Medical Device Daily Contributing Writer

ZICHRON YAAKOV, Israel – The month-long war that Israel has fought to protect itself from Hezbollah terrorist attacks from Lebanon cost an estimated loss of 1% to 1.5% of gross domestic product, or NIS 9 billion (about $2 billion). Most affected are small businesses in trade and service industries, according to the Israel Manufacturers' Association.

In contrast, Israel's medical technology industry, from incubators to fledgling start-ups to full-grown companies, rallied during this period, in a spontaneous symbiosis and outreach that permeated all through the country.

On July 12, the same day that Israel first hit back against the Hezbollah rocket bombs falling at will on otherwise pastoral northern Israeli towns and villages, Johnson & Johnson (New Brunswick, New Jersey) reported its acquisition of ColBar LifeScience (Herzliya) for $160 million, and Dentsply International (York, Pennsylvania) its acquisition of Uri-Dent , an Israeli start-up, for $100 million.

Those deals brought 2006 foreign investment in Israeli technology companies to more than $1.4 billion, according to Eli Opper, Israel's Chief Scientist, in the Ministry of Industry, Trade & Labor (MOITAL).

The next day, July 13, Meytav Technological Enterprises Innovation Center invested $600,000 to set up a spinal implant start-up, Flexis. This is the usual amount from a privatized incubator, which also gets significant funding from the Office of the Chief Scientist. Meytav will own 32% of Flexis.

“We plan to invest more when Flexis completes Phase I trials,” said Meytav CEO Zvika Rubinstein, “acutely aware of the situation” but “realistic.”

Rubinstein focused on the technology: “The proprietary artificial disc that Flexis developed to replace degenerated or damaged spinal discs far exceeds the flexibility of existing products, while providing the strength to endure the usual spinal torsion; and it can be implanted in a procedure that is very similar to existing spinal surgery.”

Founding entrepreneur Boris Silverstein, a specialist in spinal surgery, was on the scientific advisory board of Mazor Surgical Technologies (Caesaria). Many of the Flexis team worked in R&D for Mazor, which has already graduated into the marketing phase of its own award-winning surgical assist system.

All this appears like rather normal business, but becomes rather extraordinary with the realization that Meytav is located in Kiryat Shmona, the town that Hezbollah bombarded with tens of rocket bombs daily for a month, keeping most of the few people who remained in bomb shelters, for a total of nearly 1,000 of the 4,000 shrapnel-filled explosive rockets that rained destruction on Israel.

A few days later (July 16), Israeli start-up Hisense (Rishon LeZion), the inventor of Babysense for monitoring breathing rate in babies, and preventing cot deaths, reported that it signed an exclusive five-year distribution agreement with Babysafe USA (Bainbridge, New York), which is owned by Israeli businessman Sagi Ben-Dov. The company expects the deal will yield revenue of at least $8.6 million.

The agreement with Babysafe USA represents Hi-sense's first foothold in the U.S. market.

Babysense, which will be sold in the U.S. for about $130, continuously checks the baby's breathing rate and movement, and sounds an alarm in the event breathing rate is irregular or if it should stop, as happens in SIDS (sudden infant death syndrome), commonly known as crib death. Baby-sense has a battery-operated control unit connected to two sensors under the baby's mattress, with no direct contact with the infant and no restriction of their movement.

The Babysense monitor is a system composed of two sensors that are located under the baby's mattress and monitor his/her breath. The system will activate an alarm in the event of breathing cessation or irregular breathing patterns. It is suited for babies up to one year of age. The patented system is marketed as a medical product throughout the world, except in the U.S., where it is marketed as non-medical product.

Yaniv Shtalryd, business development manager, told MDD, “The main competitor to the Babysense system is Unisar 's (Burnaby, British Columbia) BebeSounds Angel-care. Both companies have similar sales worldwide. Annual sales in Israel, a market with 140,000 births a year, has reached 10,000 units. During the three years prior to the signing of the agreement with Babysafe, sales increased by 250%. Net profit for 2005 was 29%, with sales totaling a few million dollars.”

Hisense was founded in 1991 by CEO Haim Shtalryd (75% share), father of Yaniv Shtalryd, with Victor Yotam. Their original monitor, developed for operating theaters, was adapted for home use with an initial investment of several hundred thousand dollars, to fill the bigger home market.

The rockets falling in the north did not prevent U.S. venture capital firm Greylock Partners from setting up a $150 million Israel fund on July 16 to invest in early-stage high-tech companies.

The new fund will be managed by three Greylock partners, Moshe Mor, Erez Ofer and Yoram Snir, who will operate out of offices in Herzilya, to “underpin Israel's importance as a world center for entrepreneurship and technology” and “to support young technology companies aspiring to succeed in the global market.”

MDD releases new report on orthopedics market

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