A market survey published today by the Business Data Israel (BDI) research company shows that Israel is in third place in the number of biotechnology start-ups. According to the survey, the number of biotechnology start-ups reached a record 96 in 2000, while the number of biotechnology companies in Israel grew from 135 in 1999 to 160 in 2000, an 18% increase. For the sake of comparison, BDI notes that the number of companies in 1988 stood at only 25.
BDI specializes in providing business, economic, and marketing information about Israel and the rest of the world. The survey was commissioned by an undisclosed Israeli biotechnology company. The survey indicates that sales in the sector in Israel rose to about $600 million in 1999, a 40-fold increase, compared with 1988. The number of those employed by biotechnology companies has skyrocketed by 1,000% in the last 12 years, reaching approximately 4,000.
The principal source of revenue for the Israeli biotechnology sector is drug development, which accounted for sales of $401 million in 1999. Another major field is agro-biology, which reported sales of about $136 million. Sales in the diagnostic sector (disease diagnosis, genetic treatment, and genetic means of diagnosing infections) totaled about $23 million, while other fields posted sales of $38 million.
Figures for life sciences and biotechnology investment appear positive – overall investments stood at $1.7 billion in 2000. Israeli biotechnology companies raised about $80 million in the third quarter of 2000, constituting 57% of the total, according to the number of transactions. The other transactions were divided as follows: software (17%), communications, excluding the Internet (13%), other technologies (13%).
BDI stated that the annual growth rate of Israel’s biotechnology sector is 10-15%, less than the growth rates posted in the US and Europe. According to BDI, the rate of growth in Israel appears to be less than the potential.
The survey lists factors inhibiting growth in the sector: the government’s long-standing preference for supporting the electronics industry, while biotechnology receives more limited assistance; the reluctance of the Israel venture capital industry to direct resources to the sector, due to the large investments required; and the shortage of suitable manpower.
Published by Israel's Business Arena on January 24, 2001