AIRPORT CITY, Israel (Reuters) - Israel is looking to attract pharmaceutical companies involved in life sciences to help retain its competitive edge in high technology.
The Israel Innovation Authority (IIA) has published a tender seeking pharmaceutical firms to open research and development (R&D) centres and two firms will likely be chosen by July, according to IIA CEO Aharon Aharon.
Israel’s high-tech sector attracts billions of dollars a year in foreign investment, accounts for half the country’s industrial exports and employs about 9 percent of its workforce.
But the sector has reached a “glass ceiling” where growth is being hampered by a lack of engineers, Aharon told Reuters, noting the need for more life sciences firms.
“We have a few but it’s not enough,” said Aharon, who headed Apple Israel from 2011 until 2017. “As a result, the salaries are very high and our overall competitiveness is going lower.
“To grow in the innovation-based economy you have to look for another ecosystem, and life sciences is the perfect one because of the level of IP (intellectual property) created at the universities and hospitals,” he said.
Of the $5.2 billion invested by venture capital funds in the tech sector in 2017, only $1.2 billion was devoted to life sciences, Aharon noted.
And Israel’s biggest company, Teva Pharmaceutical Industries, has been cutting back on its Israeli R&D.
The IIA invests mainly in early stage companies since venture capital funds view life sciences as riskier than traditional high tech. That’s because it can take up to 15 years to develop a drug, much longer than to develop software.
Life sciences funding comprises 32 percent of grants by the IIA, which has a budget of 1.7 billion shekels ($473 million).
Tel Aviv will host the international MIXiii Biomed conference next week.
($1 = 3.5909 shekels)
Reporting by Steven Scheer; editing by Jason Neely