In a discussion at the Global Corporate Venturing Symposium 2019 with Heidi Mason, co-founder of consultancy Bell Mason Group, William Taranto, president of pharmaceutical firm Merck & Co’s Global Health Innovation Fund (GHI), shared tips on how to build a resilient corporate venturing unit.
Mason considered Taranto’s success to be a combination of the right time and right place. He was already in the healthcare industry and came from pharmaceutical firm Johnson & Johnson to help Merck set up GHI in 2010.
However, Taranto said: “We did not understand the complexity of healthcare in the early 2000s. We did not realise all the pieces we needed to connect. One of the reasons we failed early on was because we did not consider data.”
Innovative solutions, he said, resulted from combining informational tools with existing health data while utilising health information technology platforms. This approach could improve the quality of health outcomes and lower overall health system costs. He added that there were novel resources involved in procuring emerging data in healthcare, including diagnostics and social media, adding that Merck GHI was looking to build a data infrastructure to help scale its portfolio companies.
Asked how GHI achieved its expansion phase between 2013 and 2015, Taranto told Mason: “There were more tools in the toolbox.”
Taranto valued the outsourcing model, as it could be difficult to leverage Merck’s business units to perform what was required. To achieve maximum speed and flexibility, the fund looked to conduct certain procedures externally. GHI was set up as an independent private equity firm, which meant the corporate parent had no impact on the fund’s profit and loss, though the fund’s capital was eventually increased to $500m.
Merck would not initially accept Taranto’s strategy, observed Mason, but it was now ready to participate. “It took a lot of communicating,” he said. “It does not matter to whom we are reporting, we need to bring value.” GHI was a strategic fund but it was a financial vehicle first. “There is no free ride – do not lose the money, you need to aggregate,” said Taranto.
Mason asked about GHI’s oncology thesis. Taranto said patients should have timely access to the best cancer care backed by evidence. Enabling technologies – artificial intelligence, health analytics and other platform technologies – were employed to interpret clinical data and generate insights, improving outcomes.
“We are going to use our private equity firm to create a large data network of companies to serve our oncology patients,” he concluded.
