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Merck’s venture arm sees $6.2bn of exits in 18 months

The exits for Merck Global Health Innovation Fund come as the general healthcare sector heats up amid the pandemic, according to William Taranto.

The Merck Global Health Innovation Fund has realized a cumulative $6.2 billion in exits in the last 18 months, an indication of how hot the healthtech sector has been before and during the pandemic.

The most recent liquidity event happened earlier this month when portfolio company Asuragen was bought by Bio-Techne Corporation for $215 million in cash and $105 million in future milestone payments. The Austin oncology company had raised $80 million from Merck GHIF, Telegraph Hill Partners and others.

Other exits include Teladoc’s $18.5 billion acquisition of diabetes care management company Livongo last fall; Boston Scientific’s $1 billion purchase in January of remote cardiac monitoring company Preventice Solutions for nearly $1 billion; and Thoma Bravo’s acquisition of Exostar for $100 million last year.

Healthcare VC
William Taranto, Merck Global Health Innovation Fund

William Taranto, president of the healthcare-focused Merck GHIF, told Venture Capital Journal he expects the corporate VC to see six more exits this year, including another unicorn or two.

“So much money is going into healthcare right now and we’re seeing a lot of activity,” he said. “All these companies are in the right space right now.”

Similarly, CB Insights reported recently that in 2020, CVCs doubled down on digital health worldwide, investing $8.8 billion last year in 310 deals, compared with $5.2 billion in 269 deals the year before.

Merck & Co launched the venture arm in 2010 and the corporate VC made its first investment in 2011. The firm primarily invests at the Series C stage or later and will typically deploy between $5 million and $15 million in its first investments in a company.

The firm invests from a $500 million evergreen fund backed by the corporate parent, and Taranto said the venture operation has twice paid back the fund.

Taranto said the pandemic has had little effect on the firm, with Merck GHIF making nine new investments in the last year and participating in five follow-on deals. Typically, the firm invests in six to eight companies a year.

“Although we’re working remotely now, healthcare is playing an important part in society,” he said. “We’re trying to build companies that bring value to the consumer.”

The fund typically invests in therapeutics, but also looks at such healthcare fields as care management, therapy planning, analytics and AI, enabling technologies and clinical trials.

Taranto said remote clinical trials have become an emerging sector amid the pandemic, as well as telemedicine and remote monitoring.

“Where we are investing is where healthcare is going,” he said.