Israeli Biotech Begins to Boom 

Jason Keyser / AP 19mar01

Maccabim, Israel - For six months, Nir Dotan's children "itched and wondered as their father fiddled night and day in his garage with a little gadget he hoped would give scientists a closer look at how information zips through the human body cell by cell.

A year later, Dotan helped form a biotech startup in this small central Israel town, hired 17 employees and attracted two rounds of financing.

The company, Glycominds, is one of about 150 biotech startups in Israel's sprouting life sciences sector, which raised more than $500 million last year from venture capital and public market investment.

"It was very tense in the beginning because you didn't know if it would work or not and you know your resources are limited and you can't afford to make many mistakes," said Dotan, president and chief technology officer of Glycominds.

The company's invention, a miniature, honeycomb-shaped disk called the GlycoChip, enables scientists to map how proteins interact with sugars - the telephone switchboard operators of the body that carry information from organ to organ.

The new field the invention is designed for is called glycomics.

Information cataloged with the GlycoChip could save pharmaceutical companies hundreds of millions of dollars by helping them evaluate potential drugs before taking them to clinical trials.

The idea is to give drugmakers the tools to develop medicines that will travel more efficiently through the body.

Glycominds is among Israeli biotech companies that focus on ,selling services and tools to bigger pharmaceutical companies to generate revenue that might allow them to later develop products of their own. That approach is enlivening an industry strong on research but lacking in the money to develop products and market them.

For now, though, Israel's biotech industry is still a modest business.

It represents only about $600 million in annual sales, less than 1 percent of Israel's $110 billion gross domestic product, said Adi Alon, director of the Tel Aviv office of the Monitor Co., a Boston consulting firm.

Alon says the industry's sales could reach $3 billion yearly within a decade, owing to Israel's strong research and a labor force fed each year by 1,700 graduating biology and medical students.

The recent mapping of the human genetic code - the genome - has unleashed a flood of raw data for scientists to unravel.

Israel's life sciences sector raised $238 million in venture capital last year, an increase of 76 percent from the previous year, according to Israel Venture Capital Online, a technology information group. Another $300 million came from investment in public markets, according to Ernst and Young Israel.

Seven Israeli life sciences companies have gone public in the last three years and three are listed on the Nasdaq Stock Market.

The bulk of Israeli biotech is focused on drug development.

Peptor, a biotech company in Rehovot, just south of Tel Aviv, has developed a drug to treat diabetes that is in the final phases of clinical trials in the United States and could reach the market by 2004.

About five of the 100 biotech drugs on the market are made by Israeli biopharmaceutical companies.

Partnering with multinational pharmaceutical companies, Israeli biotech firms are increasingly working to bring drugs to market.

"There used to be this attitude that `no, we can't do it. It's too rigorous, too expensive. It can only be done by a German or an American company,"' said David Haselkorn, chief executive of Israel-based Clal Biotechnology Industries Ltd., which is investing $140 million in 10 biotech companies, eight of them Israeli.

Haselkorn was hired by Clal two years ago. Previously, he helped turn Israel's Bio-Technology General into one of the world's first profitable biotech companies through the development of a genetically engineered human growth hormone called Biotropin.