In preparation for the "ILSI-Biomed Israel 2010" conference, we went to hear what Ruti Alon, chairman of the organizing committee, senior partner in the Pitango venture capital fund, and chairman of the Life Sciences Industry Association in Israel, had to say about the impact of the recession on the industry, the advantages and disadvantages of The Israeli companies, the strengths, the government fund and the upcoming conference. "I am very proud of the Israeli industry," she says
The health reform in the US, regulations in emerging countries (China, India, Russia and Brazil) and the effects of the economic crisis are among the factors that will affect the success of companies in the field of biotechnology and pharmaceuticals in the years to come. This is what Ruti Alon, the partner, says in an interview for a special supplement of the Haaretz newspaper and the science website The senior in the Pitango venture capital fund responsible for the life sciences field. Alon serves as the chairman of the scientific organization Life in Israel, which covers about 750 companies, and for the past three years she has served as co-chair, together with Yisrael Makov, former CEO of Teva, of the "ILSI - Biomed Israel 2010" week, the main annual event of the life sciences industry in Israel.
According to Alon, "ILSI-Biomed Israel 2010", which will be held on June 14-16 in Tel Aviv, will this year host more guests from abroad and at more senior levels than in previous years. "We, as a small country where the local market is limited, are affected by global trends, therefore the Biomed conference, which has already gained a global brand as a place where industry executives come to look for innovations, will also help Israeli companies learn what are the best ways to help them succeed in the market."
Alon says that against the background of the recovery in the global markets and the boom enjoyed by the life sciences industry, at the event, which is now considered the largest life sciences meeting outside the US, emphasis will be placed on the business-practical aspects of one of the most advanced and successful industries in Israel today. This year the emphasis will be especially placed About the markets of cardiology, vaccines, oncology, "cell therapy", personalized medicines, and metabolic diseases Between science, technology and industry, there will be an exhibition that will include the innovations of biotechnology and medical devices. Continuing the tradition of the past years, the event will also give exposure to about 60 Israeli start-up companies.
Alon estimates that among the approximately 7000 expected participants - CEOs and executives of biopharma and medical device companies, scientists and researchers, entrepreneurs, public opinion shapers in the field, venture capital fund managers and private investors - there will also be over 1,000 guests from abroad. The assessment is based on the data of 2009, a relatively difficult year for international conferences, in which approximately 6000 people participated in the event and held over 2500 one-on-one meetings, including approximately 800 visitors from 35 countries. "We see the Biomed Week as an opportunity to meet, renew connections, create new ones, do business and learn from the big names about the future of the industry," says Alon. "In addition to the lecture courses, we will hold several hour-long seminars in various fields with the leaders in their field from the global industry, when we will certainly also participate Israelis, since we also have something to offer and say. We are even trying to promote the young companies at the event. We have opened a special area in the exhibition for them, at lower costs so that they can to present the new products and certainly hope that it will be a strong source of attraction at the conference. Many multinational companies ask us for help To inform the Israeli companies that they are coming with the hope that there will be an opportunity to meet and get to know each other and perhaps also in the future to create collaborations and investments."
Interim: Obama's reform
According to Alon, even if it is difficult to know what the consequences of the reform brought about by the American president in health insurance will be, because on the one hand millions more people will join the system and they will be able to purchase prescription drugs, on the other hand cuts are expected in other parts of the system such as Medicare (the insurance for adults aged 65 and over) or In the number of tests that each insured person can do, so it is possible that this is not an actual increase and that companies will be affected by this for both parties, but it is clear that there will be some kind of effect because the American health care market still accounts for 60% of all health spending in the world.
Changes are also taking place outside the US. In the large emerging countries - China, India, Russia and Brazil, the authorities are beginning to put order in the health sector and increase regulations in order to raise the quality of medical service. Now the companies have to do more clinical trials, in more medical centers before they receive approval from the authorities relevance in each country.
"All these issues affect every company both in the field of medical devices and certainly in the field of pharmaceuticals. Now the companies are required to spend higher sums of money in order to reach the final result - i.e. an IPO or sale. Although it should be noted that a long and winding road awaits all the start-up companies in these fields, no Only for companies from Israel. Our job is to help Israeli companies reach the finish line in the best possible way."
According to Alon, the regulatory bodies in Israel have the possibility to help. China for example is willing to give a permit to those who have a permit in the country of origin. However, many Israeli companies do not manufacture their products in Israel and prefer to issue approvals and conduct clinical trials in Europe.
How is the impact of the recession felt on the industry?
"The large companies that have sales permits were less affected by the recession, because they continued to consume their products, although the hospitals, which are major customers of the biopharma and medical device companies, were also asked to cut back and, among other things, postponed surgeries and other non-urgent medical activities."
On the other hand, Alon explains that the start-up companies were harmed as a result of a financial chain process that collapsed. The start-up companies are financed mainly by venture capital funds, which build on an exit from them - that is, an offering, or a purchase by a larger company. Since there were not enough exits, the flow of money entering the funds was drastically reduced. When a fund knows that it is difficult for it to raise new funds, the instinctive step is to keep the funds that have already been raised for the existing portfolio companies and invest less in new companies. "Fortunately, it seems that recently the markets are opening up again and the various funds in the world will also see funds coming back in and will be able to continue investing."
Intermediate: Government fund
In 2009, after requests from the industry for years, and in light of the recession that damaged the companies' ability to recruit, it was announced that the government would open a government fund that would leverage NIS 250 million for the benefit of the biotech industry. The director general of the Ministry of Finance, Haim Shani, announced last December that the government fund in question is intended to be built from the government's initial capital while expecting external funds to join it. A tender has not yet been held to determine the entity that will manage the fund, which will probably come from the venture capital industry, and bring with it corresponding money .
