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A MONTHLY REPORT COVERING NEWS AND INVESTMENT OPPORTUNITIES JOSEPH MORGENSTERN, PUBLISHER

July-August 2001 Vol. XVII Issue No.7 You are invited to visit us at our websit: http://ishitech.co.il

Copyright 2001: Israel High-Tech & Investment Report Subscription, Bulk copy and reprint information available on requestEditorial Offices: P.O.Box 33633, Tel Aviv 61336, Israel Tel: 972-3-5235279 Fax: 972-3-5227799 E-mail: [email protected]

In this IssueNegev Saline Grown Tomatoes are Sweeter Dispomedic Comes Straight to the PointAgro-Tech Research Makes Desert FruitfulArticle byBen Gurion UniversityÕs President Dr. AvishayBraverman: From a Dream to a RealityISRAEL HIGH-TECH MODEL MILLENNIUM PORTFOLIO:News and UpdatesAudioCodes' Communications Board Selected by Clarent Business Week Names Check Point Software No. 10 in `Information Technology 100'Comverse Solutions Chosen by ChinaÕs Mobile ComOrbotech sees 10-15% Decline in Q2 RevenuesMagal Enters Into Security Monitoring Services How the Global Individual Investor Can Capitalize on IsraelÕs High-Tech BoomConcord is Raising $200 mln for its Fourth VC FundMajor Drugs Responsible for Biotech Industry 33% GrowthMPM Biotech Fund Poised to Expand ISRAEL HIGH-TECH MODEL MILLENNIUM PORTFOLIOIsraeli Pavilion at the 44th Paris Air Show in Le BourgteThe Scorpion SU-25 ScoresAn advanced cockpit

The Negev, the southern part of modern day Israel,according to the Old Testament Book of Genesis, inthe years 1800-1600 BCE was a favorite wateringplace of the Jewish Patriarchs Abraham and Isaac.In the Old Testamenr Book of Numbers Moses isquoted as saying, "Go up through the Negev andon, into the hill country".

The modern day Negev includes desert and canyonregions; from Beersheva all the way down to Eilat,on the Red Sea. It covers approximately 5,140square miles; more than half of Israel's total landarea. The Negev receives a scant 2-4 inches ofrainfall annually. The climate is hot and dry, typicalof a desert.

David Ben-Gurion IsraelÕs first Prime-Minister wasthe man credited as the key leader in theestablishment of the modern State of Israel in 1948.The Premier, called for the establishment ofpioneering settlements in outlying areas, especiallyin the Negev. After leaving the government, hereturned to Kibbutz Sde Boker. His retirement tothis small agricultural community in the Negev wasa testimonial of his philosophy of developing thewilderness. During one of my visits to Sde Boker inthe 1960s I heard from the "Old Man" as Ben-Gurion was called, his detailed dream of a desertbased agriculture, converting the hot desert suninto a useful energy source and setting up a majorUniversity in Beersheva. Agriculture in the desertwas unlikely but Sdeh BokerÕs farmers raisedimpressively sized peaches, and adjacent to theÒOld ManÕsÓ modest shack roses grew in the sand."We succeed growing peaches but the lack ofrainfall forces us to bring potatoes from CentralIsrael," he mused. Ben-GurionÕs vision finally

appears to be on the track to realization.

Recently, I participated in a tour of High-TechIndustries and agrotechnology projects of theNegev area. The tour was hosted by the IsraelExport Institute and included a visit to the RotemIndustrial Park, a subsidiary of the Negev NuclearResearch Center and located near Dimona. Here,technologies originating from the NuclearResearch Center are developed forcommercial use. The

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Negev Saline Grown Tomatoes are Sweeter

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Industrial Park includes 15 companies and plants,as well as a Technology Incubator and aTechnological Training Center. Also on the itinerary was a visit to RamatHanegev, an area noted for advanced agro-industry including raising of fish in salt water, thebreeding of shrimps for export based onsubterranean artesian wells, and the productionof olive oil from olive trees grown in the desert. Another highpoint was a visit to Ben-GurionUniversity, Beer Sheva with its PresidentProfessor Avishai Braverman.In this July issue we are pleased to publish an in-depth report devoted to some of the highlightsgleaned from an unusually exciting visit to athriving technology center in IsraelÕs Negevdesert.

