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At the start of 2006, Israelís life science industry Ė spanning the fields of medical devices, biotechnology, pharmaceuticals and health IT Ė stands at the forefront of the current high-tech boom, with some 700 companies and 50 new startups every year.

Between 2001 and 2005, more companies were established in life sciences that in any other industry in Israel. The second half of 2005 saw a wave of life science IPOs on the Tel Aviv Stock Exchange.

While other sectors experienced a slowdown in enlistment of venture capital toward the end of 2005, life sciences concluded the year with significant increase in investments in startups. According to a survey conducted by PriceWaterhouseCoopers, in 2005 some $49 million was invested life science seed-stage startups, compared with $31 million in 2004 and $13 million in 2003.

The medical device sector in particular is showing signs of continued strength, with $22 million invested by venture capital in the fourth quarter compared with $19 million in the previous quarter, despite a slowdown in investment in all other areas that quarter, according to the report.

In fact, Israel is the world leader in medical device patents. Medical device companies represent more than 54 percent of the countryís life science companies, with biotechnology the second largest sector.


The life science industry as a growth engine

The exports life science products in 2005 totaled $3.3 billion.

The main export markets for the life science industry are the US (63%), Europe (27%) and the Far East (7%). In 2005, medical device exports reached $1.25 billion, 14 percent growth compared with 2004. Some $2.2 billion worth of drugs were sold worldwide, an 50 percent increase from 2004. These sales account for 13.1 percent of Israelís industrial exports.

The industry employs about 27,000 persons. Factors contributing to the success of this burgeoning industry include cooperation between academic and business, an entrepreneurial spirit, and a highly skilled workforce.

World-class universities and research institutions such as the Technion-Israel Institute of Technology, the Weizmann Institute of Science in Rehovot, and the Hebrew University of Jerusalem place Israel at center stage in life science research. There is a strong collaborative relationship between academia and business in moving cutting-edge research projects from the lab to commercialization. Fueled by the entrepreneurial spirit of Israelís medical professionals, the country boasts seven tech transfer organizations (TTOs) within the university system, five TTOs at hospitals and a specialized TTO to advance the utilization of military technology for medical applications.

In 2004, an estimated $800 million was spent on life sciences R&D activity. Of this amount, the Israeli government funded $308 million. Through the Office of the Chief Scientist of Israelís Ministry of Industry, Trade and Labor, the Israeli government disperses hundreds of millions of dollars for R&D in companies of all sizes.

University TTOs focus on the process of taking advanced research projects out into the marketplace. One example is the joint efforts of Teva, Hadassit (the tech transfer company of Hadassah-Hebrew University Medical Center), and VCs to form a new model of cooperation between researchers and pharmaceutical companies to promote drug development, participate in clinical trials and move toward commercialization.

In late 2005, the Hadassah Medical Organization and the Hebrew University of Jerusalem announced the launch of a biotechnology park in Jerusalem. Intended to provide incubator conditions for life sciences startups the park is scheduled to open in 2007.


More Info

Briefer on Israel's Life Science Industry 2006


Source: The Israel Export & International Cooperation Institute
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