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Govt grants should fund Kiwi tech pilots rather than hand out cash, start-up founder says

Thursday 23rd June 2016

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An alternative to government funding agencies handing out cash grants to small-to-medium-sized enterprises would be paying local organisations such as District Health Boards to trial their products so they can get New Zealand customers and data at an early stage, says start-up chief executive Siobhan Bulfin.

Bulfin is founder of Melon Health, a patient engagement and behaviour change platform for the prevention and management of chronic disease. The company based in Wellington and San Francisco originally aimed to effect change in addictive behaviours such as excessive drinking but now targets patients with chronic diseases such as type 2 diabetes which can be controlled but not cured.  

Start-ups have two major problems – lack of money and customers, Bulfin told attendees at a Healthtech Innovation & Investment workshop in Auckland today.

One of the difficulties for health IT companies in New Zealand was there’s really only one funder – the Ministry of Health - which is a big impediment to getting local customers, she said.

Her four-year-old company, which last year won the workshop’s Start-up company award, struggled initially to get New Zealand customers. It has only just completed its first government-funded project – a pilot with the Midland region of the Waikato District Health Board for pre-diabetes patients.

Bulfin said it would be a good idea for at least some taxpayer-funded research and development and growth grants to go towards funding local organisations to trial new Kiwi technology in order to give SMEs a customer base and set of data that would then make it easier for them to sell offshore.

That would take a lot of the risk out of testing these products for organisations like DHBs or Primary Health Organisations (PHOs) who may like the technology but don’t want to initially fund it until they’re sure it works, she said.

“It’s also a way of New Zealand taxpayers getting more value for their money,” she said.

Bulfin said Chai Chuah, the director-general of health, said at the start of HealthTech Week that the ministry wanted to embrace disruptive technologies but in her experience, “there hasn’t been a lot of evidence of that.”

Simon Brown, Callaghan Innovation’s group manager accelerator services, said he wasn’t sure whether the alternative funding suggestion was “the right idea”.

But he says the agency is in the midst of identifying sector game plans and wants input and fresh ideas like Bulfin’s to help shape what then fed back to those setting grant funding and other policy.

The successful Midland pilot is now being rolled out to other parts of the DHB and has had a ripple effect attracting interest from  New Zealand PHOs, in particular, in introducing one in their area, Bulfin said.

In the past year, Melon Health has secured two pilot projects with major US health insurer UnitedHealthcare. The first involves 500 patients in Kansas and Missouri in a 28-week trial for patients with type 2 diabetes and the second is a 12-month pilot to help pregnant patients stay healthy and stop smoking to prevent pre-term babies.

Melon Health received investment last year from the Punakaiki Fund which is now its second largest shareholder after Bulfin, and it’s about to launch a new fundraising round seeking around $3 million.

Bulfin said the start-up, which is now selling into the US, Canada, New Zealand, and Australia, hopes to break even before the end of the year.

It had an R&D grant from Callaghan Innovation’s predecessor but was turned down when making another application 18 months ago.

New Zealand’s health IT and medical device companies turned over $1,3 billion last year, according to the NZ Health Technology Review released yesterday. The sector spent $129 million on R&D with government committed to providing a further $97 million in funding more health research.

Callaghan Innovation handed out $138 million in total grants last year.

(BusinessDesk receives some assistance from Callaghan Innovation to cover the commercialisation of innovation).

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