With positive growth rates in the Israeli economy continuing, attention is now turning to those industries with potential to sustain these growth performances.
The Ministry of Finance and the Ministry of Industry, Trade and Labor have signed an agreement to set up a fund with OrbiMed, an international company that currently manages investments in excess of $5 billion in life sciences companies. The scope of the Israeli fund’s activities will amount to $200 million at the initial stage and is likely to grow in the future.
The fund will invest in life sciences companies, with a significant proportion of the investments being directed toward the biopharma sector, which the State has identified as a field in which Israel has an excellent but not fully tapped infrastructure. The new fund will be one of just a few specializing in the biopharma sector. Hopefully some significant amounts will be invested in Haifa, where the Mayor and council have earmarked an area of land specifically for the development of the life sciences.
OrbiMed Group qualified to make a bid for establishing the fund having met the tender’s high threshold conditions, and at the second stage was required to raise an amount of at least $76 million. OrbiMed succeeded in raising $160 million on the private market, more than double the minimum required. This is an especially noteworthy achievement in view of how hard it as at present to raise venture capital. The total amount that the fund will manage, which, as stated, comprises the amount raised by OrbiMed and the State’s investment, will make the fund into one of the largest venture capital funds in the Israeli industry.
OrbiMed’s entry into Israel is expected to boost international investment in the life sciences industry in Israel by $200 million, through co-investments with foreign funds.
Director General of the Ministry of Finance, Mr. Haim Shani said that, “the establishment of investment funds is one of the ways that the Ministry of Finance and the Chief Scientist at the Ministry of Industry, Trade and Labor advance their growth policy, which is intended to assist in maintaining Israel’s status as a technological power that makes a significant contribution to GDP growth”.
Chief Scientist at the Ministry of Industry, Trade and Labor, Mr. Avi Hasson stated that, “the objective of the investment funds is to bridge the funding gap, thereby removing the obstacles to investing in Israeli biotechnology companies that currently exist in Israel. We have been aware for some time of the potential of the Israeli biotechnology industry and its contribution to the economy, and the setting up of this fund is the crowning achievement in a long line of measures implemented by the Chief Scientist’s Office in recent years aimed at establishing and expanding the activities of companies in this sector”.
Managing Partner of OrbiMed International, Mr. Jonathan Silverstein said that, “the decision to operate in Israel resulted from the recognition of Israel’s vast potential in the life sciences sector in the coming years. In the last two years we have witnessed tremendous momentum in this sector in Israel and major growth in the number of companies at various stages of clinical trials. OrbiMed has examined the government programs of other countries around the world and has concluded that the combination of the programs of the Israeli government together with the potential of the local industry is the most attractive”.