acquisitions and investments in Israel, from "Stable" to "Positive." Moody's wrote, "We believe that this sector will post 4-5% growth in the next 12-18 months. Growth will have to come from innovation in products."


Not long after that Moody's statement was reflected in Medtronic's $1.64 billion acquisition of Israel's Mazor Robotics, by far the largest amount ever paid for an Israeli company in the medical sector. Based in Caesarea, Mazor has developed robotic guidance systems for spinal surgery.

In fact this was Medtronic's eleventh acquisition of an Israeli company (including acquisitions by Covidien, which Medtronic bought in 2015). Last year alone, in addition to Mazor, Medtronic acquired two other Israeli companies - nutrition data company Nutrino for $10 million, and VisionSense, which develops minimally invasive devices for brain surgery, for $75 million. Other acquisitions in Medtronic's portfolio include capsule endoscopy company Given Imaging for $860 million, pulmonary endoscope developer superDimension for $350 million, capnography respiratory monitors and modules manufacturer Oridion Systems for $346 million, heart valave developer Ventor for $325 million, and hernia mesh placement developers PolyTouch for $40 million.

Increasingly the focus of major attention from overseas investors including global healthcare giants and venture capital funds, Israel’s medical devices sector is characterized by its unique interdisciplinary capabilities in medicine, biotech, electronics and IT.

Another very recent acquisition of an Israeli medical device company was Stryker's purchase of orthopedic device developer Orthospace for $220 million in March 2019. Other previous acquisitions of Israeli companies by Stryker include the $135 million purchase of Surpass Medical, which develops flow diversion stent technology to treat brain aneurysms. Earlier this year US company AMS acquired Israel's Sealantis, which has developed surgical sealing products, for $25 million.

Other high-profile sales over the past few years have included Edwards Lifesciences acquisition of valve repair device company Valtech Cardio for up to $1 billion including milestone payments, Beckton Dickinson's acquisition of infusion pump systems developer Caesarea Medical Electronics at a company value of $250 million, Boston Scientific's acquisition of gastroenterology endoscopy company EndoChoice for $210 million and Apax Partners acquisition of esthetic medicine company Syneron for $400 million. Galil Medical, which develops minimally invasive cryotherapy solutions for treatment of tumors, was acquired by BTG for $110 million.

In recent years, one of the biggest acquisitions of an Israeli medical device firm was the $510 million XIO Group paid in 2015 for veteran company Lumenis, which which has developed surgical, ophthalmology and aesthetic laser applications. XIO is now negotiating to sell Lumenis for $1 billion with CVC private equity fund reportedly among those interested.

Interest in the Israeli medical device sector from Chinese companies is also a growing trend. In 2018, China's Venus Medtech acquired Israel's Keystone Heart for $100 million. Keystone Heart has developed a cerebral embolic protection device. Previously, China's Fosun acquired Alma Lasers for $240 million and has since floated the Caesarea based company on the Hong Kong stock exchange, raising $112 million under the name Sisram Medical.

In the dental medical devices sector, Israel's Accelmed fund acquired US dental implant company Keystone Dental for $20 million and merged it with Israeli company Paltop Advanced Dental Solutions Paltop Align Technologies, which specializes in precision manufacturing of implants and state-of-the-art digital dentistry solutions. Also in recent years, Align Technologies acquired Cadent Holdings, which develops 3D scanning solutions for restorative dentistry and orthodontics, including intra-oral scanners, for $190 million. ETView Medical, which developed a device for continuous visualization of the airways during thoracic surgical procedures, was acquired by Denmark's Ambu for $16 million.

In other landmark acquisitions of Israeli medical device companies, Johnson & Johnson bought Omrix Biopharmaceutical, a provider of bio-surgery and passive immunotherapy products, for $438 million. Medical device and services company St. Jude Medical acquired MediGuide, a firm focused on inter-body navigation and minimally invasive cardiology, for $300 million, while Medingo, which develops a miniature insulin dispensing patch for diabetic patients, was acquired by Roche for $200 million.

