Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) is investing tens of millions of dollars in US telemedicine company American Well, sources inform "Globes." This investment indicates Teva's new involvement in digital medicine.
American Well was founded by Israeli brothers Drs. Ido and Roy Schoenberg, who previously founded Careky, sold to US corporation Trizetto in 2005 for $100 million. The company's vision is to mediate between a patient and a doctor summoned to an immediate video call, thereby giving the patient a faster solution for his distress, without having to make an appointment and leave his home. The company could be called a medical version of GetTaxi, but it developed its idea years before these models proved successful in other industries. American Well is considered one of the leading remote medicine companies in the US.
The investment is one of Teva's first in a health services venture, and is part of the company's entry into the digital medicine sector. According to Teva CEO Erez Vigodman, "Teva is committed to attaining a significant presence in the rapidly growing electronic medicine field, so that it can expand its solutions beyond medication. The investment in American Well is an important milestone in this policy."
Teva already has several ventures that can be defined as digital medicine, such as an inhaler that broadcasts information to a cellphone in order to make sure that the patient has taken his medicine on time and in the correct dosage; an application designed for doctors for reporting negative interactions between different drugs; and a digital support center for multiple sclerosis patients. In cooperation with Royal Philips, Teva has also established a technology incubator in the field. Nevertheless, this is Teva's first investment in an independent digital medical company.
Medicine from anyywhere
The digital revolution in medicine is similar to what is happening in banking, where people almost never go to their branch, and to consumer products, where almost anything can now be ordered from home. The revolution is a little slower in medicine, both because regulation is more burdensome and because contact with the body is needed, but the vision is to eventually facilitate medicine from anywhere.
Taking into account that the meeting between the doctor and his patient usually results in a prescription, i.e. is a decision point at which its product is sold, Teva has decided that it cannot afford to pass up this theater, which was created by American Well.
Teva has realized that in this brave new digital world, the way that drugs reach the patients is also changing. A remote doctor, or even a decision-making algorithm, can make a medical decision and issue an electronic prescription on the basis of information coming from a home wearable monitoring product. Meanwhile, for reasons related to the business structure in the health market, the need to measure and monitor how drugs are used is gaining momentum, and the companies supplying the drugs are trying to understand how they can play on this field, and even control it. It is still unclear who the main players will be, and which applications will be winners, but many international drug companies have expressed a wish to operate in this field in order to avoid missing out on the leading trends, which is just what Teva is doing.
"The connection was made through our children"
In a "Globes" interview, American Well CEO Ido Schoenberg says that his company went through a difficult period before scoring any successes. "Our idea was very simple," he says, "but there were many constraints: regulation on conducting medical tests, which made our service illegal in many US states; the complexity in the beginning in connecting a network camera and using the website; the reluctance of insurers to pay for the service; and also problems of supply and demand - during the hours when many physicians were available for the system, few patients came, and vice versa."
In recent years, the company has succeeded in changing the law in its favor in 46 of the 50 US states, persuading insurance companies that the service can save them money, and showing that patients like the system to an extent that affects the ability of an insurance company offering it to recruit and retain policyholders. Today, several large insurance companies in the US have already announced their intention of offering indemnification for the product, and are offering it to users free of charge, or at the reduced cost of $20 per video meeting, compared with $49 if the consumer pays for it himself. 20 million policyholders are already entitled to indemnification for use of the service, and insurance companies representing 100 million policyholders have already promised to subsidize the service in the coming years. The Anthem insurance company has even invested in American Well, in which it currently owns a 6% stake.
In recent years, American Well has added infrastructure of doctors affiliated with it. "They're more available, and as a result, the waiting time for a doctor has gone down to 2.2 minutes, while the average waiting time for a doctor in the US is currently 19 days," Ido Schoenberg says. He adds that the company's current business model is mainly to connect its customers with their regular doctors, not with a random one through the Internet. In this situation, the waiting time is longer, but the doctors are still more accessible through video than face-to-face. Developments in video through mobile have also made the technical aspect of a call easier. American Well is cooperating with US company Vidyo, which takes care of the technical side of the service. "They're an Israeli company, but they won this cooperation in completely fair competition," Schoenberg says. "We've been together a year, and it has been a wonderful year, in which things worked out."
Schoenberg is not disclosing the volume of his company's sales, but asserts that revenue grew 120% in 2014, compared with 2013, and 75% in 2013, compared with 2012.
"Globes: Medicine still requires a lot of body contact or physical examinations. Have you thought how to facilitate more physical examination through your service?
Ido Schoenberg: "Certainly, we're up to our necks in such thoughts. Our ultimate goal is to treat a chronic patient at home, and the application will be through a home or wearable monitoring device. The doctor can access this information, decide whether to change the medication, and in the future, the medication will even reach the patients shortly afterwards through home delivery (here the connection with a company like Teva is visible, G. W.). The vision is to enable us to grow old at home, not within a broken-down health system.
"We also think that separation between the person making the physical examination and the person interpreting the results is possible. You can set up a 'testing kiosk' in a shopping mall or workplace, where the customers will be physically tested by a staff that is not necessarily trained or extremely expensive, and the results of the test will be sent to the specialist physicians making the video call."
How did the connection with Teva come about?
"I've known Teva executives for many years, but the connection was actually made through our children. My son studied in the global MBA program of the Interdisciplinary Center of Herzliya, where he met the son of a Teva executive. Their course was sent with a delegation to the US, including a tour of American Well, and our respective sons later explained to us why they thought that the two companies should cooperate.
"Teva is known as the largest generics company in the world and is responsible for 14% of the medications issued in the US. If it acquires Mylan Laboratories, that figure will become much higher. Issuing medications is an important part of our vision. Teva also understands well not only various drugs, but also many diverse diseases."
American Well is currently a private company, but it can be cautiously predicted it will probably hold an IPO in the future. The company declines to comment on this prediction, but it can be stated that Teladoc, one of its competitors, recently submitted a prospectus for a Nasdaq offering, and is expected to raise $100 million. If successful, this flotation may open the gates for a wave of telemedicine offerings.
Published by Globes [online], Israel business news - www.globes-online.com - on June 2, 2015
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