William Taranto has been one of the great exponents of ecosystem investing since he moved to US-based pharmaceutical group Merck & Co seven years ago as the group made a push into non-pharmaceutical healthcare.
The Global Health Innovation Fund (GHI) under his leadership grew quickly to a $500m pool and in 2014 added a $700m private equity fund to help support roll-ups and later-stage deals.
Taranto said more could be expected this year. “We remain focused in 2017 on using our growth equity firm to consolidate and build ecosystems around patient monitoring, oncology, infectious disease and healthcare information technology infrastructure. In addition, we will continue to invest out of our fund in the spaces listed above as well as in care coordination, population health and clinical trial management.”
GHI completed three new deals in 2016 – Liveongo, Arcadia and Navigating Cancer – and 11 follow-on investments – Preventice, Opgen, Patientsafe, Healthsense, Electrocore, WiserTogether, Caresync, Genome DX , Aventura, Wisertogether and Daktari.
And its deals this year include US-based cloud healthcare software developer ClearData as part of a $12m round and US-based healthcare data aggregation and analytics company Arcadia Healthcare Solutions, which raised $30m of growth capital. In addition, in March Merck was part of Grail’s first close of its series B round at $900m. Grail is a US-based oncology diagnostics spinout of genomics technology producer Illumin.
But a lot of interest followed its roll-up strategy, with the closure of a partnership involving its MedCPU portfolio company. This was a deal struck by Joel Krikston, a GCV Rising Star 2017. In his profile, Krikston described this large private equity deal for GHI in creating a joint venture with University of Pittsburgh Medical Centre (UPMC) and MedCPU, a company that improves point-of-care delivery to hospitals through technology, along with an internal startup.
Krikston said: “Ilum is focused on combining a suite of solutions – clinical decision support, rapid diagnosis, real-time antibiograms [an antibiotic sensitivity test], predictive analytics – to help hospitals fight the epidemic of hospital-acquired infections. One of my first investments, MedCPU, has become a key foundational component of the Ilum offering and we are already in several pilots at hospitals across the country in a relatively short period of time.
“Moreover, we were able to attract UPMC as a development partner and investor in MedCPU, which really embodies one of my key philosophies in terms of finding highly capable and respected strategic partners to build businesses with.”
Taranto has also been looking more globally. He said: “With our hiring of Francesca Wuttke, we look to deploy capital in 2017 and beyond in Europe.”
Taranto came to Merck from a similar role at Johnson & Johnson.
As Taranto said at the 2014 GCV Symposium: “In the context of what I do for a living, 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?
“We then decided that venture capital was the best way for Merck to do that. It allows them to look at the future of healthcare, take bets on a number of different areas and then, if it fits strategically and financially, it becomes an option for them to acquire those companies.”
