Ahead of the Biomed conference, it should be noted that the life sciences industry was among those that rushed to recover from the economic crisis, the Biomed index was introduced to the stock market, and the Biotechnology Fund was established
By: Nahum Donitza*
If you are looking for the most prominent and significant milestones for the local industry that happened this year, you should probably put your finger on the announcement by the Tel Aviv Stock Exchange on the introduction of a new index - the biomed index, on the tender to establish the biotechnology fund, on the launch of the government's incentive program Obama, and about the huge deals in the field - of this year and of the coming period.
The decision to add the biomed index (to the five existing sectoral indices - Tel-Tech, Tel-Tech 15, Real Estate 15, Finance 15 and Tel-Banks) came against the background of the development of trading in the shares of the biomed companies, and the increase in their aggregate market value, which reached -8.5 billion shekels. It seems that with the increase in activity, the demand for ETFs and financial products on Biomed shares also increased, which was an incentive for setting the Biomed index. The index includes 26 companies whose main business is research and development in the fields of life sciences, biotechnology, pharmaceuticals and medical devices and includes companies with a market value of at least NIS 50 million in which the public holdings rate is at least 20% (with the large and established Teva and Perrigo absent from the list). The biomed index is, without a doubt, another evidence of the strengthening of the position of the companies in the field of life sciences. The launch of the index points to a perception of the field as reliable, and the new investment instruments, such as ETFs, are already aimed at the general public and not necessarily at speculators. According to the analysts, the investor who chooses the Biomed ETF is actually expressing confidence in the ability of the entire industry. Beyond that, the increase in interest in biomed companies will also facilitate the entry of new and interesting companies in the biomed field to trading on the stock exchange.
State money is also in the picture
The terms of the tender for the establishment of the biomed fund published during the year also stirred up the market. According to the tender, the state funds will be managed by two or three venture capital funds, while the private funds will use the money they will receive from the government and their own capital to leverage the amount they have three or four times. Currently, Israeli funds managing more than $100 million and foreign funds managing more than $250 million can participate in the tender.
True, the government budget is a bit far from the 300 million dollars previously discussed, but the good news is that new money wants to enter the field.
According to the plans, the Ministry of Finance will allocate NIS 125 million to the biomed fund and the chief scientist allocated another NIS 125 million from his budget to the fund. The intention is to leverage the amount through investment by institutional entities, such as private equity funds and insurance companies. Eli Ofer, the chief scientist, has confirmed in many interviews that this is indeed the fund in question that he previously announced and that after leverage it can reach the 300 million dollars in question, through a tender method.
According to Finance Minister Yuval Steinitz, "This is a major move within the policy of promoting knowledge-intensive industries. These industries are the engine of Israeli growth, and we as a government must strengthen it in order to exhaust the comparative advantage of our economy. We have recognized the field of biotechnology in all its components as having tremendous potential and will use the the optimal policies to advance".
Minister of Foreign Affairs, Binyamin (Fouad) Ben-Eliezer: "The specific assistance given to the young companies in the fields of pharma, biotechnology and medical equipment, in fact the establishment and existence of the funds, constitutes another link in the set of actions taken by the ministry to fulfill its vision to establish the future industries of the State of Israel in the fields of life sciences , nanotechnology and cleantech".
According to Israel Makov, former CEO of Teva who serves as chairman of Givan Imaging and co-chairman of the steering committee of ILSI Week - Biomed 2010, one of the most important things about the fund is the extent to which the treasury will be able to leverage it: "When they reach a billion shekels, It will be possible to manage them as one fund or as two funds, one an investment fund and the other a venture capital fund."
Makov says that it is clear to him that, looking at the long term, a real life sciences industry (and especially in the field of biotech) will not rise to the desired height without the right funding sources. The money currently flowing through the veins of the industry, which mostly comes from venture capital funds, is money with a limited time horizon, he says. "The 'big' change will happen, if, for example, a 'private equity' market develops here that will complement the operation of the venture capital funds, that is, the venture funds will invest in the first stages of the company's development and the private equity will enter in more advanced stages and allow EXIT for the venture capital funds.
"We must develop tools to encourage entrepreneurs to stay here and let their companies grow in Israel. The tender of the Office of the Chief Scientist and the Ministry of Finance to establish a biotechnology fund, whose role is to raise with government support about one billion shekels for investments in the biotechnology industry, is definitely a first and right step in the right direction. The treasury's goal is an investment of three private shekels For every government shekel, leverage that will bring the total amount of the fund to NIS 1-1.2 billion, which is definitely a good start to start the process of change that we all wish for."
Obama's incentives
Another key event that took place in 2009 was the launch of the Obama administration's stimulus program, under which a budget of 32 billion dollars was allocated to make the American health care system "much more efficient". According to the estimates, one of the areas of investment that will receive many budgets in the coming years are new technologies for hospitals, which will allow them to reduce expenses and make medical treatment economical, as well as the implementation of information technologies (IT) in the American healthcare industry. There is no doubt that Israeli companies will be affected by the moves in the American market, whether they are IT companies or companies in "demanded" fields, such as diabetes, obesity, the cardiovascular field, stroke treatment, and the treatment of diseases such as Parkinson's and the field of medical imaging.
