The 3 Annual Life

Science Conference
rd

February 2001
TM

Biotechnology Strategy Project

Realizing Israel Potential
Adi Alon Monitor Group

Agenda
Project Overview
The potential
The challenge and the action plan

Febtuary 2001
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Monitor Group - Overview

Founded 1983, Cambridge USA

Decision
Architects

Monitor
Clipper
Partners

Mix of strategy consulting,

investment banking and private
equity

M2C

M.A.S.T.

The Action Company

Truly global operations - no local

partnerships or geographic
barriers

Activities
Processes &
Systems
Marketspace
Center
(E-Commerce)

Corporate
Finance
Monitor
Institute

Monitor
University

All Group companies operate

through all 26 offices globally including Tel Aviv
80%+ of engagements are repeat
clients
Committed to creating action - not
reports
Working in almost all industry
sectors
Leading global experts

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Project Overview - Key Issues

Is there a potential for Biotechnology industry in Israel?

If there is a potential - what should Israel do to realize it?

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Competitiveness of Nations, States, and Cities

for
The Diamond ApproachContext
Firm
Strategy
and Rivalry

Government

Factor
Conditions

A local context that

encourages sustained
investment in upgrading
Vigorous competition
among locally-based
rivals

Demand
Conditions

Factor (input) quantity

Related and
Supporting
Industries

Factor quality
Factor specialization

A critical mass of capable local

suppliers
Clusters instead of isolated industries

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A core group of demanding

local customers
Unusual local demand in
specialized segments that
can be served globally
Customers whose needs
anticipate those elsewhere

Project Overview - Key Activities

Over 100 interviews - profiling the industry and the challenges it
faces
Developed detailed mapping of the activities conducted in
biotechnology by Israeli industry and academia
Collected and analyzed relevant data to the challenges raised during
Israeli cluster interviews

Israel Research

Conducted in depth research of international biotechnology clusters

to identify development challenges and sources of success:

International
Research

Profiled global industry trends and mapped them against the cluster
activities in Israel

Recommendations and Action Plan

Febtuary 2001
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Agenda
Project Overview
The Potential
The Challenge and the action plan

Febtuary 2001
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Global Potential - Strong Growth Is Expected

in the Biotech Market BioTherapeutics
Projected Growth of Global
Biotechnology Market ($B)

Growth driven by:

120

Imminent patent expirations

Increasing demand
Need for improvement in R&D economics

100

80

Bn$
60

40

20

Bioinformatics, pharmocogenomics
Agricultural Biotechnology
Strong demand for insect-protected and herbicidetolerant crops
Recent shift towards products with enhanced output traits
Diagnostic
Therapy selection and monitoring utilizing
genetic data
Industrial Biotechnology
The pulp and paper industry

0
2004

2010

Source: Consulting Resources Inc, 1998; Business (02/2000); Frost & Sullivan ; Biotechnology Industry Organization

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Global Potential - Biotech Is Enjoying

Increasing Investors Attention
NASDAQ Biotech Index
(Jan 1994 - Jan 2001)

VC Funds investment in Biotech U.S., UE

+ Switzerland, UK 19951999

1200

2000

U.S.
EU + Switz.
UK

1,041

1600
800

1200

715
668
557

M$

Index

646

452

800

400

347
251

400

183
118

0
-01

-00

-00

-99

-99

-98

-98

-97

-97

-96

-96

-95

-95

-94

-94

Source: NASDAQ, Price Waterhouse Coopers

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110
29

49

118

47

1995 1996 1997 1998 1999

Israel Potential
High quality academic research
Skilled human resources - over 1,700 graduates every
year in related fields
Academic research and industrial R&D in key industry
segments (e.g. cancer, immunology, bio-informatics, etc.)
Industrial success - growing sector with recently successful
IPOs (e.g. XTL, Compugen, Keryx).
Potential for the future: interdisciplinary areas

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Israel Potential - Research and Industrial Development

Covering
Growing Segments of the Global Market
Expected Market Size of Key Biotech Markets in 2005 **
15%
$4.7B
13%
$1.6B
Neurology

Israel Cluster
Relative
Activity in
Future
Development*

~$10B

Input traits and

bio pesticides

18%
$8.8B

12%
$5.5B

~$5B

43%
$1B
Bioinformatics

Cancer

~$1B

Autoimmune
17%
$1.2B
4%
$1.3M

Infectious
Diseases

108%
$1.4B

22%
$3.1B

Cardiovascular

Diagnostics

0%

10%

20%

% of academia
research projects and
products developed in
industry:
Therapeutic
areas

Pharmocogenomics

30%

40%

Platform
technology

110%

Agro-biotech

% of Expected Annual Market Growth Rate (1998-2005)

* Research projects in the academia & number of products in the pipeline; ** Projected sales of existing products and of products under development
Source: DataMonitor, Harry Langbeheim; Pharmaceutical Researches & Manufactures of America, Recombinant Capital ; Monitor Analysis

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What Can Israel Gain - The Future Targets

Strengthening Israels knowledge base economy
Increasing employment in the sector from 3,500 today to 10,000 14,000 by 2010.
Increasing sector sales to $2 - $3Bby 2010, almost all of it export
oriented.
Keeping scientific talent in Israel, over 1,700 students are graduating
every year with science degrees in the related disciplines.
Attracting Israelis who reside oversees and have managerial
experience in the industry.

