US medical fund enters region with joint venture

The JV company will bring the capability to manufacture therapeutic devices and to develop prototypes for new device concepts to the Middle East. This is a first in the region.

"This is the first step in building a world competitive medical technology industry in the Middle East," said fund advisor, Peggy Farley, president and CEO of Ascent Capital Management.

Farley predicts that the (new) industry has the potential to rival that of the United States, given the intellectual and financial capital in the region.

"Our venture in Salalah will draw upon medical and engineering talent, focusing in a few years on innovation emanating from the region, to become one of the medical industry's leading manufacturing centres."

"Out of that will come cutting edge technology that will change the way that serious global health issues are addressed," she said.

The joint venture company created by SMSMCo and the Fund, to be called Salalah Medical Device Manufacturing Co, aims to build a fully integrated medical manufacturing capability in Salalah, Oman.

It will begin operations with the product development and manufacture of guide wire products and surgical kits.

According to Farley, its primary aim is to build value-added medical device products for the US, European and GCC markets.

"Critical is the ability to create prototypes for new inventions. Our joint venture will evolve to do that. It will also evolve to manufacture innovative and existing devices for the world markets," said Farley.

"These goals fit the Omani vision of building in-country value-added manufacturing. Through Oman's Free Trade Agreement, it also allows US and European entities to benefit from low cost labour rates," she added.

In 2005, Ascent launched the $100 million Ascent Medical Technology Fund II, a private equity vehicle to promote the development of the medical technology industry in the Middle East. It is this fund that is spearheading the Omani manufacturing unit.

The Fund was set up to provide venture capital in the region, as well as advance medical innovation and tap invention, manufacturing and clinical strengths in the Middle East, which is recognised as one of the leading emerging research markets in the world. The lead investor is the International Finance Corporation (IFC), a member of the World Bank Group.

According to Karl Groth, Ph.D., managing director of Ascent Private Equity, LLC, Ascent chose SMSMCo because of its quality systems and commitment to grow.

"SMSMCo offers good management, a high level capability, quality systems approved by international standard organisations, commitment and energy to grow, commitment to global marketing and creativity and commitment to innovation," Groth said.

Production at the unit is scheduled to being in early 2008.