US drug giant Merck & Co will form a $100 million venture capital fund for Internet healthcare.
Merck’s fund, called Merck Capital Ventures, will look to invest in companies that commercialize, distribute and deliver pharmaceuticals and related health care services. According to Per Lofberg, who will run the fund, companies that exploit the Internet to help pick physicians and patients for clinical trials, technologies that connect drug companies and physicians to provide product information, and digital assistants that allow physicians to issue prescriptions electronically are especially attractive ventures. Merck is expecting to invest about $5-7 million per venture.
Merck enters a market experiencing difficult times, as many investors turn away from Internet start-ups. Many start-ups are laying off employees or closing their businesses entirely as share prices plummet. But the backing of, and the opportunity to do business with, a large and experienced healthcare organization like Merck should help companies to succeed in automating the distribution and delivery of drugs and healthcare services.
The fund is actually a wise move for Merck, as it stands to benefit if a start-up succeeds, beyond the extra revenue stream coming directly from the investment. For example, if a company gets more doctors using the Internet through PDAs, the increased number of mobile-enabled doctors could open the door for Merck to begin eDetailing to a larger online audience. And Merck would have the advantage of identifying this opportunity before its competitors. This could well be why Merck has chosen to pick up where other investors have failed: to ensure that potentially beneficial Internet opportunities are not lost.