Dispomedic Comes Straight to the PointThough its initial productive capacity representsonly a miniscule fraction of the $2.0 billion USmarket for medical safety syringes. Dispomedicis confident that its patented and FDA clearedCoverTipª passive injection systems, will allow itto carve out a profitable market niche, for itsproduct.On November 6, 2000, American President Bill

Clinton signed into law the Needlestick Safety andPrevention Act. This "Act" could herald a new eraof protection for the nationÕs 8 million healthcareworkers. The law requires that healthcarefacilities implement the use of "safer medicaldevices" to minimize accidental needlesticks. ForDispomedic this requirement now presents a"once in a lifetime opportunity". The timeliness formarketing the product for the newly mandatedmarket of safety syringes has created animmense business opportunity.In an interview held next to one of the productionlines of the sparkling new factory located in amodern building in the Rotem Industrial Park,Barry Berler, DispomedicÕs President could barelycontain his enthusiasm. "The market that weaddress, is so great that even as we add anadditional production facility on the Caspian Sea,we will only be able to supply a small part of the

demand of the US market. He pointed out thathealthcare workers themselves will now play animportant role in choosing safety devices thatoffer superior protection and ease of use. "Neverhas there been a better time to introduceprotection at the point of injection into theworkplace! Our unique hypodermic safetysyringe, CoverTipª, is a wise and affordableinvestment in protective technology." he stated.In the case of syringes, for the last few years, the"state of the art" has been to us a no riskretracting needle so that there is no possibility ofinjury to the needle user. The needle simplyretracts back up inside the hard plastic shellwhere the medicine, for example, was contained.The syringe with the needle inside the housing isthen disposed of. This type of needle requires nochange in the user's grip and only one hand foruse. BesideÕs DipsomedicÕs CoverTipª there areseveral products on the market.

The ProductDipsomedicÕs CoverTipª is said to have all of theabove qualities and to possess superioradvantages as compared with products currentlyin the marketplace as well as others about to beintroduced. DispomedicÕs innovative technology is

ISRAEL HIGH-TECH & INVESTMENT REPORT July 2001

Israel High-Tech & Investment Reportpublished monthly since January 1985

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in its automatic sheath mechanism. As theplunger is fully depressed, a protective sheath isactivated and slides down the shaft of the needle,blunting and isolating the needle tip before it iswithdrawn from the patient. There is no extrauser intervention required to activate the safetymechanism and no manual manipulation withprotective cover sheathing theused needle. The risk ofpersonal injury and diseasetransmission is significantlyminimized and prevents thereuse of the syringe.Selling in the American and

other MarketsMr. Berler harbors no illusionsabout Dispomedic marketingits products in the US. Insteadit the company concentrateson research & developmentand manufacturing. InJanuary 2000 Dispomedicentered into a multi-phase,proprietary agreement withMedisys Technologies Inc.(SCEP:OTC) to manufactureth CoverTipª for this American company.

The Price May be the LimitDispomedic longer term goal is to reduce its pricecloser to standard syringe prices.. A leadinghospital in Israel pays NIS 92.22 for a packet of1000 of 2cc regular syringes, or about $0.02and$0..04 for standard 10cc syringes.Dispomedic safety syringes are being tested in25 hospitals in the US and five hospitals in theUkraine.The price is 4 to 8 times more thenstandard syringes. "at present and we hope toreduce the price in the future closer to the priceof standard syringes", states Mr. Berler.