Some companies have raised money on stock exchanges in recent years including Check Cap (Nasdaq: CHEK), which raised $24 million including a $12 million investment from GE Healthcare and Pontifax. SteadyMed Therapeutics (Nasdaq: STDY), which has developed the PatchPump to treat pulmonary arterial hypertension, raised $40 million (and a further $62 million in private placements over the past few years).
Other Israeli medical device companies have raised funds through venture capital funds and public offerings. Recent investments in the field of medical devices include: non-invasive blood testing company Cnoga, which raised $50 million; AI health predictor Medial EarliSign raised $30 million, smart shirt company Healthwatch, which raised $20 million; monitoring company ContinUse Biometrics raised $20 million, and CathWorks, which has developed non-invasive technology for imaging of arteries during angiography, has raised $45.8 million in two financing rounds. WhiteSwell, which is developing a minimally invasive catheter-based approach to treat acute decompensated heart failure, recently raised $30 million.

Chronic heart treatment device developer V-Wave, has raised $98 million in the past few years and bone regeneration company CartiHeal has raised $34 million. Johnson & Johnson has invested in both these companies. Ultrasound developer Insightec closed a $150 million financing round last year and over the past few years, EarlySense has raised $145 million from VC funds, including $39 million earlier this year, for its early warning system monitoring patients who are not in intensive care, and has signed a strategic cooperation and US distribution agreement with Welch Allyn.

On the Tel Aviv Stock Exchange (TASE), there have been many successful offerings over the years. IceCure (TASE: ICCM), which develops minimally invasive procedures to remove breast and other tumors using cryoablation has raised $12.2 million. Other Israeli medical device companies traded in Tel Aviv include LifeWave (TASE: LIFE) has developed devices using electrical stimulation to treat chronic sores and Glycominds (TASE: GLCM), which develops molecular diagnostic blood tests for personalized treatments for multiple sclerosis and Crohn’s Disease. MCS Medical Compression Systems (TASE: MDCL) has developed non-invasive compression systems to prevent blood clots in the limbs during surgery.
Exalenz Bioscience (TASE: EXEN) has developed an advanced breath-testing platform that enables the detection of the Helicobacter pylori bacteria and is in clinical trials for a variety of liver indications, and Itamar Medical (TASE: ITMR) develops non-invasive devices for procedures related to cardiovascular and autonomic nervous systems. Sialo Technology (TASE: SALO) has developed root canal and dental implant products.

Other leading medical device companies include: Brainsway (Nasdaq: BRIN; TASE: BRIN) which develops and markets Deep TMS (Transcranial Magnetic Stimluation) systems for treatment of a wide range of neurological and psychopathological disorders, which recently received FDA approval for its device and raised an addition $29 million on Nasdaq. OrSense has obtained EU CE Mark certification to market its non-invasive continuous monitoring solution of hemoglobin and oxygen saturation to hospitals.

Deep Breeze has received FDA approval to market its lung imaging system in the US and Biocontrol is developing implantable devices for the treatment of autonomic disorders, in which the nervous system ceases to function properly. Mesh coated stent developer InspireMD raised $9.7 million, at a company value of $100 million on Wall Street.

Medigus (TASE: MDGS) has developed the world’s smallest miniature video camera, which it developed together with Tower Semiconductors. The camera is only 0.99 millimeters in diameter. The low-cost image sensor combines high sensitivity and resolution with dynamic versatility for a range of potential medical applications, including cardiology, bronchoscopy, gastroenterology, gynecology, and orthopedic and robotic surgery. The company, which attracted an $8 million investment from OrbiMed, specializes in developing innovative endoscopic procedures and devices.