The reform will affect not only hundreds of millions of Americans but also all those Israeli life sciences companies active in the American health care system, such as Teva, Diversity Imaging and other medical computing companies. The companies that are not expected to increase their profitability are the Israeli pharmaceutical companies that produce generic drugs.
In an interview with TheMarker, Dr. Ora Dar, head of the life sciences field at the Office of the Chief Scientist, recently said that the fruits of the reform are already being seen. According to her, even if Israel does not yet have an apparent relative advantage in the fields of pharma and biotechnology, it is difficult not to refer to the successes of companies such as Protelix, which signed a cooperation agreement with Pfizer, and Medivand of Clal Biotechnology, Gamida Sel and Kamada, who have not yet reached the finish line, where they will launch a product A bestseller with approval for sales in the US and Europe, but they are right near the finish line.
Looking ahead
And that brings us to another point in the equation: business ahead. Four huge deals stood out in 2009 in the field of life sciences: total value - over a billion dollars, the most prominent of which: Ventor sold to Medtronic for 335 million dollars. The data from the research company IVC is also encouraging: the relative share of the industry in all recruitments has almost doubled. According to the company, during the first quarter of 2010, 91 Israeli high-tech companies raised an amount of 234 million dollars from Israeli and foreign venture capital investors, with the life sciences sector leading the fundraising in the first quarter of 2010 with 86 million dollars, 37 percent of the total fundraising. It was followed by the software sector with $32 million (14 percent), and the semiconductor sector with $31 million (13 percent).
The Chief Scientist's investments also increased, as part of the policy of increasing support for these sectors - in 2009 approximately NIS 409 million were invested in the fields of pharma, biotechnology and medical devices - with a clear strengthening of the fields of medical devices and biotechnology. According to the predictions of the chief scientist, the investment in both fields is expected to increase to about NIS 500 million.
In an interview with BioSearch, Dr. Benny Zaevi, managing partner at Tamir Fishman, said that "the next decade could be a decade of breakthroughs for many Israeli companies in the life sciences. If there is funding for them - the next decade will be a decade of significant breakthroughs for them."
The annual report of the Ernst & Young company that reviewed the Israeli life sciences field estimated during the year that the number of Israeli start-up companies that will go public in 2010 will be about two to five, and that the capital that will be raised will amount to about 400 million dollars at the most. The company estimated that companies in the field of life sciences are the ones who will lead the trend. According to the report, the scope of investments in the field of biotech in the US is steadily increasing and it already reaches about 70% of the investment in the field of computers - 41 billion dollars in the last five years. In Israel, according to the report, the ratio is still one in three, but it is steadily decreasing.
the largest share
A survey by the research company IVC on capital raising by companies in the field of life sciences in Israel in the first quarter of 2010, conducted before Biomed week, revealed that life sciences companies attracted the largest share of investments in the research and development stages (Early Stage) and beginning of sales (Mid-Stage), Of all the investments at these stages among the Israeli hi-tech companies, with 53 percent and 37 percent of the investments, in the first quarter of 2010, respectively.
According to the latest quarterly survey (Q1 2010) by the research company IVC on capital raisings by Israeli hi-tech companies, the life sciences sector led the raisings with 37 percent of the total raisings. The average fundraising round in the life sciences in the first quarter of 2010 was $3.58 million, compared to an average of $2.14 million in the fourth quarter of 2009.
24 life sciences companies raised an amount of 86 million dollars, compared to 62 million in the fourth quarter of 2009 (22.5 percent of the total recruitments of the hi-tech industry in the quarter), and compared to 50 million dollars, which were raised in the first quarter of 2009 (19 percent of the total recruitments in the quarter ). The amount raised was 39 percent higher than the amount raised by 29 companies in the previous quarter, and 72 percent higher than the amount raised by 25 companies in the first quarter of 2009.
Life sciences companies attracted the largest share of early-stage and mid-stage investments, with 53 percent and 37 percent in the first quarter of 2010, respectively.
Within the life sciences sector, the medical devices sector attracted $58 million (67 percent) of the amount raised in the entire life sciences sector, and 25 percent of the capital raised in all sectors in the first quarter of 2010.
In the field of medical devices, there was a 93 percent increase in capital raising in the first quarter of 2010 compared to the fourth quarter of 2009, when 20 companies raised $30 million, and a 107 percent increase compared to the first quarter of 2009, when 16 companies raised $28 million.
Kobi Shimana, CEO of IVC, points out that "the strengthening of the life sciences sector in the first quarter of the year stands out against the background of decreases in recruitment in other high-tech fields. "Significant exits that have taken place in the past year, commercialization agreements of Israeli medical technologies to multinational companies, the government tender to establish biotech funds and the thawing of the local IPO market for companies in the field, give a boost to investments in the life sciences sector in Israel."
