Naftali Bennett at Ramla conference 370.
(photo credit: Courtesy Ramla conference)
Economy and Trade Minister Naftali Bennett has mixed feelings about Israeli
“exits,” such as Tuesday’s sale of start-up Waze to US-based Google.
people are frustrated by the big exits. ‘Why do we sell, why do we sell?’ I
think the jury is out on that one,” he said on Tuesday at the annual IATA-BioMed
conference in Tel Aviv.
A recent report found that 95 percent of Israeli
start-ups, when faced with the choice of going public or selling to foreign
investors, choose the latter.
The roughly 6,000 leaders in the fields of
health, pharmaceuticals life sciences and biological technology from around the
world who gathered at the conference likely agreed with Bennett.
Israel, the biomedical industry has to look abroad to survive; a country with a
population of eight million cannot sustain such research-heavy businesses alone.
As a result, the quickly maturing biomedical industry in Israel often looks to
sell its products, technology or entire start-ups to bigger business with the
proper economies of scale abroad.
“Many of the top-selling biologics
world-wide carry a concealed ‘Israel Inside’ label,” says Ruti Aloni, who
co-chaired the conference.
According to Aloni, bio-technology conceived
in Israel (but developed and commercialized abroad) generated $24.6 billion of
revenues in 2012, putting Israeli fingerprints on nearly a fifth of worldwide
biotech sales. And the industry is growing. Of the 920 biotech companies that
have sprouted up in Israel, two-thirds of them were founded in the past decade
In his brief remarks, Bennett noted that purchases by foreign
companies can benefit local startups.
Cyota, the anti-fraud software
company he founded, has grown from employing 120 people to employing 400 since
its sale to Bedford, Massachusetts-based RSA Security in 2005. Working with big,
international companies can teach Israelis skills in management and marketing,
and prepare them for new ventures.
Exits can also be beneficial for the
state; US investor Warren Buffett’s recent acquisition of Iscar netted the state
NIS 1.7b., bringing the monthly budget in May from a deep deficit into
But not all exits leave the companies fully functioning in
Israel; Facebook shut down two Israeli start-ups after acquiring them, and its
failure to promise Waze that it wouldn’t reach a similar fate reportedly
scuttled an acquisition deal between the two companies earlier in the
Yet as Israel’s Biomed industry follows in the footsteps of hi-tech
in the coming years, Aloni says, she hopes it will have more potential to stay
rooted without necessarily relying on international companies.
hope that in the future, based on current trends, the local biotech community
will form a core of substantial companies that will evolve into a mature
industry capable of reaping the benefits of furthering local product development
and commercialization,” she says.