Israel looks to pharma companies to safeguard competitive tech-edge
Tender seeks firms to set up R&D centers • 2 likely to be announced by July
Israel is looking to attract pharmaceutical companies involved in life sciences to help retain its competitive edge in high technology.
The Israel Innovation Authority has published a tender seeking pharmaceutical firms to open research and development centers, and two firms will likely be chosen by July, according to authority CEO Aharon Aharon.
The hi-tech sector attracts billions of dollars a year in foreign investment, accounts for half the country’s industrial exports and employs about 9% of the workforce.
But the sector has reached a “glass ceiling” where growth is being hampered by a lack of engineers, Aharon told Reuters, noting the need for more life sciences firms.
“We have a few but it’s not enough,” said Aharon, who headed Apple Israel from 2011 until 2017.
“As a result, the salaries are very high and our overall competitiveness is going lower.
“To grow in the innovation-based economy you have to look for another ecosystem, and life sciences is the perfect one because of the level of IP [intellectual property] created at the universities and hospitals,” he said.
Of the $5.2 billion invested by venture capital funds in the tech sector in 2017, only $1.2b. was devoted to life sciences, Aharon noted.
And Israel’s biggest company, Teva Pharmaceutical Industries, has been cutting back on its Israeli R&D.
Teva's New York-listed shares fell about 70% to a low of $10.85 in November but have since rallied to $18.80, putting the company's market value at $19 billion.
The Israel Innovation Authority invests mainly in early stage companies since venture capital funds view life sciences as riskier than traditional high tech. That’s because it can take up to 15 years to develop a drug, much longer than to develop software.
Life sciences funding accounts for 32% of grants by the Israel Innovation Authority, which has a budget of NIS 1.7b. ($473 million).