June 15, 2003

Help knowledge advance from the labs to the business sector.

One of the most worrisome phenomena in Israel’s marketplace is a flight from Israeli hi-tech. Two related stories have been in the news lately. One is that groups who won franchises to run biotechnology incubators, declined the honor. The other is a drop in enrollment for computer sciences studies. Both should concern anybody hoping to see Israel’s economy grow in the long run.

Israel’s biotechnology industry has enormous potential, which is far from being fully exploited. The industry and research institutes can boast knowhow at an international level. But the passage of knowledge from the halls of academia to application and commercialization is lacking.

The incubators initiated by the Ministry of Industry and Trade were supposed to help utilize biotechnology’s potential, even if in part. But all we got is a blame game between the ministry’s chief scientist and the groups supposed to now be running the incubators – the Zisapel brothers and the Ofer Brothers’ group. Though they won franchises, neither will apparently be fulfilling its mandate to set up incubators.

The worst loser will be the economy. Repeating the tender process would be difficult, with highly uncertain results. Failure to set up the biotechnology incubators will undermine the development of Israel’s biotechnology industry, in the long run. It will also discourage international investors who had been prepared to come on board. And one of the most intractable problems Israel’s biotechnology sector faces is the need for strategic international partners. Unless international entities become involved, the chances that the local industry will grow become smaller.

Ultimately, the only body that did rise to its feet to support biotechnology is the one that failed to win a government tender – the Lapid group, consisting of the venture capital fund Pitango (in which – for the sake of proper disclosure – the author serves as CEO), and Teva Pharmaceuticals.

Teva launched a company named Bioline, operating in Jerusalem, to handle the incubator’s affairs. Lately Yissum, the application company of the Hebrew University of Jerusalem also joined the group, as did Hadasit, an application company running out of Hadassah Hospital. Yet the government’s goal of setting up a few key bodies to nurture the biotechnology industry remains far from fulfillment.

The second serious problem is that enrollment in hi-tech sciences is dropping.

At the end of the day, the only sector likely to fuel long-term economy growth, and to create jobs and value, is hi-tech. The best advantages of Israel’s hi-tech industry are quality manpower and education institutions, factors that go hand in hand. A drop in enrollment in relevant sciences, especially for first and second degrees in computer sciences, is perturbing.

During the boom, the marketplace suffered from an acute shortage of engineers. Unless that problem is corrected, when the economy stabilizes and the global hi-tech market starts growing again – which it seems close – Israel’s industry will be left behind.

Both problems, the failure to back biotechnology and to encourage enrollment in hi-tech sciences, will impact Israel’s hi-tech like a ton of bricks. The decision-makers must find creative solutions to encourage students to tackle the sciences, and to help knowhow advance from the labs to the business sector.

In this respect, an initiative by the Tel Aviv University and the Ramot corporation should be noted. They launched a venture capital fund devoted to commercially developing projects generated at the university or at Ramot, which is a meeting point of academia with the business world. The initiative is a welcome one, and could serve as a model for additional institutes of education, for the greater benefit of the university itself, its scientists, and investors.

(Reprinted from The Marker)

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Jason Harris

Jason Harris

Executive Director

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