The MarketThe need for a safety syringe was never indispute. Authoritative healthcare studies carriedout in the US reveal that American health careworkers (HCWs) suffer between 600,000 andone million injuries from conventional needlesand sharps annually. These exposures can lead

to hepatitis B, hepatitis C and HumanImmunodeficiency Virus (HIV), the virus thatcauses AIDS. More than 20 other infections canbe transmitted through needlesticks, including:tuberculosis, syphilis, malaria and herpes.Conservative estimates suggest that as many as80% of needlestick injuries could be prevented

with the use of safer needledevices.The cost of needlestickinjuries is staggering.According to the AmericanHospital Association, onecase of serious infection bybloodborne pathogens, cansoon add up to $1 million ormore in expenditures fortesting follow-up, lost timeand disability payments. Thecost of follow-up for a high-risk exposure is almost$3,000 per needlestick injuryeven when no infectionoccurs.The annual market size forsyringes is generally

calculated at 10 times acountryÕs population. For example, in the US, a1% market share could exceed 100 millionsyringes.

Becton-Dickinson, AmericaÕs leading syringeproducer, supplies 70% of the syringe market:$2.0 billion annual figure is generally agreedupon for the total US market. for all types ofsharps. Most of its sales are in conventionalsyringes. Medisys Technologies CEO Kerry Freyis prepared to do battle with the giant Becton-Dickinson as are others who are aiming at thesafety syringe market. He has said "that anopportunity exists for large companies topotentially enter into the safety syringe businessby acquiring a company like ourselves".

Agro-Tech Research Makes Desert FruitfulA decade ago, even the most optimistic amongthe scientific community from Ben Gurion

ISRAEL HIGH-TECH & INVESTMENT REPORTJuly 2001

Daniel Morgenstern

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University, the Faculty of Agriculture of theHebrew University and the Vulcani Institute,hardly believed in developing technologies, thatallow farmers in the desert to produce desirableand exportable qualities of melons andtomatoes. From the altitude of 350 meters abovesea level in the desert, where the averageannual rainfall is a scanty 97mm/year, during arecent visit at the Ramat Negev Desert Agro-Research Center, I witnessed melons grown inthe sand and tomatoes raised in hothouses.Surprisingly, the tomatoes were sweeter thanany I have ever tasted.Rami Galon, one of five researchers at theCenter confirmed that "that the most importantachievement of the research was theorganoleptic improvement of the products usingbrackish irrigation. The improved taste wasevident in tomatoes, olives, pears and winegrapes. The "Desert Sweet" tomatoes are sold inmany European countries. Their research hasbeen applied by Negev farmers. The technologyhas also been transferred to other countries.

How does desert farming work?Salinity in water causes "stresses" in plants andresults in poor quality. Drip irrigation, an Israelidevelopment globally exported, allowscultivation of crops with brackish and salinewater. Drip irrigation assures a continuous flowinto the soil. A constant dilution of the water ismaintained. To obtain the proper level of salinity,fresh water delivered to the Negev, by IsraelÕsNational Water Carrier from the Sea of Galilee, ismixed with brackish water, obtained from wells inthe desert. The wellsÕ depth may reach up to1,000 meters. In practice the water is pumpedfrom depths of 300 meters, and when brought tothe surface the water gushes out at atemperature of 100 degrees Fahrenheit. Water at the lower depths is "clean and bacteriafree and has a low level of salinity. It mixes atdepths of 300 meters, to provide the optimumsaline level. One of the keys of successful"desert farming" was the discovery that usingfresh water only during the short periods whenthe plant is sensitive to salinity, and brackishwater at other times was the best way. This

mixing of water of different qualities givessuperior results.

Throughout the Negev area, which covers morethan one fifth of IsraelÕs total size, but has onlyone percent of the countryÕs 7 million population,the application of the technologies developed,are readily visible to the eye with many of thevegetables being grown in greenhouses.

Of open field vegetables, 25 salinity varietieshave been tested, these include export grademelons and tomatoes. Sweet peppers, are nextin line. A decade of research has resulted in animprovement in the quality of many fruits and anoticeable higher level of sugar content, resultingin better taste, and a longer shelf life.

