Is Teva’s downfall pharma’s Lavi moment?

In 1987, the Israeli cabinet decided in a controversial 12-11 vote to cancel the Lavi aircraft. Started five years earlier, the Lavi (Hebrew for “young lion”) was the most ambitious aircraft project undertaken by Israel, and led to the development of a multi-role, single-engine, fourth-generation fighter jet.

Over a billion dollars were spent on the Lavi’s development, and a number of prototypes were manufactured and flown. But despite its success, the government – under immense pressure from the United States – decided to shut down the project, opting instead to purchase more F-16s for the Israeli Air Force.

While cancellation of the Lavi was a massive blow to Israel Aerospace Industries – which was forced to lay off more than a thousand engineers – five years of work on a combat jet provided Israel with unprecedented institutional knowledge. The engineers who worked on the Lavi had developed new and innovative radars, avionics, navigation systems and electronic warfare capabilities.

Thankfully, this did not go to waste. Instead, the talent captured by these engineers was picked up by other defense and hi-tech companies, and spread throughout Israel’s economy.

Two industries that benefited directly from the closure of the Lavi were Israel’s drone and satellite programs, both fields in which Israel is a world leader today. A year after the Lavi was shut down, for example, Israel launched its first satellite into space, becoming only the eighth country at the time to join the exclusive club of nations with the independent capability to do so.

It might be difficult to imagine this today, but the same could happen as a result of the current crisis with Teva. If done right, Israel could turn the Teva crisis from a misfortune into an opportunity.

While 1,750 employees face pink slips, there are – as Start-Up Nation Central, an NGO that tracks the Israeli hi-tech industry has found – over 100 pharmaceutical companies in Israel that could potentially pick up some of the ex-Teva employees.

A number of these companies are already positioned to absorb some of the Teva employees right away; others might need them to undergo new training. But what is really needed is for the Israeli start-up ecosystem to be flexible enough to not miss out on this pool of talent that will soon come streaming back into the workforce.

It would be a shame to let this expertise – built up over decades – go to waste. Let’s not miss out on what could be the Israeli pharma industry’s “Lavi moment.”