One on One: Pharming out Zionism

An international businessman's local ventures are just what the doctor ordered.

nathan jacobson 224.88 (photo credit: Courtesy)
nathan jacobson 224.88
(photo credit: Courtesy)
As Nathan Jacobson walks into the cafe near his beachfront apartment in Tel Aviv, he exchanges pleasantries in Russian with the security guard at the entrance. Then he does the same in Hebrew with the waitress. Finally, he switches to his native English for our interview. Though the founder and chairman of MagenDavidMeds - the first Israeli on-line pharmacy - is in a hurry to catch a plane, he speaks and acts as though he's got all the time in the world. And perhaps he has, when talking about two of his favorite subjects - Israel and business. Indeed, the 53-year-old investment and development entrepreneur with dual Canadian and Israeli citizenship, and a long-standing presence in the former Soviet Union, is not only known for the many companies he has established and run - such as The West Group and IFG Canada Limited - but for sitting on the boards of many Israeli and Jewish organizations, including the Tel Aviv Foundation, the Jewish National Fund, the Ukrainian Jewish Congress, Meir Hospital and Tel Aviv University. MagenDavidMeds, he says, is his "baby" - the fruit of both passions. "I had been working in the former Soviet Union and elsewhere for about 20 years," he explains, "and was looking for a reason to spend more time in Israel. The on-line pharmacy industry had developed largely out of Winnipeg, my home town. Its precursor was a growing phenomenon of senior citizens from the US coming to Canada by bus with their prescriptions in hand; having a Canadian doctor co-sign their US doctors' prescriptions; buying their medications in Canadian pharmacies; and then going out for an evening to the symphony or something like that, before getting back on the bus to return home. With the trip and all, these people were still saving a whole lot of money. This is because the US is the only developed country that does not have government regulation on the price of medications, which means that there is no limit to the profits that manufacturers are allowed to make. As a result, the price of medication is considerably higher than it is in other countries." This, Jacobson says, is the reason that the on-line market for medicine has had such a boom there. Still, Jacobson's personal stake in the endeavor (which has led to other, related ventures, such as Meditor, a drug development company, and Paygea, a multibillion-dollar Internet payment provider), is more than financial. In fact, he reveals - after reminiscing about his reasons for having made aliya as a young man, serving in the army and then returning to Canada - he's in the process of relocating his family here. "This is where I'm home," he insists. Where does Israel come into the equation of an on-line pharmacy that sells to the United States? I asked myself the same question. First of all, I found out that it was legal, because the US and Israel have a free-trade agreement, which includes medications - as opposed to the North American free-trade agreement, which does not. Then I discovered that not only did Israel have very competitive prices - the prices that manufacturers were charging in Israel were more competitive than those in Canada, Britain, New Zealand and Australia - but that in Israel, the medications are also the safest. A number of years ago, a terrorist cell in Ramallah tried to put poison antibiotics into the Israeli supply chain. They were caught and stopped. As a result, the Israeli medical industry instituted all kinds of new safety standards that make the medications tamperproof. When you buy medication in the US, you go to your pharmacist. He has a bottle with 500 pills in it. He pours them out onto a plastic tray, and uses a ruler to count out the number of pills for your order. You don't know whether the medication you are given has passed its expiration date, or even whether it is really the medication you ordered. Because drugs are so expensive there, there's a huge counterfeit trade going on. In Israel, on the other hand, the pharmacist doesn't get a big bottle from which to dispense pills into a small bottle with his own label. He receives them in the manufacturer's package. It's blister-packed, so it's tamperproof. On the blister pack, and on the box that the blister pack comes in, there is the log number and expiration date of the medication, in addition to a product monograph and details of possible risks in English, Hebrew, Arabic and in some cases Russian as well. You mention safety. How does a consumer know when to trust an on-line pharmacy, with so many charlatans out there in cyberspace? Consumers have to be careful about a number of things. They have to know whom they're buying from, and where their medications are coming from. They shouldn't just buy from a slick Web site. They have to learn about the on-line pharmacies they're dealing with. They have to check them out, make sure they demand real prescriptions. They can do this on, which is like a "better business bureau" of on-line pharmacies, an easy business for charlatans to go into. Also, consumers should only buy medications when they are using prescriptions from their doctors - not with on-line "virtual prescriptions." I've heard stories of people receiving capsules filled with dirt. Since it is Americans, not Israelis, who are the consumers of this market, why have you said that MagenDavidMeds benefits this country? For one thing, it keeps independent pharmacists in business. We don't work with the big chains, whose buying power threatens the "small guys." Another way in which this is good for the country is that we agreed not to sell any medication that is off patent in Israel and still on patent in the US. In other words, we do not sell the generic, even if it's available in Israel - unless the Israeli generics are available for the US market, in which case, we do sell them, thereby helping put Israeli manufactured medications in the US. You have an eclectic past that involves making aliya, serving in the IDF, returning to Canada and then becoming a big businessman