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What Other Countries Already Gained

U.K.
Example
Increased Revenues
Increased
Employment
Growing Sector
20,000

U.K. Biotechnology Industry Number of Employees

15,000

14000

U.K. Biotechnology Industry Annual Revenues ($M)

2,000

1870

U.K. Biotechnology Industry Number of UK Biotech Companies

300
268 275
248

1,500
200

175

11000
10,000

160

9000

1,000

130
760

5,000

500

0
1994

1996

1999

100

500

0
1994

1996

1999

1994 1995 1996 1997 1998 1999

Source: Ernst & Young; OST Report on the UK Biotech Cluster, Aug 1999; Northwest Biotech Development Study (June 98); ERBI BioBusiness Trends 99
Report; Speech by Lord Sainsbury, August 1999

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Agenda
Project Overview
The Potential
The Challenge and the action plan

Febtuary 2001
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The Challenge - Supporting The Growth of a

Young Industry
...Comprised of small
..With lower overall
Emerging industry...
scale companies..
Number of Biotech Companies,
1999
1,500

market capitalization

Average Sales and Number of

Employees per Company,
1999
20

Market Capitalization of
Public Companies, 2000*
150

1,274

Sales

1,200

Employees

264.0
Israel

USA
120

120

15

300

210.0
200

900

90
10

17.5

600

60

50
5

275

300

23

6.7

144

100

0
US

UK

Israel

2.1
0

US

UK

Israel

Source: Harry Langbeheim; NBC; Press release; Interviews; Ernst & Young Life Science Report, 1999 & 2000

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93.0 97.0

30

2.6
0

83.0

0
1996

1997

1998

1999

2000

2000

Key Principles of Action Plan

Placing Biotechnology of the National Agenda
Supporting infrastructure development:
Physical
Knowledge
Regulatory

Foster scale up and industry development through networking

and linkages
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Creating Cluster Dynamic U.K. - Role of the Private

Sector In Cambridgeshire
Eastern Region Biotechnology Initiative
Head of ERBI
Private Sector

Aims to enhance the development of Biotechnology

cluster
Promote local, national & international networking
Support successful growth of new ventures
Ensure the infrastructure of the region supports
biotechnology
Provides services to members:
Secures better terms from service companies
(legal and accountancy)
Web site postings of partnering opportunities
abroad
Staging networking events
Holding seminars on strategy, marketing & finance
Collecting and publishing industry data

Academia
Institute of
Biotechnology
Univeler Research Ltd
John Innes Research
Center

Government
Government Office
for the East
East of England
Investment Agency
County Council

Biotech Companies
CeNes
CTBL Ltd
Cambridge Drug
Discovery

Service
Companies
Reddie & Grose
Patent Agents
Barclays
Bank
Weil, Gotshal & Manges
Law Firm
Garretts
Law Firm
Rothschild & Sons
Investment Bank
Arthur Andersen
Accountants
Beeson Gregory
Stockbroker

Customers
Glaxo Wellcome

Peptide Therapeutics
Lundbeck
Alizyme Plc

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Creating Cluster Dynamic

Massachusetts
Council
The
council provides a forum forBiotechnology
networking between the various
parts of the cluster,

improves the business environment and interfaces between the industry and government
Activities and Mechanisms

Board of Directors

Policy: Addresses issues related to policy, clinical trials,

regulatory etc..
The Council regularly lobbies local, state, and federal
government officials on issues related to biotech (e.g.
regulatory affairs)

Networking: Separate committees are also established to

develop networks among professionals in specific areas of
biotech activity (e.g. bioinformatics, business development,
purchasing etc)
Committees may also include pharmaceutical companies
and other interested parties (e.g. Compaq and Pfizer)

Purchasing: The Council negotiates broad based

agreements with scientific suppliers as a cost saving
mechanism for its members
Conferences: Local and international conferences are
organized on broad issues (e.g. BIO2000) or on a specific
topic (e.g. financing)

Febtuary 2001
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Industry
Representatives

Other Cluster
Representatives

Genzyme

MIT Office of
Technology
Transfer

Biogen

Venture
Capital

Genetics Institute

Massachusetts
General Hospital

Millenium

Arthur Andersen

Additional
Industry
Representatives

Additional Cluster
Representatives

Areas of Recommendations 7 Points Program

Private sector
leadership headed
by the IBO to work
with government on
implementing
cluster initiative

Appoint a full time project leader or executive director to lead the implementation effort
Bring biotech on the national agenda and declare a clear vision for the industry
Form an intergovernmental task force to coordinate government policy

Attract an intl company and support Israeli companies which offer integrated services
and equipment in

Upgrade physical
infrastructure which
supports the
industry

pharmacology and animal testing

analytical services
GMP pilot batches manufacturing facility

Work with one university on a pilot plan which includes:

Increase financial and human resources to improve commercialization activities
Create a pre-seed funding to support final development of innovations with
commercial potential to improve the odds of a successful technology transfer
Align IP and equity ownership rules of commercialization companies in the
Universities with incubators

Support applied
research and
technology transfer
processes

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Areas of Recommendations 7 Points Program (cont.)

Improve early
commercialization create world class
incubators dedicated
to the industry

Reinforce regulatory
infrastructure

Map infrastructure
required to
support research
in academia
Implement tracking
system for industry
data and
performance
matrix

Set up world class scientific and business advisory board to support incubator projects
Increase funding and timing of projects to meet industry needs
Implement highly selective screening process for projects
Increase communication with the industry - clarify guidelines and information requirements
for clinical trials
Facilitate approval of phase 1 clinical trials through either a) stronger linkages with the FDA
(e.g. FDA affiliate office), or b) by adding resources to the health ministry
Add resources to the institute of standardization and control of pharmaceutical specialized
in biotechnology for evaluation and GMP accreditation
Map equipment requirements for academic research to ensure that Israels academia
maintains its position

Track data on industrial and research activity to facilitate networking and monitor
performance

Febtuary 2001
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