Market Information
Middle East and North Africa

Biopharmaceuticals Sector Profile - Israel

May 2004

Canadian Embassy in Tel Aviv
3 Nirim St.
Tel Aviv, Israel
Contact: Mona Mansour-Ashkar, Business Development Officer
3 Nirim St.
Tel Aviv, Israel
Tel.: (972-3) 636-3356
Fax: (972-3) 636-3385
E-mail: mona.mansour.ashkar@dfait-maeci.gc.ca
Internet: http://www.dfait-maeci.gc.ca/telaviv

MARKET OVERVIEW

Biopharmaceuticals is the most significant sector of the Israeli biotechnology market. Domestic biotechnology companies focus mainly on product development for cancer, auto-immune syndromes and neurology disorders and to a lesser extent, on food, cosmetics and environmental products. About 50% of university research projects in therapeutics and 66% of biotech drugs in the pipeline are in the areas of auto-immune diseases, neurology and cancer. Pharmaceutical and diagnostics firms represent 72% of the Israeli biotechnology industry, agricultural biotechnology accounts for 20%, and the remainder includes veterinary and environmental applications.

Sales revenues of biotechnology industry are estimated at $2.6 billion⁽¹⁾ in 2003. Investments in Israel were estimated at $1.4 billion. Furthermore by 2010 Israel is expected to account for 3% of the global biotech market.

Despite certain limitations, the Israeli biopharmaceutical industry prides itself on generating products such as beta Interferon developed by InterPharm, Copaxone developed by Teva, human growth hormone and Biolon developed by Biotechnology General (BTG).

There is strong government support for the biotechnology industry within Israel through programs to match research funding, establish technology incubators, and encourage bi-national cooperation. However, Israel lacks regulatory infrastructure. Despite a rapidly expanding medical and pharmaceutical industry, the Israeli market is dependent on imported goods. The pharmaceutical market, including generic drugs, was valued at $1.7 billion in 2002, 50% of which were imported drugs.

Israel's biotechnology industry is still in its infancy with 150 companies, including about 40 incubator projects and approximately 3500 employees. The majority of the companies focus on biopharmaceuticals. Three quarters of the companies are small start-ups with less than 20 employees while a dozen companies represent 80% of the total market value of the industry, generate two thirds of sales and employ about 50% of the industry's workforce. In the last decade, the number of companies increased by an average of 17% per year, while the sales generated by the sector grew by 27% per year. The challenge for the industry will be to move to the next phase of growth in which it nurtures more broadly based companies, supported by the physical, regulatory and scientific infrastructure necessary for long term growth.

The Ministry of Science, Culture and Sports⁽²⁾ and the Office of the Chief Scientist of the Ministry of Industry and Trade supports the Israeli biotech industry by providing long-term financial support for research and development (R&D) projects to biotech companies, enhancing cooperation between academia and industry to ward the commercialization of Israeli biotechnology worldwide, by encouraging international strategic cooperation and by assisting start-ups through a variety of support activities including incubators.

In the life sciences field, there are seven universities, five technical colleges and ten specialized research institutes engaged in advanced biotechnological research. An estimated 35% of all academic scientists in Israel work in the life sciences field and spend 40-50% of all academic research funding. As a result, Israel has one of the world's most skilled and educated work forces, with more doctors, scientists and engineers per capita than any other nation.

Israel has a highly diverse population as a result of years of immigration, providing researchers with a heterogenous population for clinical trial research. Lower costs for conducting clinical trials and a history of bringing new products to an advanced stage of development more rapidly than anywhere else in the world, makes Israel an attractive place for foreign companies to conduct clinical trials or establish research partnerships.

Opportunities

There are good opportunities in this market for Canadian companies interested in R&D partnerships and technology transfer agreements to take advantage of Israel's research strengths. Areas where major advances in biotechnology have been made include the use of molecular modeling to design new and improved drugs, synthetic polyamino acids for drug development, drug delivery techniques and drug design by peptide modification.

Israel needs to invest further in the essential infrastructure to compete in the post-genomic era, especially in basic research infrastructure and early stage commercialization. Currently, Israeli biotechnology firms tend to sell their early stage technology to international investors or multinational concerns, rather than take the risk to develop the product further. There is scope for combining Canadian and Israeli talents where Canadian biotechnology companies can form strategic partnerships with Israeli companies, both at the pre- and post-commercialization stages.

Due to insufficient industrial infrastructure facilities for drug development and testing, there are market opportunities for Canadian companies to provide these services. Canadian companies can also work co-operatively with Israeli companies to conduct clinical trials in Israel where there is a high level of medical expertise, lower costs and a diverse population base.