in the Soviet Union and elsewhere. Did you grow up in a wealthy household? On the contrary. We were the poorest Jewish family in our neighborhood. My parents scraped and got help from the community so that we could go to Hebrew school. There were years during which I don't know how my father put food on the table. Through my Jewish education, I always had a love of Israel. I remember lying on the carpet in nursery school with my three best friends, all of whom made successful careers outside of Israel and now live in Tel Aviv. We get together once or twice a week. This goes back to the education we received. At the time - during the late 1950s and early 1960s, many of our teachers were Israelis on shlihut to North America [who served stints as emissaries]. For example, we had two teachers, Shmuel and Dvora Wernick, who came to Winnipeg with their two children. They were great teachers, who inspired us and taught us the love of Israel. When they returned to Israel, they Hebraicized their name to "Omer." Shmuel Omer became the head of Habimah, and Dvora Omer became the renowned author of children's books. Another example: In 1978, when I had just returned from the Litani invasion in Lebanon, and was going to my girlfriend's house in Jerusalem, I was walking on Rehov Habroshim and remembered that my sixth-grade teacher, Dov Dafnai, lived on that street. So, I found his apartment, and knocked on the door. He answered, and saw a soldier in uniform, dirty from the field, whom he didn't recognize. When I told him who I was - Natan Jacobson, from kita vav [sixth grade], Beit Sefer Ramah [the Ramah School], Winnipeg - he started to cry. The point is that love of Israel was instilled in me from a very young age. And I would have stayed if my dad hadn't gotten sick. I came back to Canada from the army to be with him when he was dying. So, your father didn't live to see you make it big? No. In fact, I think one of his biggest worries was what would become of me. My mother, on the other hand - who died three years ago - did live to see it. And she always told me to be humble. I would tell her, "Mum, guess what? I bought a new car!" And she would say, "So what?" She was a very down-to-earth person. Have you taken her advice about remaining humble? Well, where cars are concerned, I have a problem. I love cars and motorcycles. I think this partly has to do with the fact that when I was growing up, my dad always drove clunkers, because he couldn't afford anything else. And the other kids made fun of that. It was hard being made fun of. I tell people today that I could either spend the money on years of psychiatric treatment or buy nice cars, and I buy the cars. Other than that, we live in a normal house in a normal neighborhood in Toronto - though we also have homes in Tel Aviv and Moscow. My wife is very down-to-earth, and our daughter, Katya, is a normal kid. With all your connections to Russia, how do you feel about the war in Georgia? I've seen it coming for a long time. Vladimir Putin is a Russian nationalist. A lot of things can be said about him, but I can tell you that he's neither an anti-Semite nor anti-Israel. He's simply pro-Russia. I've known the man from the days when he was deputy mayor of St. Petersburg. And the stuff he's doing for Iran - such as helping increase oil prices around the world - is the best thing possible for the Russian economy, which is oil-based. He watched the collapse of the [Soviet] empire. And he considers it a serious threat when Georgia or the Baltics - Latvia, Lithuania, Estonia - join the EU and try to become members of NATO. It's a threat to the face of Russia. It's a slap in the face. While America was off doing other things in Iraq and Afghanistan, Putin had to teach a lesson to the countries around that they'd better remain close. And Georgia's pushed the envelope too much, which is why he slapped it down so hard. You have to understand the Russian side. The Russians are very proud people. Look, they were never going to become Western. What we see there is Western influence, which is actually modernization. But culturally, they're never going to become like the US. Even Canada and the US are very different. What Putin is trying to do is rebuild a sense of strength and a sense of honor - and a sphere of influence. But he's limited in the kinds of countries he can do this in. The Iranians and Syrians are not good people to align oneself with. But I don't think anti-Semitism has anything to do with it. He has many Jewish advisers who visit Israel regularly. And the Jewish community itself is growing and thriving in Russia. Speaking of growing and thriving, since you first came here, you have seen the country develop. Is it easier to do business here today than it used to be? I don't think it's become easier to do business here. There's still a huge bureaucracy. The tax authorities are a problem. There's political instability. You need good local lawyers and accountants. But it's a great country to invest in. It's a great source of brain power. The economy is very strong. Overall it's tremendous. You refer to political instability. Whom do you support for the next prime minister? It's a delicate question, because I have friends in various parties. There are people who I want to be relevant in Israel because they're clean, smart and because they have an understanding about what's necessary for the state. They present a leadership I can believe in, and we're sorely lacking in leadership. [Opposition leader] Binyamin Netanyahu is clean. He may be criticized for a lot of other things, but nobody will ever accuse him of being dirty. Also, he gets the situation, and he knows how to discuss it and bring it forward. Another politician I admire is [Public Security Minister] Avi Dichter. He is one of the cleanest, most decent people I've ever met, and he's a true leader dedicated to the State of Israel, even though he might not be the flashiest guy with a large campaign budget. I want to see a government with people like that from a variety of parties. We need to teach the people of Israel that we can trust our politicians. And we need politicians who put the people first and themselves second.