Hikma Pharmaceuticals has launched a $30 million strategic venture capital fund focused on digital health, therapeutics, and diagnostics startups.Founded in August 2015, the Amman-based Hikma Ventures operates as the corporate venture capital arm of Hikma Pharmaceuticals.
Hikma Pharmaceuticals, founded in 1978 in Amman by Samih Darwazah, produces generic pharmaceuticals at 28 manufacturing facilities in eleven countries, including branded products like Blopress, Prograf, and Suprax. The company went public in 2005, listing on the London Stock Exchange.
According to Hikma Venture’s managing director Lana Ghanem, the fund was launched as a way to supplement the company’s research and development activities while simultaneously allowing Hikma Pharmaceuticals to tap into the booming digital health space.
The entirety of the $30 million comes directly out of Hikma Pharmaceuticals’ balance sheet. Today, Hikma Ventures is closing in on its first set of deals, which Ghanem expects to go complete in the next 2 months. The initial investment size is up to $3 million per round with the opportunity for follow-on funding.
“We will invest in companies across different stages, including seed, series A and series B,” said Ghanem.
Since launching, Ghanem has worked to source deals through Hikma Pharmaceuticals’ network, collaborating with accelerators, incubators, and VCs throughout the region and abroad.
“We are looking at digital medical devices, wearables, big data analytics platforms and telemedicine across areas like chronic disease management, oncology, respiratory, consumer health, and mental health,” says Ghanem.
Although strategically focused on digital health and drug delivery, Hikma Ventures will be flexible in selecting portfolio companies.
“We’re actively looking for deals in digital health and drug delivery,” said Ghanem. “However, we’re opportunistic; something may pop up on our radar and we may look at it.”
Although based in Amman, Hikma Ventures won’t be location specific. Ghanem said the team is exploring deals across MENA, as well as North America and Europe. “We’re geographically agnostic,” she adds.
Joining the digital health revolution
Before launching Hikma Ventures, Ghanem joined the company as an assistant to the CEO in 2012. While in that position, Ghanem says she discovered that Hikma Pharmaceuticals was allocating far less resources to R&D than its competitors. A corporate VC fund offered a way to remedy that.
“That was what kind of triggered the idea in my head,” says Ghanem.
With help from DASH’s Venture’s managing director Omar Sati, Ghanem created a proposal for a strategic fund, which she pitched to the board in August 2015. The board approved the plan and Hikma Ventures was born.
Originally envisioned as a way to compliment R&D activities, Hikma Ventures decided to embrace the digital health space as an opportunity to add value to the company.
“We figured that in order to stay abreast of technological advancement and in order to stay relevant, digital health should be our main focus,” says Ghanem.
Digital health is at the forefront of addressing current healthcare challenges across the world. Using cutting-edge technology, digital health is helping fight chronic diseases, cut costs, expedite the process of care, and reduce overall gaps in healthcare.
As groundbreaking innovations in digital health emerge from the startup world, large corporations are realizing that corporate venture capital funds are an attractive alternative to costly and slow R&D projects.
In MENA, the healthcare sector in general is primed for innovation - and digital health is positioned to do the innovating. The indicators are there: beyond basic infrastructural components like rising internet and smartphone usage, healthcare spending in the region is growing, and numerous startups are tackling the digital healthcare sector.
With this trend in mind, Ghanem says that launching a strategic fund for digital health startups became logical for the company.
“It’s still very primitive compared to the US and European markets, but this is where the opportunity is,” explains Ghanem.
The future of the fund
“We’re using $30 million as the initial amount,” says Ghanem. “We see that as gaining traction.”
However, Ghanem says that in the future, Hikma Ventures will consider restructuring the fund to include other investors. In the meantime, Hikma Ventures looks to add a new dimension to its parent company’s brand while establishing a foothold in the sprouting digital healthcare startup industry—in MENA and abroad.
“To create that ecosystem in the region, it’s going to require the efforts of not only the private sector or pharma companies,” says Ghanem. “It’s going to require insurance companies and the Ministry of Health to believe in the field of digital health.”
And with its new VC arm, Ghanem says that Hikma Pharmaceuticals wants to join the fray.“It’s only a matter of time for such a model to transfer to our market,” says Ghanem. “We want to be pioneers.”