Israel's booming life science industry has earned it the reputation of being one of the most innovative nations in the world. Of the life science segments, it is the medical device start-ups which have stolen the limelight. Device companies account for 57 percent of the total life science industry, and it is the entrepreneurial mindset rife within Israel that means the nation now boasts the highest number of patents per capita in the world. However, the industry remains very underdeveloped when compared to the global medical device scene, with a number of factors preventing the current industry from maturing.

The Israeli Life Sciences Industry

The medical device market in Israel has grown alongside the rise of pharmaceutical and biotech companies for over 20 years. However it is only in the recent millennium that Israel has seen a dramatic rise in the number of medical device start-ups that have sprung up, with 632 new devices emerging between the years 2001-2010. What's more, the number of medical device companies in existence has now eclipsed biotech and pharma companies – demonstrated in this image produced by the Israeli Advanced Technology Industries (IATI). [1]

Figure 1; Graph to demonstrate Figure 1; Graph to demonstrate composition of Israeli Life Science Industry in terms of company numbers

However, although initial statistics may seem exciting, they conceal a generally underdeveloped medical device industry that is struggling to see real growth into the commercial market.

*Figure 1: Graph to demonstrate composition of Israeli Life Science Industry in terms of company numbers. [2]

Digging Deeper

As of August 2012, 1,086 life science companies were active in Israel, with over half (656) being medical device companies. Of these, over 200 are already marketing their products throughout the world. However, the potential of the industry, and the indication that it is far from maturity, is the basis that over 50 percent of the companies have just five employees or less. Only 19 medical device companies (3 pecent of the total) have over 100 employees, and over 65 percent of the companies have not yet reached the commercial stage and are still in the seed or R&D stages of development. This demonstrates the vast majority of medical device companies are start-ups, yet to see if they will be able to progress their devices to clinical studies. And even companies who have passed through the clinical side of development (195 to date) only 30 have been showing revenues of over $10 million dollars, considered the revenue of a large company.

Financial Constraints

There remains an underlying factor which is slowing medical device development in Israel and this comes down to the age-old problem of investment. A medical device start-up with a great idea will almost certainly come to nothing if it does not receive the necessary funds to progress its study. Traditionally medical device investment has always been viewed as somewhat of a risky investment compared to other areas of investment, such as the internet. If investors are cautious about the potential ROI they may receive from a medical device company, they are more likely to invest in a company that has progressed some way through clinical development, often leaving the start-ups without the aid they need. This attitude seems unfitting considering the growth of the medical device industry as a whole, and the vast numbers of the population in need of medical devices in the modern world. Due to the Israeli life science industry being relatively young, this may be an area that will take time for investors to feel comfortable funding. Arguably the recession has also contributed to reduced investment, however this is a global factor, and now the shoots of recovery are being seen hopefully this won't remain a predominant factor for long. Improved promotion of Israeli medical device companies of all sizes from bodies such as the Ministry of Health and the IATI could go a long way in addressing funding concerns.

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The Solution

Some hindrances to Israeli medical device development will not be so easily solved. One factor hindering Medical device development in the Middle East as a whole is the political divisions between countries in the Middle East. Saudi Arabia has a similarly booming medical device industry, which is set to reach $1.8 billion in worth by 2018. However the political climate evidently means collaboration with Israeli companies will not be a possibility. In order to help the entrepreneurship within Israel thrive it is clear investment must be encouraged through bodies such as the Ministry of Health and agencies like the ATI, who represent the high tech and life science industries in Israel. However as a country with a population of just 8 million, serious investment, and education, is also needed from larger foreign sources to help develop the medical device industry. Grant schemes such as the Horizon 2020 project and investment from European investors would see new business in Israel, whilst also progressing the study of life saving medical devices. Most importantly, investments made into Israel should be seen as being for the greater good, considering it could lead to life saving devices being developed for the world's population.

Outsourcing in Clinical Trials Israel 2016

Arena International have recognised the potential of the growing medical device industry in Israel, and for our '2nd Outsourcing in Clinical Trials Israel' event, will be featuring a completely separate stream for medical device attendees, whilst also showcasing medical device speakers on the first day of the event. A range of innovative medical device companies have been invited onboard to showcase their experiences at this year's event, which is sure to provide a great meeting point for the industry. Find out more information about this conference here.




[2] – Jan. 4, 2013