Israel has by far the highest proportion of any country of new patents in this sector per head of the population. Over 400 companies in this field in Israel, about half of the country’s Life Sciences sector, encompass a diverse range of medical disciplines including therapeutics, diagnostics, implantables, disposables, monitoring, telemedicine, imaging and medical equipment.

Israel’s medical devices sector is part of a fast growing world market that provides breakthroughs in earlier and better diagnoses and medical treatments that bring clinical benefits to patients with cost savings to both healthcare systems and individual patients.

Israel’s strength in this sector stems from inter-disciplinary capabilities, which bring together medicine, clinical expertise, materials science, electronics, ITC and software expertise and engineering know-how.

Some of the world’s leading universities with renowned R&D faculties, leading edge medical centers, the world’s highest per-capita number of physicians, and a flourishing high-tech sector combined with a spirit of entrepreneurship have all contributed to the country’s dynamic growth in medical devices.

When compared to non-medical high tech, investments in the life science sector is at times costlier and a longer process before reaping financial rewards. However, it is a more stable investment avenue as demographic and economic trends ensure the sustained interest and need for new technologies and therapies.
Holding and investment group Elron Electronics has a strong medical device portfolio that includes BrainsGate, which develops electrical stimulation based therapies for central nervous systems diseases; Pocared develops an innovative laboratory system for real time diagnostics; Cartiheal, which develops implants for cartilage repair; Coramaze, which is developing a valve repair systems; Notal Vision, which is developing methods to detect macular degeneration, and NitiNotes, which is developing a non-surgical bariatric solution to treat obesity.

Israel’s medical device sector evolved from the country’s highly successful medical equipment industry, which was pioneered in the 1980’s and 1990’s by Elbit, which developed diagnostic imaging technology including innovative nuclear and magnetic resonance imaging and ultra-sound equipment. Elbit eventually sold its diagnostic medical imaging using computer tomography to General Electric’s Marconi division, which in its turn was acquired by Philips Medical Systems. Based near Haifa, Philips Medical Systems has annual sales of about $240 million. Similarly, Elbit’s diagnostic ultrasound and nuclear and magnetic resonance imaging were sold to GE Healthcare, which today generates annual sales of $230 million in Israel. Elbit and GE Medical Care’s partnership has spawned one of the country’s most promising medical device firms – InsighTec. Established in 1999 by Elbit and General Electric, ExAblate 2000, InSightec’s first product, is FDA approved, and integrates focused ultrasound thermal ablation with magnetic resonance imaging capabilities to provide a non-invasive method for destroying or ablating targeted tumor tissues. Elbit Medical Technologies (TASE: EMTC) has a 48% stake in Insightec and GE Healthcare is a major partner after investing $41 million in 2012 for a 40% stake. Moshe (Mori) Arkin and Dr. Uri Geiger have founded a seed-stage investment fund called Accelmed to invest in promising medical device companies. Accelmed’s start-up portfolio includes EDGE Medical Devices which is developing Plasma DR flat-panel X-ray detector technology for digital radiography, Non-Linear Technologies (NLT) NLT, which is developing minimally invasive surgical (MIS) products for treating degenerative spinal conditions and Peer-Medical, which is developing the first 330-degree colonoscopy.

Marius Nacht and Dr. Yair Schindel have set up two aMoon healthcare funds totaling $320 million and investments include CartiHeal and BioLojic Design.
Crowdfunding company OurCrowd has set up the $50 million digital healthcare investment fund OurCrowd Qure which is investing several million dollars in early stage startups. Among its investments so far are DarioHealth, which has developed a smart diabetes health management solution.

Johnson & Johnson’s acquisition of Omrix was by no means its first major investment in Israel. The US giant had previously acquired Biosense through its Cordis Division. Biosense provides solutions for endocardial diagnosis and therapy. Johnson & Johnson has also invested in Contec Medical, which develops multimedia information solutions for point of care applications and NESS (Neuromuscular Electrical Stimulation Systems), which provides technological solutions for patients suffering from paralysis due to neurological disorders. The company has also made an investment in Impulse Dynamics- a developer of an active implant to treat chronic heart failure. Johnson & Johnson also partly owns Medigus (TASE: MDGS), a pioneer developer of a unique proprietary endoscopic device for the treatment of gastroesophageal reflux disease.