What else is ahead?E-Commerce Online for PerishablesThese include new species of flowers and flowerbulbs grown with fresh, brackish and hot water,all under plastic cover. Grapes for new wines tobe produced from vines already thriving in theNegev vineyards and irrigated with brackishwater.Farmers, whatever they may be growing orraising, are a hardy lot and have a keen scent forprofits. Eyal Policar, in his 40Õs owns andoperates a 4-hectare flower farm in MoshavZofar, in the Arava rift of southern Israel. ÒPolicarArava FarmsÓ sell several varieties ofTrachelium, Limonium and Gypsophiliaworldwide. In 2000 Policar was appointedManager of the Israeli unit of the US WorldCommerce Online, Inc., a leader in globalÒbusiness-to-business electronic commerce.ÒWhen using our e-commerce softwaresolutions, food or flower producers canstreamline their operations. Typically a 15%saving is the gain. IsraelÕs perishable growingindustry could save as much as $150 million ayearÓ, asserts the flower grower turned into an e-commerce executive.Flowers grown in the wilderness by Mr. Policar,are shipped to buyers in the United States. A newly developed hothouse computer tocellphone system which monitors various

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hothouse parameters and developed underPolicarÕs supervision is about to undergorigorous trials to determine its marketability. Mr.Policar just calls it the "black box". The high-techsystem which is intended to alert "farmers" tochanging conditions in hothouses, is the result ofa year long research and development program,involving a group of telecommunication andsoftware developers. Israel has attracted attention to its flowergrowing activities as it is the worldÕs leader inflower exports to Europe, according to statisticsprovided Haim Hadar, secretary of the FlowersGrowers Association. Last year Ôs flower exportsgrossed about $1.5 billion, which is about 30%of all flowers imported by Europe. Israeli flowers have gained a high reputationfollowing many years of investing in improvingflower quality, developing new varieties thatmeet customer demand, rapid response to thechanging fashions in the flower world, extendingflower shelf life and shortening the packagingand shipping process.

An Unlikely ExportShrimp for export, are raised in plastic ponds,using artesian water, pumped from 300 metersunder the Negev sand. "The shrimps that breed,enjoy a three to four time higher survival ratethan in South America and the Far East.Shrimps prefer Negev artesian water with itsspecific level of salinity, and are less susceptibleto diseases caused by the bacteria commonlypresent in sea water fed into the ponds. Thewater that we use in our ponds is totally free ofbacteria. Recently European customers havevisited us. On tasting sessions they haveapproved the taste of our shrimps," explainsEvyatan Nir, one of three entrepreneursresponsible for the shrimp project.Israel, as part of its aid program to developingand undeveloped countries, transfers its know-how to various nations. It has initiated brackishwater projects in development of arid zoneagriculture in West Africa (Senegal and BurkinaFaso), in India's Rajasthan desert, the Gansudesert in China and in the arid zones of northernChile.

David Ben-Gurion, for whom our university isnamed, launched his visionary campaign todevelop the Negev during the War ofIndependence in 1948. Even during the firstcritical years of the state - when Israel'spopulation was less than one million inhabitantsand the newborn country faced major securityproblems - Ben-Gurion understood that the keyto Israel's development lay in the vast unsettledareas of the Negev. Despite the current politicalsituation, the time has come to once again raisethe banner of developing the Negev.

In the past 50 years, many promises have beenmade and then broken. The Negev remains onthe periphery of successive government plansand budgets, still waiting to fulfill its central rolein the country's development. Israel's explodingp o p u l a t i o ngrowth andi n c r e a s i n gi n e q u a l i t ycalls for theNegev Projectnow as thecritical way toc o r r e c tu n b e a r a b l econgestion inthe center ofthe countryand allow fore q u a lopportunitiesfor all. Why now?The universityis alreadychanging theface of the


Converting Dreams to Reality

an article by Ben Gurion UniversityÕs President Dr. Avishay Braverman

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South. During the last 10 years, the university'spopulation has tripled to more than 15,000students. The best and the brightest from allsocio-economic groups flock to this universitywhere 50 percent originate from the Negev and50% from the remainder of the country. Ben-Gurion graduates supply approximately 20% ofthe high-quality manpower of the hi-tech,biotech and medi-tech industry in Israel. Thefaculties are generating relevant research forthe creation of new companies in the Negev.

Why now? The knowledge revolution, despitethe current hi-tech recession, is the main forcefor Israel's future. As it is clear now all over theworld, the development of successful cities ofthe 21st century world will be based onindustries generated directly from researchtaking place at the Universities.

