Life sciences become big business in Israel

TEL AVIV (JTA) — Yaron Aizenbud lays out in neat rows a set of patented titanium tools designed for back surgery, picks out a curved drill that matches the curve of a spine and a plastic model of vertebrae, and simulates how the drill is used to stabilize a damaged spine.

Aizenbud and the other founders of the small Israeli start-up Scorpion Surgical Technologies hope their medical devices will become a new solution for back operations, particularly for people with osteoporosis, in some cases even eliminating the need for replacing ruptured discs.

Scorpion Surgical was among the hundreds of companies displaying their wares in a maze of rooms and bright lights at a recent biotech and life sciences convention in Tel Aviv. Among them were firms with home-grown advances in cell and gene therapy, imaging and heart disease drugs.

In its ninth year the conference, ILSI-BioMed, drew some 7,000 people, including international investors and industry leaders. It was the largest such industry gathering outside of the United States, according to conference organizers.

Aizenbud, a veteran of Israeli high-tech who has worked for IBM, Amdocs and a host of start-ups, spoke of the special satisfaction in switching gears to the life sciences.

“You feel the difference in what you are doing,” he said. “This is about contributing something to the public.”

The field of life sciences, an umbrella term that refers to medical devices, pharmaceuticals and biotechnology, has become big business in Israel. There are more than 1,000 companies, and another 80 join the field every year, according to industry estimates.

Last year, life sciences accounted for $6 billion in Israeli exports, mostly to the United States, making it one of Israel’s biggest exports.

Israel tops the list of countries in medical device patents per capita and is fourth in the world for biotechnology patents per capita.

Observers credit Israel’s success in this extremely competitive market to the nurturing ecosystem the country has produced to foster life sciences innovation. The ecosystem brings together a combination of top research at Israel’s universities that transfers to companies, many of which get their start in state-subsidized “incubators.” In 2000, the government designated life sciences a priority sector.

“My impression is there is both a lot of innovation here and a willingness to take high risks here, even in comparison to U.S. biotech,” said Simeon Taylor, vice president of Cardiovascular and Metabolics Discovery Biology at
Bristol-Myers Squibb, a major U.S. pharmaceutical company that had representatives at the ILSI-BioMed conference.

Over the years, Israel has built up a strong name internationally with a track record of success stories. Perhaps most well-known is the invention by the company Given Imaging of the PillCam, a capsule containing a camera that a patient can swallow, enabling the physician to see distinct portions of the gastrointestinal track.

And there are the potential blockbuster products coming on the market, like the drug to help treat schizophrenia developed by the Jerusalem-based company BioLineRx. The drug, BL-1020, helps reduce patient violence.

In June, BioLineRx signed an out-licensing agreement with a major U.S. pharmaceutical company for $335 million.

At the conference Kinneret Savitsky, the company’s CEO, tried to put her company’s success in a larger, national perspective.

“Research is in our blood,” she said. “We think out of the box. It comes out of our way of life here.”

The medical device business accounts for more than half of the life sciences industry in Israel. These technologies require less research than biotech and usually can be brought quicker to market — before investors become impatient.

The relatively long time it takes to build a success in pharmaceuticals and biotechnology makes the industry a high-risk, high-yield one.

Claudio Yarza, the partner in charge of life sciences for PriceWaterhouseCooper’s Israel office, cautioned that although the industry has developed well in the past few years, the risk remains.

Even when a deal is made, Yarza said, it’s not clear that the product will make it to market or become a success.

“Bio-tech is harder to succeed at than high-tech because the development stage is more complicated,” he said. “Many high-tech companies start with an idea for a product, and it’s already ready for development not awaiting more research. And in bio-tech we think we might have a new solution on our hands, but until trials are completed we cannot say it definitely does.”

Debra Lappin, the president of the Council for American Innovation, said the United States needs Israeli know-how and thus should be welcoming to Israeli companies and the advances they bring.

“The new nature of innovation relies on partnerships,” she said. “The U.S. is reliant on outsourcing its innovation, so we need to make sure the door is open because otherwise Israel will look elsewhere.”