Boston Scientific recently acquired SI Therapies, which develops cardiology products, for $24 million, and has previously acquired: Mel – Medical Enterprises Group, which develops minimally invasive therapies for the treatment of cancer with a flagship product that induces remission and reduces recurrences of cancer of the bladder; Remon Medical which uses wireless communications to exchange energy and data with minute devices placed deep inside the body. Boston Scientific has also invested in Sightline, which specializes in the design and development of medical endoscopic systems. In addition, Boston Scientific invested in BrainsGate that is developing an implantable neuromodulator to treat brain tumors and other neurological disorders and in VisionCare Ophthalmic that has developed an implantable telescope to treat the dry form of Age Related Macular Degeneration.

Guidant Technologies acquired X-Technologies for about $150 million. X-Technologies, which developed a pull wire for use with catheters in balloon angioplasty, which effectively treats artery narrowing. Kodak Health acquired Orex Computed Radiography. Orex is developing, manufacturing and marketing low cost computerized radiography products, based on innovative phosphor plates. The technology captures X-ray images digitally, eliminating the need for film development processing.
Some of the $222 million VC fund established by the government, and managed by Orbimed Advisors is being invested in medical device start-ups. Moreover, OrbiMed also raised a $307 million second fund last year. OrbiMed has as already mentioned invested in Medigus as well as in brain clot protection device company SMT R&D, Ornim Medical which develops devices monitoring hemoglobin blood oxygen saturation.

Moshe (Mori) Arkin and Dr. Uri Geiger have founded a healthcare venture capital fund called Accelmed to invest in promising medical device companies, which to date has raised nearly $400 million in three funds. Accelmed’s start-up portfolio includes EDGE Medical Devices which is developing Plasma DR flat-panel X-ray detector technology for digital radiography, Non-Linear Technologies (NLT) NLT, which is developing minimally invasive surgical (MIS) products for treating degenerative spinal conditions and Peer-Medical, which is developing the first 330-degree colonoscopy.

Marius Nacht and Dr. Yair Schindel recently closed aMoon's second $660 million healthcare venture capital fund following its highly successful first $200 million fund. aMoon is also raising a $120 million aMoon Velocity Fund for investment in early stage startups. aMoon portfolio companies include personalized nutrition company DayTwo, and implant developer for cartilage and lesion problems CartiHeal. Another aMoon portfolio company is Theranica, which raised $35 million earlier this year, and which has developed migraine device Nerivio, a fully integrated family of neuromodulation therapeutic patches, which combine electrical neuro-stimulation (ENS) and neuromuscular-stimulation (NMES/EMS) technologies with modern wireless communications and smartphone apps.

Crowdfunding company OurCrowd has set up the $50 million digital healthcare investment fund OurCrowd Qure which is investing several million dollars in early stage startups. Among its investments so far are DarioHealth, which has developed a smart diabetes health management solution.

