What Illinois can learn from Israel about medical technologies

17 Jun What Illinois can learn from Israel about medical technologies

Posted at 11:01h in Biotech, Commentary by

CHICAGO – BIOMED is the Israeli annual medical device and biotech conference taking place this week in Tel Aviv. For the 4th straight year, Illinois is present at this event with representatives from the Illinois Biotechnology Industry Association (www.ibio.org) (Executive Director, Barbara Goodman), the University of Illinois-Chicago (Asst. Vice-Chancellor fro Research, David Gulley, Ph.D.), the Illinois Science + Technology Park (your’s truly), Takeda America (Associate Director, Global Scientific Affairs), Illinois Office of Trade & Investment, Eastern Mediterranean Regional Office (Sherwin Pomerantz), American-Israel Chamber of Commerce-Chicago, and others.
Simultaneous with the BIOMED event, the 3rd International Stem Cells Meeting is also being held, drawing scientists from around the world. Israel is one of the countries at the forefront of stem cell research. Professor Sam Stupp of Northwestern, a leading expert in both stem cells and nanotechnology, is one of the keynote speakers at this conference.
So why does Illinois have an interest in Israel and this event? One reason is that Israel has been an important site for Illinois exports with over $210 million exported in 2008 and historically over $4 billion since 1992.
Illinois also has the 6th largest Jewish population in the U.S. with over 278,000 Jews in Illinois (versus some 2 million in New York/New Jersey, and more than 1 million each in both California and Florida, and a sizable population in Pennsylvania), making Israel a logical point of interest for this segment of Illinois’ population. The American-Israel Chamber of Commerce-Chicago was founded in 1958, and is a major focal point of commerce between the two countries, and as focused in recent years on areas of matching strategic interests such as healthcare/life sciences (including biotechnology, medical devices, diagnostics, imaging, digital healthcare), agri-technology (including renewable fuels), homeland security, communications, and information technology.
While all of this is interesting, Israel is an R&D machine with cutting-edge science, and outstanding creativity and genius in bringing new medical technologies to the marketplace. How can such a small country, smaller than New Jersey and with a population of about 7.3 million people do this and have a worldwide impact? It helps that the Israeli government has made this a national policy and funded large research initiatives. This tiny country has a GDP per capita of $27,200 according to the Israeli Export & International Cooperation Institute. It is one wired society with 98% of the population having a cell phone and 72% of the population not only having internet but high-speed internet.
According to the World Economic Forum, Israel ranked 17th out of 131 countries rated for global competitiveness and got high marks for “Quality of Scientific Research Institutions” (ranked 3rd), “Availability of Latest Technologies” (ranked 3rd), “Venture Capital Availability” (ranked 5th), and “Utility Patents” (ranked 3rd).
Healthcare is high-up in priorities for the Israeli government both in their domestic and international policies. Israel currently spends 7.5% of its GDP on healthcare (about half of the U.S. level), but has excellent healthcare systems, with 3.9 physicians per 1,000 people. According to the Israeli Export Institute, there are some 373 hospitals in Israel and 42,100 beds.
One thing I have noticed in Israel is that there is no stigma to fail. We in the Midwest, on the contrary, stunt our entrepreneurial spirit (and limit the number of entrepreneurs) with our tremendous stigma for failure. The Israeli entrepreneurial spirit seems indomitable.
The Israeli entrepreneurial spirit, culturally, seems to commence with their mandatory stint in the army (both men and women) usually before going to college. As they attend college later than their U.S. counterparts, there seems to be a greater maturity about education.
The Israeli military experience gives Israeli teenagers intense social networking and brings together all sectors of the society. It also creates an informal atmosphere where there is easy access to decision-makers. The military experience also teaches them a risk-taking attitude and how to improvise under difficult situations. Additionally, because of the vast influx of Jews from places like Ethiopia, Argentina, and Russia over the last 10 years, there is a multicultural environment.
As these young Israelis grow up and “graduate” from Israel, they continue to maintain however these social networks learned from the military providing valuable contacts later in life and business.
