2. Biotechnology The Israeli Case

3. Definition Using living organisms, cells or biological agents, to produce goods and services. Modern biotechnology arose when the technologies of gene engineering became available in the early 1970's.

4. European Life Sciences Source: E&Y

5. U.S Life Sciences Source: E&Y

6. European Biotechnology Per Country Source: E&Y

7. 5 Years IPO Trends in Europe

8. Drug Development Process Pre-clinical tests IND – Investigation New Drug Application Clinical Trials NDA – New Drug Application Approval – Periodic reports must be submitted continuously

9. Phases of Clinical Trials

10. The Israeli Biotechnology Market 160 companies (30% in therapeutics) 4000 employees Market valuation: $3.5 billion Market capitalization: $2.7 billion Av. Growth in no. of companies: 14% Sales: $800 million (incl. the Copaxon) 75% of the companies employs less then 20 21 therapeutics drugs in clinical trials 54 therapeutics drugs in pre-clinical trials

11. Israel Biotechnology Sector

13. Israeli Biotechnology Companies By Field of Technology

14. The Sample 10 bio-pharmaceutical companies 2 specialized incubators 2 specialized VCs 2 incubator companies 3 small companies (up to 25 employees) 1 medium company (70 employees) 4 public companies

15. Work Experience All entrepreneurs have strong academic experience in their field All entrepreneurs hold PH.d or M.D. 3 entrepreneurs had former entrepreneurial experience

16. The Importance of a Team Work 6 companies in the sample were created by teams A basic team consist usually of a scientist and an experience entrepreneur In half of the cases the entrepreneur was searching for a scientist with idea Companies founded by team of entrepreneurs are more successful

18. Technology Transfer Technology Transfer Policies plays a crucial role in the development of the industry Different models of TT creat difficulties for investors University rules impose entrepreneurs to take a leave of absence from the university. This increases their personal risks. In many cases investors and TT agencies are speaking different business language.

19. Financing Incubators Assist in shortening the ignition phase of start-up Serve as a good “ school ” on how to run a company In some few cases serve as a good bridge for technology transfer (especially those incubators which are being hold by the Universities)

20. Financing Incubators – cont. Lack of basic infrastructure needed for biotechnology start-ups (clean rooms, clean water, refrigerators etc.) Incubation period is too short The available resources are too small Rules regarding share holding of Universities and incubators are often contradict

21. Financing VCs VCs investment in the sector rose 124% in 2000 attracting 11% of total investments. Total amount invested by Israeli VCs in 2000 was $124.4 million ($64M in 1999) Total VCs investments in Israeli biotech companies was $238 million ($135M in 1999) All companies in the sample raised seed money from VCs Av. amount of investment $1.2 million

22. Financing VCs - cont. Two specialized VCs set up private incubators for their portfolio companies Main fields if contribution: Recruitment of managers Setting up advisory boards Attracting other investors Management

23. Financing VCs - cont. VC market in the field is still under developed. Seed funds are not enough As a result there are market imperfections

24. Office of the Chief Scientist Despite the restrictions most companies are using OCS funds ($300K-2 millions) Funding schemes: The regular scheme (up to 50% of R&D costs for single company with royalties) The magnet program (up to 66% of R&D costs for a consortium of companies) Very limited usage of EC funds

25. Business Model Strong Team of entrepreneurs Significant Innovative Idea Pre-Clinical Tests Phase I+ II Strategic PartnerLicensing/Selling of IPR Phase III NDA+Marketing Phase III After2-3 successful drugs Royalties

26. Human Resources The no. of M.Sc and PH.d graduates each year fulfill industry needs The “ excellent to industry ” program is very active. Lack of experienced managers Need to recruit managers from abroad

28. Policy Recommendations Processes of technology transfer must be simplified Universities ’ rules need to be modified in order to decrease scientists ’ personal risks Incubator system needs to be adjusted VCs support to early stage companies should be encouraged by governments

29. Policy Recommendations - cont Governments should encourage excellent support services such as IPR and regulation as these are vital for companies ’ success Cluster oriented policies should be adopted