We are gratified that the Israeli government isbacking the university and the city of Beershebain creating a hi- tech park adjacent to theuniversity, which will include a newlyestablished National Institute of Biotechnology. The hi-tech park will bring with it new jobs andopportunities to the region, not only in hi-techbut also for service and lo-tech industries. Weare happy to note that there are already 18trains running between Tel Aviv and Beershebaand that next year there will be 36 a day. Welook forward to the future when the tracks willbe improved and travel time will be reduced toless than one hour. We hope the governmentwill finally establish the international airport atNevatim and improve the road system for thedevelopment towns surrounding Beersheba.

The motto, 'Negev - The New Israel,' will appeareverywhere announcing that a new lobby grouphas been created, one that crosses all socio-economic lines, one that demands that thecurrent and future Israeli governmenst helprealize David Ben-Gurion's dream of a populousand prosperous Negev. Even in these difficultand dangerous times, we still must change ourdomestic priorities, now.

ISRAEL HIGH-TECH MODELMILLENNIUM PORTFOLIOUPDATESAudioCodes' Communications BoardSelected by Clarent AudioCodes (Nasdaq: AUDC), IsraelÕs leadingprovider of voice over packet (VoP)technologies, and Clarent Corporation (Nasdaq:CLRN ), a leading provider of Internet protocol(IP) communications solutions reinforced theirlong-standing relationship by announcing thatClarent has selected AudioCodes to supplyVoIP technology to Clarent's next generationGateway.AudioCodes' TrunkPack products are full-featured, VoIP building blocks that are high-density, low power and available on a single-slotboard. This makes the TrunkPack family anideal solution for significantly higher densitygateway products like the BHG8000, which willinitially support up to 7680 ports per seven-footrack in its first release. By incorporatingAudioCodes' communications boards, Clarentis ensuring that BHG will exceed marketdemands for gateway products.

Business Week: Check Point Software No.10 in `Information Technology 100'Check Point Software Technologies Ltd.(Nasdaq:CHKP), the worldwide leader insecuring the Internet, announced that it hasbeen named one of the world's top 10 publicinformation technology companies by BusinessWeek magazine. Check Point ranked as thenumber one software company in the world andwas named number 10 out of 100 of the bestperforming information technology companiesin any category. Additionally, the company wasrecognized as one of the industry's mostprofitable companies. In its fourth-annual "Info Tech 100" issue,published June 18, 2001, Business Weekrecognized companies that demonstratedsuperior efficiency -- either self-achievedthrough the utilization of technology or by theselling of products and services that help


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customers improve efficiency or save costs.Other selection criteria included shareholderreturn, return on equity, revenue growth, andtotal revenues. Check Point Software provides comprehensive,integrated Internet security through its SecureVirtual Network (SVN) architecture forcompanies ranging from the largest enterprisesto small offices. The company leads theworldwide firewall and VPN markets, accordingto reports from leading industry analysts, andhas developed a complete secure infrastructurefor eBusiness.First Union, a brokerage firm, upgraded CHKP toSTRONG BUY from Buy while cutting pricetarget to $70 from $90. The firm says that whilerecent concerns about competition in the VPNmarket are valid, they have been exaggeratedand are now fully discounted in the stock price.

Comverse Solutions Chosen by ChinaÕsMobile Com Comverse Technology, (Nasdaq:CMVT), said ithad signed an agreement with China's SichuanMobile Communications Corp to provide anadvanced wireless messaging solutionsupporting short message service, voice mailand unified messaging. The Israelitelecommunications software firm did notprovide any financial details of the deal. WithComverse's technology, Sichuan Mobile canoffer voicemail notification, short messageservice, stock quotes, weather reports and newsupdates.Salomon Smith Barney raised its investmentrating on Comverse Technologies (CMVT) to a"Buy" from "Market Perform," citing CMVT'simpressive FY02 1Q report. Notably, thebrokerage firm lifted its FY02 EPS estimate apenny higher than the current consensus to$1.79, but lowered its target price to $100 from$120 based on comparable companies. The company cites new orders and itsexpanding market share, boosting net incomefor the quarter ended April 30 rose to $79 million,or 43 cents per share, compared with $56

million, or 32 cents per share, a year earlier.

