Biotechnology Strategy Project Realizing Israel Potential

1
Biotechnology Strategy ProjectRealizing Israel
Potential

• Adi Alon Monitor Group

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Agenda

• Project Overview
• The potential
• The challenge and the action plan

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Monitor Group - Overview

• Founded 1983, Cambridge USA
• Mix of strategy consulting, investment banking
  and private equity
• Truly global operations - no local partnerships
  or geographic barriers
• 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

Decision Architects
M2C
Monitor Clipper Partners
M.A.S.T.
Activities Processes Systems
The Action Company
Marketspace Center (E-Commerce)
Corporate Finance
Monitor University
Monitor Institute
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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
The Diamond Approach
Context for Firm Strategy and Rivalry

• A local context that encourages sustained
  investment in upgrading
• Vigorous competition among locally-based rivals

Demand Conditions
Factor Conditions
Related and Supporting Industries

• A critical mass of capable local suppliers
• Clusters instead of isolated industries

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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
• Conducted in depth research of international
  biotechnology clusters to identify development
  challenges and sources of success
• Profiled global industry trends and mapped them
  against the cluster activities in Israel

• Israel Research

International Research
Recommendations and Action Plan
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Agenda

• Project Overview
• The Potential
• The Challenge and the action plan

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Global Potential - Strong Growth Is Expected in
the Biotech Market
Projected Growth of Global Biotechnology Market
(B)

• BioTherapeutics
• Growth driven by
• Imminent patent expirations
• Increasing demand
• Need for improvement in RD economics
• Bioinformatics, pharmocogenomics
• Agricultural Biotechnology
• Strong demand for insect-protected and
  herbicide-tolerant crops
• Recent shift towards products with enhanced
  output traits
• Diagnostic
• Therapy selection and monitoring
  utilizinggenetic data
• Industrial Biotechnology
• The pulp and paper industry

120
100
80
Bn
60
40
20
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
Source NASDAQ, Price Waterhouse Coopers
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Israel Potential

• High quality academic research
• Skilled human resources - over 1,700 graduates
  every year in related fields
• Academic research and industrial RD 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
10B
Input traits and bio pesticides
Neurology
18 8.8B
5B
43 1B
Israel Cluster Relative Activity in Future
Development
12 5.5B
Bioinformatics

• Cancer

1B
Autoimmune
17 1.2B
of academia research projects and products
developed in industry Therapeutic
areas Platform technology Agro-biotech
4 1.3M
Infectious Diseases
108 1.4B
22 3.1B
Cardiovascular
Pharmocogenomics

• Diagnostics

0
110
40
10
20
30
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 GainedU.K. Example
Increased Revenues
Increased Employment
Growing Sector
U.K. Biotechnology Industry - Number of UK
Biotech Companies
U.K. Biotechnology Industry - Annual Revenues (M)
U.K. Biotechnology Industry - Number of Employees
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

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The Challenge - Supporting The Growth of a Young
Industry
...Comprised of small scale companies..
..With lower overall market capitalization
Emerging industry...
Number of Biotech Companies, 1999
Average Sales and Number of Employees per
Company, 1999
Market Capitalization of Public Companies, 2000
USA
Israel
Source Harry Langbeheim NBC Press release
Interviews Ernst Young Life Science Report,
1999 2000
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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

• 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

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Creating Cluster Dynamic Massachusetts
Biotechnology Council
The council provides a forum for networking
between the various parts of the cluster,
improves the business environment and interfaces
between the industry and government
Board of Directors
Activities and Mechanisms

• 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)

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
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Areas of Recommendations 7 Points Program
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Areas of Recommendations 7 Points Program
(cont.)