700 companies
About 700 companies operate in Israel in the fields of life sciences, most of them new, a minority with a clear road map and timetables regarding the transition to commercial lines. But one can get the impression that there is at least one certainty in the industry: the capital, which the industry craves for, is found and waiting for the right investment channel. Companies that will be able to present real potential to investors will be able to usher in the leap they are hoping for through the stock exchange in Israel, and perhaps even in the US.
"According to estimates, about 10% of the 8,000 start-ups established annually in the world in the field are established in Israel," says Ruthi Alon, the senior partner in the Pitango venture capital fund responsible for the fund's life sciences field and co-chairman, along with Israel Makov, to "ILSI - Biomed Israel 2010" week. "For several years Israel has been at the top of the list of approved patents Per capita in the field of medical devices and biopharma and also the returns of companies in the field in Israel were respectable", and still, in her estimation, the coming year will definitely be a test year for the industry. "We must see the critical mass here, with infrastructure, managers, funds, money and knowledge".
Dr. Eli Ofer, the chief scientist at the Ministry of Defense, sees research and development as the main resource of the industry. "In order to maintain our position, we must strive and fight to constantly find ourselves at the top end of the value chain of research, development and innovation. The State of Israel has great centers of excellence in academia, broad and deep knowledge on many subjects and an entrepreneurial spirit. If we work to increase investment in R&D, and promote the In the main directions, we can make the country an industrial and economic leader also in the biotechnology and traditional industries, similar to the high-tech industry."
Dr. Ofer sees as one of the main directions in which we need to act, the cultivation of the biotechnology and nanotechnology branches as preferred sectors with extremely high economic growth potential that cannot be attracted without massive state aid. "We must understand that the real comparative advantage of the State of Israel in these future issues is in R&D and innovation," says Dr. Ofer.
According to Dr. Ofer, biotechnology is a very promising field and he even called on Israeli entrepreneurs to "attack" it ahead of time. "There is scientific excellence here and many start-up companies and some medium-sized companies that are fighting for their survival, but this is not an industry," according to him, a ministry The scientist allocates relatively large budgets to the field of life sciences, in an effort to develop a significant industry in Israel. "The rate of grants in the field has almost doubled within a decade. In 2000, the amount of grants to the field of life sciences was 14.3% of the total amount granted by the scientist, and by 2009 it had jumped to 27.7%. Israel must be aware of developments in the world in the field of R&D and the enormous investment made by other countries in the field. The chief scientist's budget must be increased by another billion shekels, in addition to the existing 2 billion shekels, in order to meet the needs of industrial R&D in Israel."
* The author is the CEO of "Donitza Communications-DMC", a public relations office specializing in biotechnology and medical devices www.donitza.co.il
5 תגובות
It's not scientific. But without flour there is no Torah. Without a country there is no science.
In light of the letter from Senators Mitchell and Reid, the heads of the Democratic and Republican parties, we have supporters.
But for the sake of safety in society, which is Eli Horowitz's life project, they will overcome the sediments of the past,
An Israeli leader will be chosen from among the capitalists, or a representative will come on his behalf.
In Combers - the Indians are better than the Israelis.
Liron, an American brain + an Israeli brain = the two are better than the one.
A question to Israel from a cub that is no longer in the wild. If you wish to forward it to him by email, he will answer it.
How did an American emerge from her as chairman of the board - is there no talented Israeli manager to be found
To continue Eli Horowitz's life's work? Couldn't they call you?
The Americans have no sentiments for the preservation of industry in Israel. On the contrary. Teva was not even sold to the Americans.
It is given in exchange for the shares that received coverage in its purchase. I mean we bought them and they took over us.
A brief overview of what happened until today when we sold flagships to the Americans:
Combers - Kobi Alexander was chased all the way to Africa and declared a fugitive criminal.
Is he the only one in NASDAQ who gave excessive options to employees? Is there a lack of regulation there as
that showed the fall of 2008? Until the last Combers were fired, the pen did not rest with the current Combers owners.
Lehabi Iskar - sold to the good man Warren Buffett by Steph Wertheimer's son for a whopping $4.5B.
The place did not close - but the vision and the dream stopped there on the sale date. As if nothing had happened there since then.
Whoever goes to the Tefen museum will see that the place lacks the vision of an Israeli leader connected to the land of this country. so sad.
We can learn from the Germans (those with whom we have a long history between 65-71 years): they are not
Sell companies to others. The government invests 5.6B EURO in order not to lay off workers in production.
The production in Germany, at an admittedly terrible price of bringing millions - I even heard 25M Turks.
But Siemens, Bosch, AEG, Cuban shipyards where our frigates, our Dolphin submarines are built.
We are selling our Iron Sheep assets. Luxury industry.