Revenues rose 36 percent to $365.0 million.Twenty-two analysts polled by research firmThomson Financial/First Call expected themaker of systems that phone companies use tooffer call answering, voice mail and otherservices, to post earnings of 42 cents per share.However, the companyÕs Nasdaq traded sharesrecently fared badly. Comverse'sannouncement of an impending bond-to-shareconversion and the announcements of poorfinancial results by companies, like Nortel,weighed heavily on the Comverse shares.

Orbotech sees 10-15% Decline in Q2RevenuesIsrael's Orbotech Ltd. (NasdaqNM:ORBK) said itexpects second-quarter revenues to fall 10percent to 15 percent from year-ago levels, citingexcess inventory in the electronics sector.

The company, which makes inspectionequipment for circuit boards, said the inventoryglut has caused its customers to cut back oncapital expenditures. Yavne, Israel-basedOrbotech said the weakness in the sector makesfull-year projections ``particularly difficult.''The stock has ranged from $24.25 to $71.58 inthe past year.

Retalix Software Provider for Big Y A chain-wide rollout of RetalixÕs (Nasdaq:RTLX)StoreLine POS application began at Big YFoods, was announced by both companies.Thesolution is believed to be the first supermarketapplication to run with dual-touch, flat paneldisplays, significantly enhancing the level ofcustomer service and satisfaction.

At present, 33 stores are installed, with Big Yplanning a full chain-wide rollout by July 1, 2001.The new system displays purchases on thecustomer screen as they are scanned, togetherwith a running total of purchases and savings.

When selecting the


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How the Global Individual Investor Can Capitalize on IsraelÕs High-Tech

Boom

TASE Publicly Traded VentureCapital Companies

Results for the individual companiesSadot - 14.3 %*

Teuza + 23.3 %*

Marathon - 29.1 %*

Mofet - 33.9 %*

Inventech - 54.6 %*

Tamir Cap + na

* Yields Year to Date and as of June 22 , 2001

All technology sectors declined as total falls to $10.1 billion,according toPricewaterhouseCoopers and VentureOne MoneyTreeªSurvey.Venture-backed companies raised less money in the first quarter of 2001 than they have since the

second quarter of 1999, according to the Survey. The $10.1 billion offinancing equity invested in these companies was 40% less than theprevious quarterÕs $16.8 billion. .Although investment has declined steadilysince the peak in the first quarter of 2000,this is the greatest quarter-to-quarter decrease in history in absolute dollar terms. Equity financingsinclude cash investments by professional venture capitalfirms,corporations, private placement and individuals into companiesthat have received at least one round of professional venture capital.Seed and first round financings were hit hardest:both deal flow and

the amount raised were at approximately half the level of fourth quarter2000,and together these rounds now constitute 39%of venture capital

financings,as opposed to 49%in the previous quarter.Of the VC dollars invested,just24%were allocated to seed and first rounds vs.30%last quarter. According to Tracy

T.Lefteroff,global managing partner of the Venture Capital Practice ofPricewaterhouseCoopers,ÒThedecline is not unexpected in light of the pessimistic public markets,though the magnitude of the dropis severe.Venture capital typically lags the public markets so areturn to last yearÕs level of investmentis unrealistic.And,venture capital firms are focusing moreon assisting their existing portfolio companies,... leaving less time for new deals.Ó

UPDATE

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Retalix StoreLine solution, Big Y Foods replacedits proprietary fixed-keyboard configuration withFujitsu's new Web-enabled Team POS 2000 point-of-sale terminals, featuring the dual touch-screendisplays. Using StoreLine's HTML programmableformat, Big Y's Information Technology staff is ableto customize the shopper display frequently,allowing Big Y to take full advantage of a widerange of reward programs.

In addition to earning points for loyalty, Big Y'sEducation Express program, benefiting localschools, was automated within the RetalixStoreLine software. Other unique promotionalactivities include a loyalty-shopping program inwhich customers win multicolored coinsredeemable for discounted or free items inside thestore.