Alon is happy about the move and additionally proposes to establish a similar fund for the field of medical equipment - a field not covered by the current fund. "We welcome the government's aid to the pharmaceutical sector. It is very important. However, we also need to help the field of medical devices. In previous years, venture capital funds and other investors invested in many companies in the field of medical devices, and indeed quite a few companies were subsequently sold to the industrial giants, and the funds made Exit. Recently there has been a change in the equation, where the number of companies able to acquire young companies is very small, and as a result it has become a buyer's market where companies can present to companies. The young women have demands that have not been presented before.
"If until recently, when an entrepreneur came to a large company with good technology, there was a high probability that his company would be acquired at the beginning, then today, companies that come here are not looking for simple technologies but for uniqueness, something that Israel is good at. On the other hand, when the technology is unique, the regulatory requirements It is more difficult to apply and the company's costs are increasing. Today, in order to reach maturity and obtain regulatory approvals in the US and Europe, the companies are required to spend amounts that cannot be obtained in Israel Unlike in the field of computing, very few foreign funds cooperate with Israeli funds in investments in medical equipment and pharmaceutical companies."
In light of all these changes, Alon recommends to the Chief Scientist to also support the field of medical devices, whether through the establishment of a fund similar to that of biopharma or through other means to enable this sector to deal with the obstacles as well.
Is the success rate of Israeli biomed companies, expressed in IPOs and acquisitions, good relative to investments?
"In the period between 1996 and 2003, approximately one billion dollars were invested in 320 companies in the life sciences. As a result of this investment, and because investment in pharmaceutical companies in particular matures after many years, it is useful to measure the results of these investments in a later period. Indeed, as a result of the funds invested before 2003, In these years, exits were made to companies in the field of life sciences in the amounts of 2.3-2.4 billion, but in total for 19 companies. That means the industry as a whole had a multiple of 6 on the money invested only thanks to those six percent. of 2.3 for the money invested in about 5% of the companies and this is an exceptional result. As an industry we are very effective and very productive and I am very proud of the industry The Israeli one. I myself had successful investments in companies such as Optamol, Ventor, Colbert and we have companies that have entered the market such as Dipharm and Bioline. We also sold half of Biocontrol to AMS."
What are the advantages and disadvantages of the Israeli biomed market: where are its strengths and weaknesses, in your opinion, and how can they be exploited?
"The Israeli market is a very young market, full of energy that brings technological developments at a very high level. We have proof of patents behind us and in this respect we are among the leaders in the world, however the main problem is that the system is not properly funded and that there is a lack of infrastructure such as a law regulating clinical trials and in general the capacity for such trials, Restrictions on animal experiments and other aspects - the managements are not experienced enough. But in all these areas we are improving. The equivalent of The FDA is more active in Israel. This makes it difficult for Israeli companies to move forward in an orderly manner because in Israel it is difficult to get approvals for clinical trials at the beginning of the journey. In the framed article, the Europeans also ask whether clinical trials have been conducted in the company's country of origin and the Israelis do not always have answers. There is a willingness on the part of all parties to improve the situation and progress on all these fronts should be made so that all the infrastructures will be coordinated and make it possible to ease the difficult effort of You brought a company in the medical field from A and Z. In any case, it's a long and expensive road, and it's better to have as few obstacles as possible."
What does the future of the biomed field look like in the State of Israel, according to your assessment, and how does it fit into the international market?
"I am optimistic about the future of the field. We have exceptional capabilities here. When you look at the situation today compared to the situation about a decade ago, it cannot be compared, the market has matured and matured all along and this will allow us to go far. The world sees us as a significant source of innovation, and if we know To use this figure in an orderly manner and the government fund for biopharma is a good example of this, good things can happen Let them do a similar thing in the field of medical devices as well."
If you had to name a number of points that are a highlight of your career, which moments would you choose?
"When I worked on Wall Street I was considered a very good analyst. In Israel I have investments in which I was very clearly successful together with Pitango. Each of these companies is important to me personally, important to the fund and important to the State of Israel in general."
What elements do you think a startup should have in order for it to be worthy of Pitango's investment? What is the winning formula?
"In my opinion, there are no winning formulas. It is very important to us that the product has a large potential market, that there is good patent protection because this is one of the most important things in our field, that there is a very clear strategy from a regulatory point of view and that there is good management. There is a triangle between the investors, the entrepreneurs and the company and as long as the relationship in the triangle This is better and the path to success is easier."
What recommendations do you have for people at the beginning of their life sciences career who want to make a mark?
"An entrepreneur in the field of life sciences must first of all have a long breath, and in my opinion it is very important in this field to understand. He also needs to recognize that he does not know everything and the more he asks for advice and help from those who have already gone through a similar path, or who have a very high level of knowledge, the better your chances To shorten the track will be higher. One of the ways is to establish an advisory board to help overcome the obstacles. As a rule, the entrepreneur needs to understand what he is doing, and most importantly To be proud of the fact that he brings a healer into the world - that in itself is a very strong feeling."
What is going to happen at the Biomed conference this year? What do you think will make the most waves?
"What always causes the big waves is the visitors' understanding that Israel is an excellent center for technologies and that there is a vibrant, alive and energetic industry here, and that people work here efficiently and effectively with much smaller amounts of money, and then everyone who comes to the conference and meets with entrepreneurs finds what they are looking for The very increase in the number of visitors indicates that people understand that they should come and search here, and this is what I see as the success."
