ISRAEL LOBBIES TO WIN BACK MULTINATIONAL R&D

Despite the recent criticism of changes to Israel's data exclusivity and patent laws, which have aroused international condemnation, the country continues to lobby hard for the return of multinationals to the local R&D industry. According to Israeli officials, there are currently no major multinationals with a direct presence in Israeli biotech R&D.

Undeterred, the Israeli biotech sector formed the Israel Life Science Industry group in January, while the government is reported to be working on a new incentives package for the industry. The government has pledged to co-finance some projects worth more than "a certain threshold" at 50%. The focus of the recent lobbying in the US has also been mainly devoted to stem cell research, nanotechnology and central nervous system disorders.

Meanwhile, a senior academic research official in Israel has claimed that local firms radically overstate research spending on a regular basis. Israel currently has the world's highest proportion of R&D spending as a proportion of GDP, at some 4.6%, but the reports argue that up to 40% of R&D spending is actually allocated to Israel's burgeoning IT software industry.

Such claims appear to fit with the claims of multinational sector companies, which argue that recent years have seen massive downscaling of Israeli pharmaceutical R&D. Despite lax new intellectual property provisions, however, the country has secured significant improvements to its research environment. In the last 12 months, incentives such as new regulations improving monitoring of clinical trials at public hospitals and legal changes to encourage manufacturing of new discoveries in Israel have been implemented or announced.

Nevertheless, it is significant that despite local claims of pharmaceutical R&D spending reaching US$246mn in 2004, the public research sector and domestic firms account for the overwhelming majority much of this expenditure. A recent international study comparing the local biotech industry with the US has also shown that while biotech accounted for 60% of investment in life sciences in the US, Israel's share was substantially lower.