Big Y, with headquarters in Springfield andsupermarkets located in western Massachusettsand Connecticut, is a family owned and familyoriented retail food company. The total storecount, including Table & Vine, is now 46. Of theselocations, 25 are World Class Markets.

Magal Enters Into Security MonitoringServices Magal Security Systems, Ltd. (NASDAQNM:MAGS), announced that it has established anew company, Smart Interactive Systems Inc., toparticipate in the growing need for real time videomonitoring security services. Smart InteractiveSystems Inc. will integrate sensors and videocameras located in the protected area that willthen transmit the visual information of activity inthe area to a central monitoring station foranalysis and response. The company will offer itsservices mainly to industrial sites, commercialbusinesses and VIP residences.

New York is the intended initial market withoperations thereafter expanding nationally andlater to other countries. The potential market islarge and management believes that in a fewyears most of the security systems used atindustrial and commercial sites will adopt video

monitoring systems as the preferred method ofsurveillance and protection. . Magal's products areused currently in more than 60 countries,protecting national borders and sensitive facilitiesfrom terrorism, theft and other threats.

IsraelÕs Prime MinisterÕs sheep ranch and home inthe Negev, is geographically located only arelatively short distance from Palestinian territory.The property was recently provided with asecurity fence at a price of $1.7 million. Magalwould not confirm or deny to IHTIR that it suppliedthe system

The company has received the approval of the TelAviv Stock Exchange ("TASE") for "dual listing" ofits ordinary shares and expects trading in them tobegin within 30 days..

Concord is Raising $200 mln for its Fourth VCFund

Concord Venture Management managingpartner, Matty Karp, announced that the companyhas begun to raise $200 million. Three previouslyestablished funds Nitzanim, and Concord I and IIfunds have $260 million under management.

Prominent holding in ConcordÕs first fund,Nitzanim, included ESC Medical Systems(Nasdaq: ESCM), Galileo Technology (Nasdaq:GALT), and Accord Networks (Nasdaq: ACCD).These all provided exits by way of IPOs.

Concord IÕs exits include RT-Set (Neuer Markt:RTZ) and Oridion (SWX: ORIDN). Concord II, a$180 million fund, has not yet registered any exits.Promising companies in its portfolio include SaifonSemiconductors, Flash Networks, and RemonMedical Technologies.

Prominent investors in the Concord funds areKardan Technologies Ltd., Leumi & Partners,Compaq (NYSE: CPQ), JP Morgan, the ChinaDevelopment Industrial Bank, Goldman Sachs,Harbourvest Partners, and QWest.


Major Drugs Responsible for BiotechIndustry 33% GrowthSales by IsraelÕs biotechnology industries roseby 33 percent in 2000, and totalled $800 million.according to a recently issued report by theNational Biotechnology Committee.The committee's coordinator, Dr. Talia Ben-Neriah, stated that in 2000 the number ofbiotechnology companies in Israel reached 160and employ 4,000 people.

Teva Pharmaceuticals Multiple Sclerosismedication Copaxone and Interpharm's Rebif(recombinant bulk human-interferon-beta-1),both are major drugs for the treatment of multiplesclerosis, and are prominent contributors to theoverall revenues of the industry.

Teva reported world sales of $247 million fromCopaxone in 2000, up by 48 percent from 1999.This growth alone would account for about $120million of the increase in Israel's biotechnologysales in 2000. A major portion of Interpharm's2000 revenues of $58.8 million came from thesale of Rebif.

The biotechnology industry is still not expandingin line with industry analystsÕ expectations. In1999, sales in the Israeli biotechnology sectorreached $600 million and included 135companies with 3,800 employees.

Leading the industry are pharmaceutical,agricultural, and diagnostic systems producers.The greater part of the growth is concentratedamong the pharmaceutical concerns.

Sales in the pharmaceutical field accounted for71.5 percent of the biotechnology sector,compared to 66.9 percent of the sector in 1999.Sales from agricultural products accounted for18.3 percent of the sector, as compared to 22.8percent in 1999 and 26.5 percent of the sector in1997. However, the number of companies inagricultural biotechnology grew to 54 in 2000from 48 in 1999.