Another Israeli company with a portfolio of life science companies is Clal Biotechnology Industries (CBI) (TASE: CBI), controlled by Clal industries, which is itself controlled by US company Access Industries owned by Len Blavatnik. CBI’s portfolio includes three medical device companies: Mininvasive is developing arthroscopic based surgical equipment for rotator cuff procedures; Colospan, which is developing a medical device to alleviate anastomotic leaks following colorectal surgery; and Pi-Cardia is developing valve repair for patients with heart threatening heart valve conditions.
Other start-ups include: Nexense, which has developed a computer wearable for treating sleep apnea by monitoring physical parameters during sleep; Pneumedicare which is developing a monitor for lung ventilation in mechanically ventilated patients, and Nephera, which is developing an instrument based on electrical stimulation of the urinary bladder to break the vicious cycle of cardio-renal interaction. Medical Surgical Technologies has developed a robot, the AutoLap, which tracks the surgeon's movements and moves the camera accordingly.
Labstyle Innovations has developed a mobile app that processes a wide variety of parameters, such as nutrition, exercise, weight, and even outdoor temperature, to give diabetes patients recommendations that are as accurate as possible on amounts of insulin they need to inject. Zebra Medical Vision has developed a medical imaging research platform and Vectorius Medical Technologies is developing a novel cardiac monitoring system for congestive heart failure (CHF) patients.
Rainbow Medical, which specializes in seed and incubator investments in medical device start-ups and developing breakthrough medical technologies, has raised $25 million from investors in China. Among Rainbow's portfolio companies are: Enopace Biomedical, which is developing an innovative device to treat heart failure patients. Enopace's technology consists of a minimally invasive, implantable neurostimulation device that increases cardiac efficiency by reducing left ventricular workload. Other portfolio companies include GluSense, which is developing a miniature implantable continuous glucose sensor - implanted under the skin to transmit continuous glucose values to an external unit or smartphone for over a full year, significantly improving the quality of life of diabetes patients; Nano-Retina is developing an artificial retinal prosthesis based on a proprietary nano-technology configuration for sight restoration; ProstaPlant Urology Systems is developing a transurethral implant for symptomatic Benign Prostatic Hyperplasia (BPH) and Lower Urinary Tract Symptoms (LUTS); Affix Medical is developing a catheter ablation device to treat atrial fibrillation (AF), the most frequently diagnosed arrhythmia, which affects 2.3 million people in the United States; Vascular Dynamics has developed a passive, catheter-delivered implant for the treatment of high blood pressure, also referred to as hypertension; Maxillent is developing an innovative, minimally invasive, sinus lift implant; Slender Medical Slender Medical is developing a novel treatment for subdermal tissues using non-invasive high intensity focused ultrasound (HIFU).
Treatment indications include aesthetic fat reduction, specifically designed for small body areas such as the chin, as well as medical indications such as treatment of lipoma and keloids; BlueWind Medical is developing a novel wireless neuro-stimulation device for the treatment of peripheral neuropathic pain (PNP); and Roboscopy Medical is develops an efficient, low cost robotic system for minimally-invasive surgical procedures.
Among the startups in the Trendlines incubator in Misgav in the Galilee, which is traded on the Singapore Stock Exchange are: CoreBone, which has developed a highly bioactive, 100% mineral, strong bone graft material for dental, orthopedic and spine applications, and Futura Graft, a high-throughput robot for plant grafting while LapSpace medical has developed an inflatable laparoscopic retractor. ElastiMed has developed a smart sock that improves circulation in the legs for the treatment of venous and lymphatic disease.
Xenia Venture Capital (TASE: XENA) has a portfolio of startups, including medical device company Medi-tate, which develops products for treatment of urethra and prostate diseases. Its flagship product, iTIND 555, which is designed to treat patients with benign prostate hyperplasia (BPH), has CE certification for marketing in Europe. Other portfolio companies include: Xenolith Medical, which is developing the new generation of "stone filters" that allow effective blockage of stone debris migration during ureteroscopic kidney and bladder procedures, complete removal of trapped debris and considerable simplification of the overall procedure; and NeatStitch, which develops and markets NeatClose, a patented Nitinol based automatic suturing product primarily targeting the Laparoscopic Port Closure Market. NeatClose is an FDA cleared, safe, fast, simple to use and highly effective laparoscopic port closure device designed to close 10 mm or greater port sites.
With major healthcare companies like GE Healthcare, Medtronic and Philips Healthcare all unveiling plans to expand their development activity in Israel, the prospects are extremely promising for increased investment in the country's medical device sector.