Israel As A Global Hi-Tech Research And Development Center

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Some of the world’s leading Life Science corporations with presence in Israel

By Gideon

With the exception of the U.S., Israel–a country of a mere 8 million people–leads the world in high tech, an astonishing feat.” -Forbs  Magazine July 2015

My curiosity about Israel’s place in the global research and development arena was triggered when I overheard that the corporation that I work for (a Fortune 300, US based, medical device company) recently joined  the growing trend of global corporations and established a research center in Israel. The thought that crossed my mind when I heard it was that our company probably had no choice: If we want to be in the game, we must be in Israel. The second thought that crossed my mind was that the reputation of the Israeli engineers came a long way since I arrived in the US in the mid 80’s with an engineering degree from the Technion (Israel Institute of Technology). I had a very difficult time finding a job, simply because most employers at the time were not familiar with the Technion. 

What made me sit down and research the internet for information about Israel’s place on the  world’s research and development stage was an article I read  about the Israeli born, Professor Avi Loeb, the Chair of the Department of Astronomy  at Harvard University, who was chosen to lead a ten billion dollars, privately funded initiatives, to research Alpha Centaurithe nearest star system outside our solar system, using miniature space probes fueled by  a giant laser beam fired from earth. 

Israel is a small country of about eight million people. It spends most of its collective energy on self defense in the rough neighborhood called the Middle East. Like other democracies, Israel has to balance its limited budget between various competing priorities such as defense, infrastructure, education, public health, fighting poverty, and absorbing new immigrants. It is a political pressure cooker: Most Israeli governments do not last their full term. Early elections are common in Israel. Under these circumference it is unlikely for a country to emerge  as world leader in science and technology. Yet, as unlikely as it is, during the past twenty years Israel has become a powerful innovation engine that global companies cannot ignore. As seen in the charts below, Israeli startup companies (Tel Aviv) are well funded and are not far behind Silicon Valley (in relative terms).

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“Few people realize that more than one out of every four of the biotechnology solutions in use today have Israeli roots. ‘Research in Israel is present in between 25% and 28% of the world’s successful biotech-based solutions,’ according to Ruti Alon, a General Partner at Pitango Venture Capital and co-chairperson, with Dr. Benny Zeevi, Managing General Partner, Tel Aviv Venture Partners, of the upcoming IATI-Biomed Conference, set to take place in Tel Aviv in May. ‘Many of the patents in pharmaceuticals that are now being used to treat cancer, heart problems, and much more were developed at Israeli institutions like Hebrew University or the Weizmann Institute…’” – timeofisrael.com, March 10, 2016

“Israel’s future as an innovator and research center for the world’s biggest tech companies is in peril due to a shortage of “geeks,” according to members of Israel Advanced Technology Industries, an association of hi-tech and life-science industries.” – Jerusalem Post

Talent is  in demand. There is a limited supply as shown in the charts below. It is anticipated that the competition for this talent will increase. 

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With almost 280 global multinational R&D centers in Israel, the country has become a sought-after hot spot. Multinational R&D centers are playing a major role in the Israeli High-Tech ecosystem employing about 45% of the High-Tech work force. There are dozens of global multinational Life Sciences R&D centers in Israel of global medical device, Healthcare IT and pharmaceutical companies. Most of these centers originated as a result of acquisitions of Israeli companies. These centers continue to develop breakthrough technologies for the global healthcare market, as well as playing a key role in building a cadre of future Israeli managers in the areas of R&D, sales and marketing.” – http://www.iati.co.il/files/files/Life%20Sciences%20Industry%202015.pdf

“On the surface, Israeli high-tech seems to be enjoying the best of times: Record levels of fundraising; a buoyant market for mergers and acquisitions and initial public offerings; and worldwide interest in how to imitate the Israeli innovation model.
But, as the first-ever annual report issued by the Economy Ministry’s Office of the Chief Scientist on Monday showed, there is another side to Startup Nation. The report found that technology is accounting for a smaller and smaller part of the economy, and that its future is clouded by a chronic labor shortage.” – Haaretz, April 2015