The Canada-Israel Industrial Research Development Foundation (CIIRDF) provides companies in either country with an introductory service for the purpose of creating R&D alliances. The program contributes half of the costs of joint R&D projects (up to $50 000 over one year for approved pilot projects and up to $750 000 over three years to fund approved full-scale projects) for eligible Canadian or Israeli firms operating and headquartered in either Canada or Israel. At least 30% of the cash cost of any individual project must be spent in either Canada or Israel, contributions are repayable from commercial revenues from the project. For further information, Canadian companies should contact CIIRDF.

Canadian companies interested in research and development relationships with Israeli companies are encouraged to consult the MATIMOP program. MATIMOP (Israeli Industry Center for Research and Development) is a public non-profit organization that promotes joint industrial development of advanced technologies. The program's Web site (http://www2.matimop.org.il) contains a database outlining co-operative program opportunities that span a range of advanced technologies.

Key Trade Shows

BIO-TECH ISRAEL May 4-6, 2004 - Israel's 3rd National Biotechnology Week (http://www.kenes.com/biotech/prog.htm). The exhibition has always attracted large numbers of exhibiting companies representing the entire spectrum of biotechnology related products and services. The Bio-Technology Conference and the Exhibition will be held at the David-Intercontinental Hotel, Tel Aviv. For more information, contact the Canadian Embassy.

KEY PARTICIPANTS

Israel is expected to become a major centre for the development of pharmaceuticals, especially generic brands. However, in spite of recent growth, the Israeli pharmaceutical market remains relatively small and the Israeli biotechnology industry has yet to achieve the level of the development of its international competitors, particularly in the United States, Canada, Germany and the United Kingdom.

The two main producers and importers of biopharmacuticals are Teva Pharmaceutical Industries, and Agis Industries which together have a combined market share in Israel of 50%-60%. Other major biotechnology companies in Israel include Biotechnology General (BTG), Pharmos, Interpharm (IPL) and Compugen.

PRIVATE-AND PUBLIC-SECTOR CUSTOMERS

In 1998, Israel reformed its drug import regulations to include major changes in pricing, importing and approvals for new drugs. For example, medications approved by the U.S. Food and Drug Administration (FDA) or the European Medical Regulations Agency will be approved by the Ministry of Health in Israel much more quickly than those that have not received such approval.

The FDA and the Israel Ministry of Health have signed a Mutual Recognition Agreement (MRA) to enable full acceptance and recognition by the FDA of clinical trials conducted in Israel for new drugs and medical devices.

Despite objections from international biopharmaceutical companies, Israel has allowed parallel drug imports since September 2000.

KEY CONTACTS

Canadian Contacts

Embassy of Canada in Israel
3 Nirim Street
Tel Aviv, Israel 67060
Tel.: (972-3) 636-3356
Fax: (972-3) 636-3385
Contact: Mona Mansour-Ashkar
Business Development Officer
E-mail: mona.mansour-ashkar@dfait-maeci.gc.ca
Internet: http://www.infoexport.gc.ca

Health Canada
International Affairs Directorate
Brooke Claxton Building, Room 814A
Postal Locator 0908A
Tunney's Pasture
Ottawa, ON K1A 0K9
Tel.: (613) 941-3136
Fax: (613) 952-7417
Internet: http://www.hc-sc.gc.ca

Industry Canada
Life Sciences Branch
235 Queen Street
9^th floor East
Ottawa, ON K1A 0H5
Internet: http://strategis.ic.gc.ca

Life Sciences Branch
PO Box 940, Station A
1801 Hollis St.
Halifax, NS B3J 2V9
Contact: Mark Craig, Industry Development Officer, Bio-Industries
Tel.: (902) 426-9958
Fax: (902) 426-2624
E-mail: craig.mark@ic.gc.ca
Internet: http://strategis.ic.gc.ca

International Trade Canada
125 Sussex Dr.
Ottawa, ON K1A 0G2
Internet: http://www.dfait-maeci.gc.ca

Middle East Division (GMR)
Contact: Mona Bieber, Trade Commissioner
Tel.: (613) 944-6994
Fax: (613) 944-7975
E-mail: mona.bieber@dfait-macei.gc.ca

Market Research Centre (TMR)
Contact: Michelle Morris, Senior International Market Analyst (Life Sciences)
Tel.: (613) 996-2462
Fax: (613) 943-1103
E-mail: michelle.morris@dfait-maeci.gc.ca
Internet: http://www.infoexport.gc.ca

Market Support Division (TMM)
Contact: Chris Duggan, Trade Commissioner, Life Sciences
Tel.: (613) 996-1431
Fax: (613) 943-8820
E-mail: christopher.duggan@dfait-maeci.gc.ca

