US medical innovator aims for healthy Irish link
Cleveland Clinic Innovation Centre’s strategic alliance with i360medical builds on Irish medtech growthIt's one of the most dynamic medical technology innovation hubs worldwide, producing as many as 250 new ideas every year and, over the past 12 years, spinning out more than 50 companies.
So why did the Cleveland Clinic Innovation Centre choose Dublin for its first foreign financial investment with this weekend’s announcement of an investment link with Dublin-based i360medical?
Chris Coburn, executive director of the centre, points to Ireland’s cluster of medical device and pharmaceutical companies, both international and indigenous. He also speaks about a growing commitment to innovation, despite our current economic woes. The fact that Cleveland has a sizeable Irish-American population and that there is a strong cultural fit does no harm either.
“My understanding is that since the decline in 2008, the Irish medtech industry has continued to grow,” he says.
“Yes it is changing, it’s evolving and the overall state of the economy in Ireland, or anywhere else matters, but, that said, in Ireland this is a robust and dynamic collection in this industrial segment: devices and drug companies are thriving.”
Coburn was brought in by Cleveland Clinic 12 years ago when it established a separate corporate venture business – Cleveland Clinic Innovations – to commercialise some of the stream of ideas emerging from the hospital group’s nearly 3,000 clinicians and almost 11,000 nursing staff.
It has filed more than 1,600 patents in that time and nurtured 52 spin-off companies which have received more than $620 million in investment. The innovation centre was last month named the world’s fourth most influential healthcare corporate venturing unit worldwide – the only academic centre or hospital in the top five.
The clinic itself consistently tops hospital rankings and has been recognised for pioneering a low-cost, high-quality approach to healthcare. Established in 1921, it has been behind a series of major medical innovations, not least heart bypass surgery.
With the announcement by Taoiseach Enda Kenny in Cleveland at the weekend, i360medical is forming a strategic alliance with Cleveland Clinic Innovations, making it the European wing of its innovation alliance programme.
i360medical was initially established under the guidance of the Royal College of Surgeons in Ireland, where it operated for four years as the Centre for Innovation in Surgical Technology.
Spun out from the Royal College of Surgeons in Ireland as an independent company, i360medical aims to be an “innovation enabler”, with all the expertise necessary to take new healthcare ideas and medical technologies to market. It sees its key expertise as the ability to work across the traditionally separate healthcare, clinical, academic and business sectors to and commercialise new ideas. The international link-up with Cleveland Clinic Innovations is seen as a key element.
As Cleveland Clinic’s new European partner, i360 will give the US group’s healthcare partners and spin-offs the opportunity to expand their reach, by making Ireland their launch pad for Europe and rest of world. With €2 million in initial funding secured, it will offer EU-based development and clinical trials leading to European approval and early commercialisation. Conversely, the alliance will give US access to Irish medtech start-ups.
“Any innovation landscape is always changing and the areas of emphasis shift,” Coburn notes. “Gaps occur, the system corrects itself. Sometimes gaps ensue, as they do in the US between the end of government funding and the start of private, but the system keeps going forward and evolving and I think that is what is happening here.
“I think we in i360 are providing a focus and a service to these early stage highly innovative companies that typically do not have all the tools that they need.
“You have a lot of different models in the delivery of care – academic medical centres, standalone hospitals, for profits – and any one of those places might be a source of important high potential discoveries. But you’ve got to have the system to access those and I think that is what i360 and we are teaming up on here – just how do you get to those entities, to step up or act on that.”
While designed to have the necessary flexibility to nurture innovation, Cleveland Clinic Innovations is quite disciplined in its approach.
“We have a process of two months to get an initial read, usually it is quicker. There is a torrent of innovation coming through the system so we are under pressure to get quick positioning on what has the greatest potential,” Coburn says.
It’s not just assessing solutions that come to them, however: Coburn says the innovation hub is increasingly in the business of addressing unmet need when it is brought to its attention.
“We will convene a set of clinicians who will brainstorm around that unmet need. So it’s not just that something occurs and then we have to go to find it ourselves; it is that we are creating the environment that results in it.”
Cleveland Clinic Innovations sees itself as an early-stage investor; even after a dozen years the bulk of its spin-off investments would still be classed as such. It’s an area that has traditionally struggled for investment in Ireland.
“One of the assignments for i360 or the Irish Government or the academic sector is to identify and celebrate earlier-stage successes because so much of entrepreneurship is the cultural dimension. Incipient entrepreneurs need to know there are others who went before them who were successful,” he says.
He cites Creganna as an example even though it has made its name in an area removed from its initial target. “Someone took a risk and [now] reward has been received. So from our standpoint, you want to ensure that people embrace that and are willing to fill that part of the spectrum,” he says.
“In the end, technology is important, but the discriminator on a successful enterprise is leadership. You have to have individuals who are willing to create the ideas, run them and bring the technology and, of course, the resources.”
And what about attitudes to failure, an area where Europe, and especially Ireland, can be unforgiving?
“Different countries view risk-taking slightly differently,” Coburn says. “In a general way, people want to know the risk taker did it in a knowledgeable and careful way but that failure does happen. There would be no need for entrepreneurship if thinks were always preordained.”
He notes that, within the US, Cleveland would initially have been seen as more risk averse than other regions of the US.
“Over time that changes though ... as investments have been made and people are having a return. Neighbours and family members look at them [those who have made money on such investments] and believe they are just as smart as they are. So it is important to get to those first few cycles to build the entrepreneurial culture. When you are sub-critical and every deal is just a one off, it is harder to get there.
“To me it feels that, even despite the economic issues, entrepreneurship is increasing in categories here. Whether you are at critical mass now in a given category, I think someone needs to look at that, but once that is established, by and large those things acquire enough momentum that they will continue, hopefully unabated.”
So what’s in it for the entrepreneur, the person with the idea, or the business-focused manager they bring on board to take it to market?
There’s no fixed formula, Coburn says, though he notes that it is usual after every investment round to top up key executives so they maintain their position.
“If the individual is solely the CEO but in the broad definition of that – management, fundraising, vision – that's probably 5 per cent of the company at the point of sale, plus or minus. If, on the other hand, they created the company and they controlled the IP coming in, they could own several multiples over that. I am aware of companies that have been through many rounds of investment and the management group might own 30 per cent to 40 per cent of the company.”
While Cleveland Clinic operates across a diverse range of sectors, at i360 Coburn expects medical devices to be the main focus, given Ireland’s perceived strength in this area.
“I would not see any tech being excluded but devices would seem to be the area of emphasis.
“But if you look at healthcare, IT [information technology], it is as a segment that is the fastest growing item in healthcare, so you would expect this i360 relationship will also embrace that – because of its potential but also because it is impossible to divorce IT systems from device innovation. So much of it is intertwined.
“I think the great beauty of Ireland in this category is that you can get your arms around it. It’s a 4.6 million population, you can get across the country in a couple of hours, so a single entity like i360 has the chance to have a national impact. This is an exciting stage for the company and for medical entrepreneurship in Ireland. Something new is being created that is going to create opportunity and fulfil a need.”
- This is a longer version of an article that appeared in The Irish Times newspaper on Monday, October 15th