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A life sciences delegation led by the U.S. Chamber of Commerce visited Israel in March and met with top government officials, including Prime Minister Benjamin Netanyahu.
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Teva Pharmaceuticals, founded in Jerusalem in 1901, is now the largest generic drug manufacturer in the world and employs more than 8,000 people across North America.

Life Sciences: A New Frontier in U.S.-Israel Cooperation

Israel has made a name for itself throughout the world in the traditional hi-tech sector. Tech giants like Google and Microsoft have purchased Israeli firms and opened research facilities in the “Startup Nation,” taking advantage of Israel’s highly educated and creative workforce.

Less well-known, however, is Israel’s success in the life sciences field, where technology is harnessed to develop medical devices and life-saving drugs. American companies have begun to recognize the potential for cooperation in this field and are pursuing projects that combine U.S. resources with Israeli knowhow. Leading a recent business delegation to Israel, U.S. Chamber of Commerce Senior Vice President for International Affairs Myron Brilliant characterized the life sciences sector as “one of the most promising areas of growth in our bilateral commercial alliance.”

A Business That Makes a Difference

The Israeli life sciences industry is young and growing rapidly. It boasts some 1,000 companies, almost half of them formed within the past five years, with dozens of new companies being established every year.

The life sciences sector accounted for some $6 billion in exports in 2009, mostly to the United States. Israel tops the world in medical device patents per capita and is fourth in the world for biotechnology patents per capita.

“You feel the difference in what you are doing,” says Yaron Aizenbud, one of the founders of a small Israeli startup, Scorpion Surgical Technologies, specializing in medical devices for back operations. “This is about contributing something to the public.”

Perhaps most well-known among Israel’s life sciences firms is actually a company founded in 1901, Teva Pharmaceuticals. With 40,000 employees at facilities throughout North America, Europe and South America, and $18 billion in revenue in 2011, Teva is the largest generic drug manufacturer in the world and one of the 15 largest pharmaceutical companies worldwide.

The success of Israel’s life sciences sector can be traced to the country’s entrepreneurial culture and world-renowned research institutes, such as the Technion and Weizmann Institute of Science, which often partner with government-supported startups. Professor Ada Yonath of the Weizmann Institute, for example, received the Nobel Prize in 2009 for showing how ribosomes function, which has important implications for developing antibiotics.

Israeli breakthroughs in the discovery and development of specific products include the world’s best-selling drug for the treatment of multiple sclerosis, Copaxone, which was originally discovered at the Weizmann Institute and is now sold by Teva. Pillcam, the first miniature ingested camera that diagnoses and photographs abnormalities in the gastrointestinal tract, was introduced by Israel-based Given Imaging.

The development of medical devices like Pillcam is made possible thanks to two additional advantages that the Jewish state has: the many Israelis involved in the medical profession, and the country’s expertise in imaging systems developed for military purposes.

“Israel is an acknowledged world leader in imaging, which is used for so many purposes, from satellite technology to security,” says Todd Dollinger, chairman and CEO of the Trendlines Group, an investment group based in northern Israel. “But it is also the basis of many medical devices, which use various imaging techniques to diagnose and treat patients without the need for surgery.”

Opportunities for Collaboration

Recognizing the potential of the Israeli life sciences sector and keen to explore opportunities for collaboration, the U.S. Chamber of Commerce led a life sciences business mission to Israel in late March. The group, which included top executives from companies like Boston Scientific and Merck, toured research facilities across the country and held meetings with government and private-sector officials, among them Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz.

This was the inaugural trade mission from the chamber’s U.S.-Israel Business Initiative, a Washington-based national program established in 2010 to advance the business partnership between the United States and Israel. The visit came on the heels of the Israeli government’s launch of a program offering incentives to multinational corporations that invest in the country’s life sciences industry.

“We were delighted to help lead a dialogue between the American life sciences industry, the Government of Israel, and the Israeli private sector to lay the framework for new avenues for partnership between our two countries,” said Myron Brilliant, the chamber’s Senior Vice President for International Affairs and mission leader.

International Attention

The life sciences delegation is just the latest indication of the international attention that Israel’s life sciences sector is garnering. Massachusetts-based medical device giant Covidien has announced three acquisitions of Israeli firms this year alone. GE Healthcare and Intel have opened a lab in Israel to jointly test new technologies. And during an April trip to Israel, New Jersey Governor Chris Christie met with Teva officials and signed a letter of cooperation. Teva has more than 300 employees in New Jersey and has been offered $15 million in tax credit to build a new research and development facility in the state.

The increasing importance of healthcare in the global economy makes investment in the life sciences particularly attractive. Drawing upon their unique advantages, the United States and Israel are partnering in various ways to expand their commercial relationship in this sector and thus strengthen the longstanding alliance between the two countries.