Sales of medical diagnostics accounted for 4.7percent of revenues, compared to 3.9 percent ofbiotechnology revenues in 1999. With two newcompanies in this sub-sector bringing the totalnumber of firms to 35 in 2000.The number of start-ups in biotechnolgy rose to25, as compared to 16 in 1999. All the new start-ups are involved in the medical sector. Most (21)are also involved in developing platforms -patent-protected methods to reduce thedevelopment time for a specific medicine. Manyof them (15) are also involved in diagnostics.

The data in the report jibe with results of a studyon the economic potential of the Israelibiotechnology industry that the Science Ministrycommissioned in 1997. At the time, that reportpredicted that sales in the sector would reach$790 million in the year 2000 and $1.8 billion by2003. The forecast included the predictions ofthe sale of Copaxone.

In the beginning of 2001, the internationalconsulting firm Monitor published itsrecommendations on how to advance thebiotechnology industry in Israel. The Trade Ministry's Chief Scientist, CarmelVernia, plans to convene a gathering of expertsfrom academia, government and industry todiscuss ways to advance this promising sector.He also plans to support incubator companiesand promote a consortium,

MPM Biotech Fund Poised to Expand MPM Capital, a major global venture capitalfund, which focuses on biotechnology, willexpand its activity in Israel. MPM intends toinvest in two or three Israel companies within ayear according to MPM chairman and generalpartner Dr. Ansbert Gadicke.

MPM is presently carrying out a due diligenceprocess on an unnamed Israeli company. MPM holds 17% of the equity in Israeli Omrix, adeveloper of biological glues. Its investment inOmrix amounts to $11 million.


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ISRAEL HIGH-TECH MODEL MILLENNIUMPORTFOLIO

Since the start of 2001 the Israel High-Tech Millennium Portfolio is down by23.3%. Most of the portfolio shares moved lower in the mid-June, during theone week 8.0% precipitous drop in the Nasdaq average.

The ISRAEL HIGH-TECH MODEL MILLENNIUM PORTFOLIO is a simulated portfolio We accept no responsibility for investmentresults based on the Model Portfolio.

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Visitors flocked to VIEW the Arrow anti-missilemissile, which provides powerful protectionagainst short- to medium-range ballistic missiles.

On display at the pavilion were the Arrow launcherand the Arrow interceptor the only one of its kindcapable of successfully intercepting anothermissile, developed by IAI Electronic Group, MLMDivisionThe Green Pine early warning radar, one of themost advanced radar systems in the world,developed and manufactured by IAI/Elta, wasshown here for the first time and used togetherwith the Arrow missile, of which it is an integralpart. Also on display were new missiles such as theDerby, a beyond- the-horizon air-to-air missiledeveloped by Rafael, along with Rafael's NTD, anew lightweight anti-tank missile. In total, theIsraeli exhibitors' area covers 2,450 squaremeters.Another premiere was SU-25 ``Scorpion'' which

was displayed in flight and on the ground at theParis Air. The upgraded SU-25 MK Scorpionaircraft, is equipped with a totally new avionicssuite. The upgrade program is the result ofcooperation between the TAM Company ofGeorgia, US, and Elbit Systems of Israel. TAM isthe manufacturer of the SU-25 aircraft, more than800 of which were delivered to customersworldwide. The Su-25 aircraft is fitted with anadvanced avionics system including Weapon Delivery andN a v i g a t i o nS y s t e m(WDNS). Theupgraded Su-25 ``Scorpion''made itsofficial maidenflight on April18 of this year,at the TAMa i r f i e l d i nThilsi, Georgia. A state-of-the art cockpit with two,6 X 8 inch, multi-colored LCD displays and a Head-Up Display (HUD) had offered enhanced situationalawareness and all-weather capabilities. Thisexpands the operational use of the Su-25 andenhances flight safety. The new avionics systemprovides accurate navigation and precise weapondelivery capabilities.

The ÒScorpionÓ Scores Well at Le Bourget

Israeli Pavilion atthe 44th Paris Air

Show in Le Bourget

The worldÕs most advanced avionics suite

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