Wednesday, February 19, 2014

A Look Back -- And A Look Forward -- At Where Merck Global Health Innovation Fund, LLC Is Currently Investing Its $500 Million

This coming Saturday, at a Venture+ healthcare IT conference in Orlando, Florida -- Joseph Volpe, the head of Merck's Global Health Innovation Fund, LLC, will speak at a likely very lively panel session -- about how digital data initiatives are changing the face of health care delivery in the US, here in the second year of Obamacare.

While the fund was in 2010 staked with $500 million by Whitehouse Station, it technically is a separate LLC -- and in theory at least, is not directly required to follow the mothership's orders -- when investing. Even so -- it is wholly owned by Merck -- per the bottom of page 3 of Exhibit 21 of the latest SEC Form 10-K. So the LLC interests' are held by, and voted by someone, somewhere, inside the puzzle palace at Whitehouse Station. And those votes count for something -- so, Mother Merck is likely to reap the benefit of the winning investments -- from the portfolio (and more or less direct them, in the first place).

So. . . what is Joseph Volpe excited about? [And by implication, what is Merck excited about?] Let's listen in, via Healthcare IT News:

. . . .[Joseph] Volpe is speaking on a panel at the Venture+ Forum titled, "Health IT Venture Trends." And he says data – and all the capabilities related to it, from capture and storage to security to analytics – is one of the biggest trends he's paying attention to nowadays when looking for companies in which to invest.

"Data is the currency of the future," says Volpe. "And as that gets deeper and richer, we have to be able to do something with it."

Merck's Global Health Innovation Fund was spun off as a separate LLC from the pharmaceutical giant; its self-stated mission is "investing in transformative healthcare."

With some $500 million entrusted upon it to invest, Merck GHI has so far funded 22 companies since 2010, says Volpe – mostly minority positions, to the tune of $5 million to $15 million.

"We've broken it into two areas," he explains: "technology-enabled solutions and health IT platforms."

In the former space, "We look at precision medicine, accountable care, provider and patient engagement, decision support," says Volpe. The latter includes "health informatics, analytics, health data liberation" and more.

As the industry has evolved, Volpe has also noticed his investment priorities changing these past few years.

"We've gone from a high-level health IT focus to dig a little deeper," he says. "I'm looking now at privacy and security, predictive analytics, machine learning. . . ."

So -- the accountable care organization compliance bit lept out at me. That's going to be a hot set of properties -- especially if tied together, cohesively, by an upper-level Merck oversight/bundling initiative -- going into 2015. UPDATED: It turns out that the fund already sold off one of these venture investments -- called Humedica (with some longitudinal patient data sets, useful in accountable care tech) -- to United HealthGroup, a Minnesota based health insurer, in January 2013.

And, despite the conference literature's suggestion, we ought to assume that these areas are of keen interest to mother Merck, since the website for the fund sets it out this way: "Merck Global Health Innovation (GHI) invests in emerging companies that deliver breakthrough health care solutions, and which advance Merck's mission to discover, develop and provide innovative products and services that save and improve lives. . . ." Thus I'd look for some accountable care organization compliance tech -- to make its way into potential future Merck JV offerings, among other things.

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