“Israeli hi-tech continues to provide investors with an impressive string of exits, with total deal value of more than 5bn for the fifth straight year. The Israeli market seems to have grown desensitized to the news of yet another exit. But, that’s quite unjustified, because this is actually quite amazing, on a global scale…The growth of M&As this year was robust with an increase from $5bn in 2014 to 7.2bn in 2015. Meanwhile, IPO activity ,by Israeli companies dimmed in 2015 from $9.8bn for 18 IPOs in 2014 to $3.5bn for 8 companies in 2015, mainly due to the effect of the $5.3bn Mobileye IPO in 20…Israeli hi-tech remains a focal point for international M&A deals. We have grown accustomed to the presence in Israel of ,global giants like Facebook, Apple, IBM ,Qualcomm, Microsoft, Intel and more .which is actually far from being obvious This year we have seen some new players, in the local M&A market such as ARM ,Amazon and Zynga. Israeli companies such as Checkpoint, Mellanox, IronSource and Wix are also actively or potentially in on the action. The most active buyer by far is Microsoft with 5 acquisitions in 2015. In ,2015, 56 buyers acquired 62 companies versus 49 buyers that acquired 52 companies in 2014.” – PwC Israel Exit Report 2015

Israel seeks to share hi-tech success with Arab sector. Tel Aviv and the high-tech industry are synonymous with one another, each driving and sustaining the other’s growth. For years Israel’s best known industry has benefited from young soldiers leaving the army with newly-developed skills they hope to put to use in the hip beach city, giving credence to the image of the soldier-turned-computer engineer enjoying the good life in the city otherwise known as ‘the bubble.’ This might be about to change in the face of efforts by Israel’s Ministry of Economy and Industry to encourage high-tech companies to work out of Nazareth, the capital of Israeli Arab culture and a world away from Tel Aviv. It’s a move that could benefit both the high-tech industry and the country’s 1.6 million Arab citizens. [YNET, March 2016]

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Examples of global corporations’ presence in the Israeli R&D landscape:

TEL AVIV, Israel (May 20, 2014) For the first time in the Israeli market, two major corporations will cooperate to help identify potential breakthrough startups. Microsoft and BD (Becton, Dickinson and Company), a leading global medical technology company, are working together to establish a unique accelerator experience for startups creating advancements for the healthcare industry. The program will be located at the Microsoft Ventures Accelerator in Israel and interested entrepreneurs and startups. 

Abbott Informatics Solutions VP Dave Champagne praises Israel acquisition Starlims for pioneering medical IT in the cloud. Abbott Informatics Solutions divisional VP Dave Champagne says that Abbott’s diagnostics technology is now installed in laboratories but these are laboratories that do not analyze patients’ samples in real time such as research laboratories at universities, pharmaceutical companies, R&D services, clinical trial companies etc. Abbott hopes to capture the new clinical medical market through the Israeli systems developed at Starlims. – www.globes-online.com – on March 2, 2015

Johnson & Johnson Innovation Expands Global Incubator Presence to Israel and Announces Multiple, Diverse, Early-Stage Collaborations with Academia and Biotech. New Brunswick (January 8, 2014) – Johnson & Johnson Innovation today announced that it is expanding its global incubator presence through a novel collaboration with the Office of the Chief Scientist in Israel and other industry partners to establish a new biotechnology incubator near Israel’s Weizmann Science Park.  This is the latest in a series of recently announced collaborations to fuel entrepreneurship in the world’s scientific hotspots.  In addition, Johnson & Johnson Innovation announced several new collaborations with academia and biotech that focus on multiple disease areas and consumer healthcare challenges.  These customized collaborations are part of Johnson & Johnson Innovation’s strategy to support an international network of scientific entrepreneurs through access to best-in-class laboratory facilities, scientific expertise, and funding. – https://www.jnj.com/news/all/Johnson-Johnson-Innovation-Expands-Global-Incubator-Presence-to-Israel-and-Announces-Multiple-Diverse-Early-Stage-Collaborations-with-Academia-and-Biotech

The Israeli biotech companies Metabomed and ChanBio joined the Merck Serono Israel Bioincubator. The bioincubator aims at stimulating innovation by bridging the gap between academic research and the biotechnology industry. It offers seed financing and access to dedicated, state-of-the-art laboratory facilities within Inter-Lab, Merck Serono’s Israel-based R&D center. Merck Serono is committing a total of EUR 10 million in the initiative until 2018. – http://www.chemistryviews.org/details/news/5585121/Merck_in_Israel.html

Israel: A Source of Innovation for GE Unlike other research organizations within GE Global Research, my team is not tasked with developing technology for GE’s businesses. Instead…we hunt! Our job is to identify external innovation and facilitate partnerships with Israeli inventors and companies. Coined as the “startup nation,” Israel is a hotbed for entrepreneurship, technology & creativity.” Oded Meirav

Tim Cook: Apple’s Herzliya R&D center second-largest in world. With 700-plus direct employees in Israel, the Herzliya R&D center is Apple’s second-largest in the world, Apple CEO Tim Cook told local staff on Thursday. – February 27, 2015 http://www.timesofisrael.com/apples-herzliya-rd-center-now-second-largest-in-world/

 

 

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