Biotechnology Incubators in Israel The Israeli Biotechnology Market

Biotechnology Incubators in Israel

The Israeli Biotechnology Market n n n n 160 companies (30% in therapeutics) 4000 employees Market valuation: $3. 5 billion Market capitalization: $2. 7 billion Av. Annual growth in no. of companies: 14% Sales: $600 million 75% of the companies employs less then 20

European Biotechnology Per Country Source: E&Y

The existing incubation system 3 types of bio-incubators in Israel: n Public incubators n Private incubators n PublicPrivate incubators – public incubators which were partly privatized

Public Incubators The existing system of public incubators: n n Duration: up to 2 years Funding per project: up to $350, 000 Government participation: 85% Ownership: n n Entrepreneur - 50% Private investors - 20% Incubator - 20% Other staff members - 10%

Public Bio-Incubators n Many public incubators have some biotech firms n 2 public incubators specializing/half specialized in biotechnology: n n Biomedical Incubator Rad-Ramot Ltd. Naiot Technological Center Ltd. Both incubators display relatively high levels of private holdings

Problems with the Public scheme n n n Percentage of ownership is predetermined Inflexible terms Duration of funding limited to 2 years Budget per project limited to $350, 000 No shared infrastructure (not recognized as an eligible cost of the incubator(

Private Initiatives in Israel n n Eager Biogroup Ltd. Hadasit Medical Research Services and Development Ltd. (Haddasa Hospital( Clal Biotechnology Industries Ltd. The Center for Advanced Technologies (Tel Hashomer Hospital(

Eager Biogroup Ltd n n n Incubator ownership: private investors Seed funding and mentoring against X% ownership (depends on the level of involvement( Focus: IP strategy and clustering of related projects

Eager Biogroup Ltd n n n International collaboration with the Pasteur institute in Paris and the European molecular biology labs in Heidelberg. Average initial investment of $200, 000 Present status: 7 incubator companies

Hadasit Medical Research Services and Development Ltd. n n An incubator within Hadassah Hospital Ownership: Hadassah Hospital Entrepreneur receives up to 20% Funding of projects: n n Initial sources of funding: internal sources and Chief Scientist In later stages external investors are sought by the incubator management team for each project Management: highly experienced personnel Present status: 5 companies

Clal Biotechnology Industries Ltd n n n Ownership: Clal Investment Group Up until 2 years ago the company only invested in mature companies: at least in phase 1. Following a strategic decision to invest in Start -ups the incubator was established. The incubator will house 4 portfolio companies Shared infrastructure including clean rooms GMP/GLP services

The Center for Advanced Technologies n n n An incubator within Tel-Hashomer hospital Ownership: Tel Hashomer – the state of Israel Incubator concept: n n To commercialized ideas coming from the hospital staff To enable external entrepreneurs using the advance hospital infrastructure

The Center for Advanced Technologies n n n 5 permanent research staff Funding of projects: mainly from the chief scientist and from MAGNET. Some projects are funded by private investment 6 -8 projects

“Most incubators tend to become specialized within biotechnology” Main causes for this: n Geographic proximity between companies leads to synergies n Management specialization n Shared infrastructure n Relevant Network

The New Public Biotech Incubator Initiative

Rationale n n Biotech requires more time Biotech requires more funding Importance of shared infrastructure Specialized management is crucial

The New Bio-incubator Scheme n n 2 public bio-incubators will be established Duration: 3 years Funding per project: $1. 8 million Government participation: n n n Year 1 - 85% Year 2 - 75% Year 3 - 65%

The New Bio-incubator Scheme n n n Shared infrastructure (50% public participation( Specialized in-house auxiliary services Involvement of multinational pharma company Involvement of leading VC Strong emphasize on management

Bio-Link project n n EC funded project within FP 5 Two main objectives: • Information exchange and networking • Stettin and validating a Co-incubation model