Breakthrough Dividend: Chapter 8 - Industry Support Groups

Besides active government and industrial sectors, Israel has several unique intermediate organizations that span the gap between them. These often attract both government and industrial support, and play a major role in promoting new biotechnology startups and partnerships, both domestically and abroad.

National Biotechnology Steering Committee

In 1991, the Ministry of Science and the Arts (MOSA) and the Ministry of Industry and Trade (MIT), following the recommendation of the Katzir Report (Chapter 7), set up a broad-based National Biotechnology Steering Committee (NBSC) to help facilitate, coordinate and promote Israel's efforts in this new field. To increase its eligibility for external funds, the NBSC also subsequently constituted itself as a nonprofit organization, the National Committee for Biotechnology (NCB). The Chairman of both the NBSC and NCB is Prof. Max Herzberg, the CEO of Orgenics (Chapter 12); its Secretary is Dr. Hamutal Meiri. Both are well-known for their energetic activity in promoting Israeli biotechnology on both a personal and professional level. The NCB recently moved into Industry House in Tel Aviv, a modern office building that also houses MATIMOP and the Israel Export Institute.

The Committee's composition, information, resources and expertise gives it considerable influence. Its members are often primary advisors to Government Ministries (especially the MIT), the U.S.-Israel Science and Technology Commission's Working Group on Biotechnology and other national, binational and international groups active in Israeli biotechnology. They were deeply involved, as advisors, in setting up the MIT's MAGNET Program in Biotechnology, and they persistently lobby for increased national support of biotechnology.

The NBSC's domestic activities are quite varied. In 1992-93, for example, members made formal site visits to all Israeli universities and academic research institutes to reassess the state-of-the-field four years after the completion of the Katzir Report. They also initiated a series of symposia and conferences, including the 1994 meeting, "International Cooperation for Biotechnology."

The NBSC/NCB acts as a national clearinghouse for information on Israeli biotechnology. In 1994, the NCB published a Directory of Israeli Biotechnologists. In addition, the NBSC/BC have prepared an industrial profile summarizing the contributions of Israel's biotechnology to the national economy, and commissioned a technology-assessment and marketing survey to help identify Israel's competitive niche in the emerging field of biosensors, a new NBSC priority. They have also screened 300 R&D abstracts from IHE's and TI's to proactively prepare business plans for those that, after careful screening, showed exceptional promise. Their first business plan helped establish a new startup company (Serumtech, Chapter 19) to "pharm" human genes in transgenic goats, to create high-value medical products that could be easily extracted from the milk. The NBSC/NCB is also nearing completion of a national database of active Israeli biotechnology projects, to facilitate progress assessment and academic-industry cooperation.

Recent international successes include initiating binational cooperation with Japan's powerful MITI (May 1993), setting up a program to promote Israeli participation in the U.S. biotechnology market (May 1993) and organizing an Israeli industrial biotechnology delegation to California and the West Coast (October 1993).

MATIMOP

MATIMOP was originally an R&D and high-tech industry lobby group, but now encourages and directly assists new startups. Entrepreneurs are offered professional market analysis and business advice on their particular proposed product, or on likely future opportunities. "We charge for these studies," Amitai says, "but, since they are essentially government subsidized, we charge a young new firm a lot less than an outside consultant would." MATIMOP also sponsors larger studies that assess Israel's competitiveness in a particular field (e.g., biosensors).

After completing their feasibility study, MATIMOP can help new entrepreneurs apply for an R&D grant from the MIT. Since Israel has a small domestic and capital market, MATIMOP often helps its proteges locate local or foreign strategic partners and move into exports. According to Amitai, such international matchmaking is rapidly becoming the major thrust of MATIMOP's efforts. The organization now has a database with 400-600 Israeli technology-based projects seeking partners for joint ventures at any one time.

MATIMOP also gives Israeli inventors international exposure through its quarterly newsletter, Advanced Technologies from Israel, which highlights 20-25 high-tech projects seeking R&D or marketing partners. The newsletter is sent free-of-charge to 8,000 addresses, mostly abroad. About 30-40 percent of all responses and inquiries are from interested American companies, especially medium to large industries, investment companies and banks. Of the last 100 or so highlighted projects, however, only one related to biotechnology (a degradable ophthalmic drug).

MATIMOP could be a useful channel for identifying, reaching and linking Israeli and U.S. biotechnology partners, although its present "customers" and publicity focus mostly on Israel's traditionally successful electro-optics, electronics, materials and biomedical engineering industries. On the other hand, its recent catalog, also entitled Advanced Technology from Israel, lists 26 new opportunities in agrotechnology (of which 12 qualify as biotechnology by this report's definition), 9 in biotechnology, 25 in diagnostics (19 biotechnology) and 17 in medicine (6 biotechnology). While a good sign of things to come, a quick comparison with the 65 hopefuls in computer science and the 40 in mechanical engineering, again drives home the relative difficulty of a biotechnology first start. While sympathetic to biotechnology, Amitai points out the field is still relatively young and, although MATIMOP can help entrepreneurs, it cannot create them. Eventually, however, he expects biotechnology to receive a greater share of MATIMOP's attention and exposure.

Amitai is bullish on U.S.-Israel cooperation. He feels no culture gap exists between U.S. and Israeli businessmen (except recent Soviet immigrants) and that large, established Israeli companies can easily compete on their own merits. In contrast, he feels that smaller Israeli companies have major problems managing their contacts abroad and in maintaining control of their inventions and advances. American companies prefer buying or licensing Israeli ideas at an early stage and finishing the R&D back home. They want to keep tight control of their own R&D funds, in-country and nearby, and don't want a continuing relationship with an Israeli partner, especially one too small to maintain effective daily contact. This may not be in the best interest of Israel, whose government espouses a policy of creating jobs and a high-tech industrial base in Israel. It also may not be in the best interests of the Israeli companies themselves, since the next phase of development has high incremental value-added, but smaller companies really have little leverage and little other choice. Similar concerns have been raised by Uri Litvin and Reuben Alister of YISSUM (Chapter 20). They all agree, however, the major gap remains getting local R&D to the point where it is "safe" enough to attract foreign capital at all.

Israel Export Institute (IEI)

The Israel Export Institute (IEI) is an independent trade-promoting group. Funded 60 percent by government, and 40 percent by established Israeli exporting companies, IEI provides members information, contacts, liaison and exposure. It also publishes useful catalogs, including the 1994 directory, Israel's Biotechnology, which provides information on about 40 exporting companies. IEI does little to encourage new domestic startups, but it can be a useful contact for U.S. firms looking for established potential partners abroad, though Mira Richman, Director of IEI's health care department, admits, "We know more about Hong Kong than Tel Aviv."