Israeli Contacts

Embassy of Israel
1005-50 O'Connor St.
Ottawa, ON K1P 6L2
Tel.: (613) 567-6450
Fax: (613) 237-8865
E-mail: embisrott@cyberus.ca

MATIMOP - Israeli Industry Centre for Research and Development
Contact: Haya Miller, Deputy Director General
PO Box 50364
Tel Aviv 61500, Israel
Tel.: (972-3) 517-0150
Fax: (972-3) 517-7655
E-mail: hmiller@matimop.org.il
Internet: http://www2.matimop.org.il/bio2002

Canada - Israel Industrial Research and Development Foundation
In Canada
875 Carling Avenue, Suite 430
Ottawa, ON K1S 5P1
Tel.: (613) 724-1284
Fax: (613) 724-1134
E-mail: ciirdf@cyberplus.ca
Internet: http://www.ciirdf.ca

In Israel
Contact: Adi Riza
PO Box 50364
Tel Aviv 61500, Israel
Gibor Sport House, 7-9, Menachem Begin St.
Ramat Gan 52521, Israel
Tel.: (972-3) 754-9580
Fax: (972-3) 754-9582
Email: adi.riza@ciirdf.co.il

Israel Biotechnology Organization (IBO)
Chemical and Pharmaceutical Division
Industry House
29 Hamered St.
Tel Aviv 68125, Israel
Tel.: (972-3) 519-8875
Fax: (972-3) 519-8718
E-mail: chemical@industry.org.il
Internet: http://www.irc.org.il/biotech/Ibo.htm

Israel Export Institute
Healthcare and Biotechnology Department
Contact: Menachem Leib, Head of Department
Industry House
29 Hamered St.
PO Box 50084
Tel Aviv 68125, Israel
Tel.: (972-3) 514 2830
Fax: (972-3) 514-2902
e-mail: karp@export.gov.il
Internet: http://www.export.gov.il

Israeli Medical Association
39 Shaul Hamelech St.
Tel Aviv, Israel
Tel.: (972-3) 696-9639
Fax: (972-3) 695-6103

Ministry of Health
2 Ben-Tabai St.
Jerusalem 91010, Israel
Tel.: (972-2) 670-5705
Fax: (972-2) 678-1456
Internet: http://www.health.gov.il (Hebrew)

Pharmaceutical Division
Contact: Yaacov Cass, Regional Pharmacist Kiryat Hamemshala
Ramleh, Israel
Tel.: (972-8) 978-8625
Fax: (972-8) 921-4936
Internet: http://www.health.gov.il (Hebrew)

Ministry of Industry and Trade
Investment Promotion Centre
30 Agron St.
Jerusalem 94190, Israel
Tel.: (972-2) 622-0661
Fax: (972-2) 622-2412
E-mail: infoipc@moit.gov.il
Internet: http://www.moit.gov.il

Ministry of Trade con't
Office of the Chief Scientist
Eli Opper -Chief Scientist
4 Mevo Hamatmid
PO Box 2197
Jerusalem 91021, Israel
Tel.: (972-2) 677-0531
Fax: (972-2) 624-1064
E-mail: batyac@ocs.moit.gov.il
Internet: http://www.moit.gov.il/madan.htm

Ministry of Science, Culture and Sport
Government Offices, Building C
Hakirya Hamizrachit
Jerusalem 91490, Israel
Tel.: (972-2) 581-1220
Fax: (972-2) 581-1613
Internet: http://www.most.gov.il

BIBLIOGRAPHY

BIOISRAEL 2003. Annual Conference Brochure. May 13-15 2003

Espicom. World Pharmaceutical Markets. "Israel," July 2003.

Useful Internet Sites

Canada-Israel Industrial Development Foundation (CIIRDF) http://www.ciirdf.ca

Industry Canada http://strategis.gc.ca

InfoExport: http://www.infoexport.gc.ca

Israel's Life Sciences Online http://www.bioisrael.com

Israel Relay Centre -Biotechnology in Israel: http://www.irc.org.il/biotech

Israel's Business Arena http://www.globes.co.il

Israeli Industry Centre for Research and Development -MATIMOP: http://www.matimop.org.il

Ministry of Industry and Trade -Office of the Chief Scientist http://www.moit.gov.il

Ministry of Health http://www.health.gov.il

^1. All monetary amounts are expressed in Canadian dollars, unless otherwise indicated. The conversion rate to Canadian dollars is based on IMS Exchange Rate, October 2003.

^2. For contact information regarding key organizations mentioned in this profile, see Key Contacts .