This entrepreneurial spirit has also helped build the Israeli venture capital community, with assistance from the Israeli government. In 1992, the Israeli government started a venture fund with $100 million which was the first real venture fund. That has blossomed some 17 years later into 80 private VC funds with $10 billion, according to the Israeli Export Institute. To help further incentivate such activity the office of the Chief Scientist of Israel also provides funding for technology incubators, R&D consortiums, and grants.
Israel has the highest number of scientists and engineers per capita in the world. It is the largest contributor to NASDAQ outside the U.S. with over 150 Israeli companies trading on NASDAQ, the New York Stock Exchange and the American Stock Exchange. There are over 80 Fortune 500 companies with operations in Israel including Intel, IBM, Cisco, Microsoft, Motorola, Google, Yahoo, etc.
All of this has had had a direct impact on the growth of the Israeli life science industry which has grown from 186 companies in 1996 to 1,250 companies last year (note: 90 % of these companies have less than 5 employees each). Of these companies 62% are focused on medical devices, 23% on drugs (large and small molecules), 7% on healthcare IT (digital healthcare), and only 1% on agbio, but this latter area is growing. There are over 3,000 tech companies in Israel with 200 start-ups launched every year, with $13 billion invested in start-ups since the year 2000.
Of this group, there are 38 companies focused on oncology, 106 focused on cardiovascular products, 125 diagnostic companies, 73 digital healthcare companies, 62 imaging companies, and 54 drug delivery companies to name some of the key subsegments. Nanotechnology is playing an important role in these drug-delivery companies.
As the Israelis classify this, 30% of the companies are at the seed stage (start-ups), with another 38% at the “R&D Stage”, meaning that they have raised a few million. Another 32% have with some kind of revenue. Given the great preponderance of medical device companies, this is a more likely scenario as these types of products get to the marketplace faster.
One area of high growth is digital healthcare where 95% of Israeli physicians use IT in the daily practice. You may remember that the American-Israel Chamber of Commerce-Chicago along with the Israeli Consul for Economic Affairs for the Midwest sponsored a digital healthcare conference in April this year at the University of Illinois-Chicago which featured a half dozen Israeli companies which wowed their American audience with creative approaches to healthcare software.
Many large international life science companies have taken note of the Israeli cutting-edge in R&D, and companies like Medtronic, Merck, Abbott Labs, Sanofi-Aventis, Philips, Siemens,Bio-Rad, GlaxoSmithKline, Schering-Plough, Roche, Pfizer, Eli Lilly, Boston Scientific, GE Healthcare, Ferring, Genzyme, and Johnson & Johnson all have operations in Israel. The combined two meetings of BIOMED and the Stem Cell Conference attracted more than 8,000 people last year. While there are no official numbers yet on this year’s version, it appears well attended and not suffering from the worldwide slump affecting other regions of the world. There are attendees and delegations from China, France, Denmark, Hungary, Singapore, and states delegations from Pennsylvania, Michigan, Texas, Maryland, Ohio, Missouri, and Georgia.
Much can be learned from both Israeli culture on entrepreneurship and risk-taking, and scientific creativity and push toward product development and commercialization. As the Israeli market itself is so small, Israeli must learn to globalize early and think about their global development and commercialization trategies.
Although the U.S. has modified its policies regarding stem cell research in a positive way this year, thereby stimulating renewed scientific interest in the U.S., Israel is still far beyond the U.S.in applications and research of this promising technology, hence one of the reasons why so many people are attending this conference.
Coming to Israel always energizes me as its people are so high-energy and creative. Coming here one gets exposed to more new ideas in a concentrated time period.
Illinois, a state with over 12 million ( and some of our Midwest neighbors) could learn a lot from Israel in technology creativity and commercialization.
See you soon.
Recent columns by Michael Rosen

Michael S. Rosen is president of Rosen Bioscience Management, a company that provides CEO services, including financing and business and corporate development to start-up and early-stage life science companies such as Renovar and Immune Cell Therapy. Rosen also is a founder and board member of the Illinois Biotechnology Industry Organization. He can be reached at rosenmichaels@aol.com.
This article previously appeared in MidwestBusiness.com, and was reprinted with its permission. The article is not meant to be a stock recommendation.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC. WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.