Innovation as a major Growth Engine of the Israeli Economy

Israel Makov

Delegation of Hospital CEO’s from North AmericaFebruary 5th, 2012Tel Aviv

Israel’s High-Tech Industries

41.2% of total exports in 2009

270,000 employees in 2008

c. 14% of total employees in Israel’s business sector

15% of Israel’s GDP

High-Tech

Industries

Software / Hardware

Nanotechnology

Biotechnology

Clean-Tech

Space Industry

Life Sciences

Innovation Centers

Start-ups

Large companies

SecurityIndustries

Semiconductors

Communications

Internet

Industry’s Strengths

Industry and Academic Partnership

The Chief Scientist formulated a set of designated tools to enhance the relationships between Academy & Industry (marketing, financing, business training, etc.)

Supporting basic research that has the potential to be commercialized Expanding existing programs ("Magneton", "Nofar," etc.)

Government Support of the Industry

Governmental Focus on R & D

Clean-Tech ?

Bio-Tech?

Homeland

Security ?

A Fruitful Academic Infrastructure

Israel ranked #3 globally in scientific publications per capita

SOURCE: Office of the Chief Scientist - Ministry of Industry, Trade and Labor, ISRAEL

Ranked 2nd in Stem Cell relatedScientific publications

Ranked 2nd in Stem Cell relatedScientific publications

Israel – A Source of Medical Innovation

Medical patents/capita BioPharma patents/capita

SOURCE: US patent office 2007; E&Y 2007, The Global Competitiveness Report 2010-2011, WEF

2nd in Europe in biotech pipeline products per capita

2nd in Europe in biotech pipeline products per capita

Ranked 6th in innovation globally by the

World Economic Forum

Ranked 6th in innovation globally by the

World Economic Forum

Innovation Translates Well To Ventures

246

33

53

8571 77 71

94

67 63

38

200705040199 0320001998 02>1998 06

Companies by year of foundationNumber

333 companies established between 2003-2007

• ~900 companies

• 50-60 new per year

• 1/3 are younger than 5 years

• 100’s of service providers:

− CROs− Engineering− Labs− Consultants− Bankers− Lawyers

SOURCE: ILSI report

Ventures Are “Real” – Create Value

26

18

12

5Pre-Clinical

Other

Clinical

Seed

Revenue

39

Companies development stage, 2009%

>1/3 of the companies generate cash Companies sold/traded at high values

• Optonol

• D-Pharm (TASE: DPRM)

• Mediguide / St. Jude

• Ventor / Medtronic

• Omrix / J&J

• Boston Scientific / Remon

• Protalix (AMEX: PLX)

• Disc-o-tech / Kyphon

• Colbar / J&J

$155M

$175M

$300M

$325M

$438M

$80M

$750M

$220M

$159M

2010

2009

2009

2009

2008

2007

2006

2006

2006

2006-2010 selected deals

SOURCE: ILSI Data Base 2009

Most Popular: CARDIOVASCULAR, ONCOLOGY, CNS

109

283537

44

57

72

Orthoped-ics

Oncology Ophthalmic CNS Cardio-vascular

OBGYN &

pediatrics

Life science companies by therapeutic area, Israel 2007Number

SOURCE: ILSI report

General & internal

Among medical device companies: 20% Cardiovascular 8% General & internal 5% General surgery

Largest Segment: MEDICAL DEVICE

334

12

21

Pharma

Other

2Medical ITAgro. Biotech.

Service

Biotech.

55 Medical devices

Life science companies by sector%

100% = ~900 companies

Medical device fits Israel’s characteristics

• Innovation, improvisation, problem solving

• Engineering & software

• Requires smaller investment• Shorter time to market• 75% of financing is for medical

device (vs. 35% in the US)

• Smaller/simpler operations• Shorter process• Simpler regulation

Granted Medical Device Patents -per Million Capita 2007

Source: www.uspto.gov Analysis: ILSI ©

0

2

4

6

8

10

12

14

16

18

UnitedStates

Japan Germany UnitedKingdom

France Canada Israel SouthKorea

Taiwan

Nu

mb

er

of

Pa

ten

ts p

er

mil

lio

n C

ap

ita

Medical Device Patents per million Capita

Granted BioPharma Patents – per Million Capita 2007

Source: www.uspto.gov Analysis: ILSI ©

0

2

4

6

8

10

12

14

16

18

Num

. of P

aten

ts p

er m

illion

Cap

ita

Venture Capital Investments in Israel -1997 – 2010 YTD ($ million)

Source: Israeli Money Tree Survey

Amount Invested in Life Science Sector in Israel

0

50

100

150

200

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

YTD

Mil

($

)

Biotechnology Medical Devices

38103

144

225114

244

161145

287206 199 203

152

37

Most Large Players Have Local R&D Activity

… And A Fruitful Academy - Business Fusion

Tech-transfer company

The Hebrew University

Tel Aviv University

Program highlights

• More than 600 researchers in the relevant fields (Life sciences, Medicine, Exact sciences, Engineering)

• Licensed products include: Lipimix, Circadin, Diaslide• Recently established a joint research fund with J&J

• $59M revenue in 2008• 6100 patents to date – similar to MIT and Stanford• More than 60 spin-off companies (e.g., Keryx, Nasvax, Novagali)• Products: Exelon (Alzheimer), Doxil (ovarian cancer)

Weizmann Science Institute (Yeda)

• 2006 – 2007 statistics:– >40 new license and option agreements signed– >80 research projects funded (including through JVs, e.g.,

J&J).– >200 patent disclosures submitted

• Copaxone (Teva), Rebif (Serono), the leading MS drugs

• 12 Tech-transfer organizations: 7 in universities, 5 in hospital• Facilitate investments, sponsorship, and partnership with strategic players

Key Success Factors

Government support & Financial infrastructure Innovation culture

Army / Defense industries

Academia

Human resourcesGlobal orientation

Thank you