Dan Mendelson, CEO of Avalere: The Israeli startups in the life sciences do not understand that the rules of the game in the American market have changed

Mendelssohn arrived in Israel on the occasion of the Biomed 2010 conference, which opens today in Tel Aviv

"There are changes in the commercial market for medical technology and it is easy to lose your legs and arms there - especially if you are an Israeli company. The most fundamental change, which has not yet been internalized by many companies, is the way in which the payers (the health and government programs) examine new technology - they want to see that the business works Really before they put their hands in their pockets," says Dan Mendelson, CEO of the American strategic consulting company Avalere Health. Mendelson came to Israel on the occasion of the ILSI-Biomed Israel conference 2010, held June 13-16 in Tel Aviv, where he will try to guide Israeli companies that are getting lost in the tangle of the changing American healthcare market. According to Mendelsohn, small companies outside the US usually start planning too late and fail to think about their economic value proposition. during the entire period of clinical trials. "The result can be fatal in the competition for the American market," he says. "This leads to commercial failure, or even a significant loss of value for investors."

Mendelson says that most medical device companies as well as Israeli biotechnology companies are not really ready for the American market. "Excluding a few exceptions, the Israeli technology companies are small, lack adequate funding, and what they are mainly interested in is how to move their product through the FDA approvals, as quickly as possible. The Israeli companies must take much more aggressive steps to understand how they can sell their products in one of the largest and most profitable markets in the world."

Mendelsohn is convinced that Israeli investors must make sure that their companies take the changes taking place in the American market more seriously. "Funds sometimes do not take into account that clinical developments should be market-focused and not only regulatory-focused... and certainly, sometimes this means investing more money in development. Sometimes it is worthwhile for the funds to think about compensation for performance and commercial successes, in order to incentivize the managers of small companies to work in a different way than usual" .

Mendelsohn points out that about five years ago a law went into effect guaranteeing the use of medicines for every American over the age of 65, in addition to a similar law in the field of medical equipment and hospital care, which already exists. The insurance covers the use of medicines up to a certain ceiling, but allows consumers to choose through which company to receive the service. "That's why", he says, "today a more significant part of the payment comes from the consumer's pocket, which requires a change of attitude for the company that manufactures and markets. It must also know what (and which product) its final consumer is willing to pay for."

Mendelson also says that the insurance companies in the US are moving to evaluate products differently. "Today they are already demanding that every new product show improved efficiency over products that already exist on the market."