Top Israeli tech executives talk.
(photo credit: Courtesy)
While the Israeli high-tech industry is celebrated the world over, the biotech sector is finally stepping out of its big brother’s shadow and enjoying a significant success of its own. There are over 1,000 life science companies in Israel. They are developing and producing innovative products such as the Pill Cam and the ReWalk walking assistance system, which are just two examples of how Israeli biotechnology is changing the world. But in order to understand the industry, it is necessary to look at the major factors contributing to its success.
Much like high-tech, the biotech industry requires highly skilled people to innovate. The number of trained scientists and engineers is considered critical to the growth of these industries. Israel has more scientists and engineers per capita than any other country in the world, with 140 per 10,000 population as compared to the 83 per 10,000 in the U.S., the next on the list. Israel also has one of the world’s highest per capita ratios of scientists in life sciences, with one out of every three Israeli scientists specialized in life sciences. These numbers translate into real innovation. Israel is one of the world leaders in biopharma patents and medical patents per capita. While innovation is key, more is needed to grow an industry: entrepreneurs, capital and government support.
The entrepreneurial spirit in Israel has been touted in innumerable talks, publications and blogs. But in addition to innovation and entrepreneurship, capital is critical for translating an idea into a viable commercial enterprise. And this capital is making its way into the life sciences. In the past several years we are witnessing steadily increasing amounts being raised privately and publicly by life science companies. While early-stage companies require angel or venture capital funding, some companies are maturing into public companies in a more advanced stage of development, and are attracting substantial interest from foreign investors, obtaining primary or dual listings on the Nasdaq stock market. As an example, Pluristem Therapeutics, a cell therapy company based in Haifa, is listed on the Nasdaq and Tel Aviv exchanges, has successfully raised $150 million via a series of offerings, and plans to initiate late-stage clinical trials. As the President &COO of the company I can appreciate all it took to get from the invention of the core technology at two of Israel’s top academic centers, to a well-funded, publicly traded company moving its products towards commercialization.
Israel also has important government and organizational support for the industry. The Israel Advanced Technology Industries is the largest Israeli organization dedicated to advancing the high-tech and life science industries. It has several goals, one of which is supporting government activity and advocating for public policy that encourages innovation, job creation and long-term investment in startup companies. It supports and advocates for these industries in conjunction with strong government efforts. The National Authority for Innovation, formerly the Office of the Chief Scientist of the Ministry of the Economy, invests $400 million annually in grants, incubators and other programs. These funds play a significant role in the development of early-stage companies, but also supports activities at later stages of development such as large clinical trials that target regulatory approval and commercialization. The National Authority for Innovation is committed growing the sector, and allocates between 25-30 percent of its yearly budget to the sector. The life sciences industry also enjoys tax benefits and grants for export-oriented industries and R&D centers, and benefits from science and education programs that nurture and sustain excellence in science and reverse the emigration of educated life science professionals.
As of 2014, more than 50% of Israel’s exports derive from the high-tech and life science industries, and the life sciences industry is playing a meaningful part in this. With the expected increase in investments in Israeli life science companies, from Israeli institutional and overseas investors, we can anticipate an increase in the number of companies. We can also expect the development of more mature ones, with products approaching or achieving commercialization. More companies will aim to bring products into the market, rather than exit in earlier stages. These developments should all contribute to the growth and prosperity of the Israeli economy.
Academic excellence, innovation, entrepreneurship, inflow of capital and strong government support are coming together to generate a booming life sciences industry in Israel, much as they have done for the high-tech sector. Investors and entrepreneurs can look forward to the continued success and growth of the sector, and, most importantly, patients can anticipate better outcomes as this Israeli industry expands and matures. Yaky Yanay is president and COO of Pluristem Theraputics and Co-Chairman (Life Science) IATI (Israel Advanced Technology Industries).