US Claims Multinationals Fleeing Israeli R&D

The Office of the US Trade Representative (USTR) has claimed that Israel's intellectual property protection regime has led to a downscaling of involvement by international companies in Israel's drug industry, particularly in the R&D sector.

The report echoes statements made by US ethical drugmakers' association PhRMA and its counterpart Pharma Israel that the research industry is in decline, mainly due to insufficient protection of material contained in drug registrations. Many leading drug firms are also alleged to be shifting research efforts to more tightly regulated markets.

However, allegations that Israeli R&D is in decline are likely to be questioned by some local players, as the government has recently attempted to attract new sources of foreign investment such as Japanese biotech firms, and local drugmakers claim that R&D spending has risen 42% over the past two years to some US$246mn last year. Although clinical trials by Israel-based generics makers may account for some of this increase, it is worth noting that the ongoing dispute over Israel's intellectual property laws with the US and European Union continues to colour the debate.