EMERGING INDUSTRIES THE ISRAELI EXPERIENCE Sharon Kedmi Director

EMERGING INDUSTRIES THE ISRAELI EXPERIENCE Sharon Kedmi Director General Ministry of Industry Trade & Labor November, 2010

Israel Challenges • A small country, lacking natural resources and a significant local market • Human capital is the main resource • Israeli economy is export oriented and dependent on global economy status and developments • The markets for Israeli products are several time zones away Objective: Developing a global-facing Innovative industry that can overcome geographic & geo political challenges while leveraging the advantages of its population

Main Economic Indicators Criteria 2006 2007 2008 2009 2010 E GDP (current prices in $B)* 144. 0 164. 1 191. 8 193. 1 201. 0 GDP Real Growth Rate (%) 5. 2% 5. 4% 4. 0% 0. 7% 4. 1% $24, 271 $27, 395 $28, 473 $28, 160 $28, 800 3. 3% 3. 5% 2. 1% -1. 1% 2. 3% Exports (Goods & Services)** $B* (As Percentage of GDP) 62. 6 (43. 5%) 71. 2 (43. 4%) 80. 4 (40. 3%) 70. 35 (36%) 81. 9 (40. 7%) Imports (Goods & Services)** $B* (As Percentage of GDP) 62. 2 (43. 2%) 74. 0 (45. 1%) 84. 1 (42. 2%) 72. 3 (37. 4%) 84. 8 (42. 2%) 8. 4% 7. 3% 6. 1% 7. 6% 7. 2% GDP per Capita (PPP adjusted)** GDP per Capita Growth Rate (%, Current prices) Unemployment Rate (%) Source: Ministry of Finance, Bank of Israel and CBS

EMERGING INDUSTRY Solid infrastructure for the development of new IT Israel’s Competitive Edge – IMD World Report 2009 Country Rank 1 st 2 nd 3 rd 4 th BUSINESS EXPENDITURE ON R&D ( % GDP) Israel Sweden Japan Finland TOTAL EXPENDITURE ON R&D ( % GDP) Israel Sweden Finland Japan TOTAL PUBLIC EXPENDITURE ON EDUCATION ( % GDP) Israel Portugal Mexico Denmark ENTREPRENEURSHIP OF MANAGERS Israel Hong Kong Brazil Malaysia FLEXIBILITY AND ADAPTABILITY OF PEOPLE Hong Kong Israel Ireland Australia VENTURE CAPITAL AVAILABILITY Hong Kong Israel Malaysia Israel Ranks 24 Singapore

EMERGING INDUSTRY Solid infrastructure for the development of new IT Israel’s innovative ranking Source: Economist Intelligence Unit, 2009

EMERGING INDUSTRY Solid infrastructure for the development of new IT R&D Centers of Leading Foreign Companies Company No. of R&D Employees Sector Intel 5, 400 Semiconductors HP- (Indigo & Mercury) ~5, 000 Capital Equip IBM 1, 100 Computing Equip Cisco 1, 000 Software Motorola 1, 000 Telecom Applied Materials 1, 000 Capital Equip. SAP 800 Software Freescale 570 Semiconductors Microsoft GE (Healthcare) 600 400 Software Medical Equip Over 200 foreign companies have established R&D centers in Israel Over 35, 000 personnel are employed in these R&D centers in Israel

EMERGING INDUSTRY Solid infrastructure for the development of new IT Multinationals… • Microsoft built in Israel their first R&D facility outside the US. • Cisco built in Israel their first R&D facility outside the US. • Motorola’s Israel facility is the company’s largest development center worldwide. • IBM chose Israel for its first VC investment outside of the US • Intel has 4 R&D facilities and 2 manufacturing centers in Israel, employing 7, 000 Israelis • Google opened two R&D centers in Israel

EMERGING INDUSTRY Solid infrastructure for the development of new IT Israeli Breakthroughs – Selected Examples • Given Imaging – First ingestible video camera used to view the small intestine and diagnose disorders • Intel’s Core 2 Duo, Centrino and Pentium 4 microprocessors • M System’s Disk on Key and Disk on Chip flash memory • GE Healthcare’s portable cardiac ultrasound system • The Phillips Brilliance CT Scanner • IP Telephony invented by founders of Vocal Tec • AOL Instant Messenger ICQ • Zip compression technology

EMERGING INDUSTRY- WATER Driving Forces Affecting the Environment Building/ floorspace 20 m 2 pc Car ownership Energy Waste Water 315 cars/1000 inh. 6, 332 KWh pc/year 1. 58 kg pc/day 250 L pc/day

EMERGING INDUSTRY- WATER National Water Carrier Mekorot’s Water Supply System 1964 2009

EMERGING INDUSTRY- WATER Desalination Projects (110) Hadera Production since 12/09 (150) Sorek (60) (100) Palmachim Ashdod Ashkelon (110) Production 2013 Production since 09/07 Production 2012 Production since 12/05

EMERGING INDUSTRY- WATER Treated and Reclaimed Water Israel recycles 75% of its wastewater Reclaimed water account for over 50% of irrigation water Drip irrigation Different water prices

EMERGING INDUSTRY- WATER Israel’s Water Achievements Israel, with a 75% water recycling rate, is the world’s No. 1 water recycler. Israeli-invented Drip irrigation helped achieve 70%-80% of water efficiency in agriculture – the highest rate in the world. Israel has achieved the highest ratio of crop yield per water unit. Israel is the home to the world’s largest Seawater Reverse Osmosis desalination plant, annually producing 100 MCM at a low cost of ~$0. 65 per CM of water – the most cost-efficient of its kind in the world. Israel creates 25% of its consumed water. Israel’s total water consumption has remains the same since the 1960 s, despite a growing population and rising water requirements.

EMERGING INDUSTRY- WATER Water Technology Companies 300 companies (60% start-ups at R&D stage established after 2001) 8, 000 employees Export by water technology industry: 2005: $704 M 2006: $851 M 2007: $1, 094 M 2008: $1, 550 M

EMERGING INDUSTRY- WATER & ENERGY Fields of Expertise Water Security Water Mgmt. Solar Geo & hydro Wind Water Reuse Water Energy Desalination Irrigation Unique Position Bio-fuels Energy Efficiency

EMERGING INDUSTRY- ENERGY Driving Forces in Israel The driving forces for development of solar energy technologies stem from Israel’s geographic conditions: Abundance of sunny days 50% arid zone Lack of oil resources Comprehensive R&D environment Strong synergy between academia and industry A range of academic institutions and R&D centers Innovative companies Over 100 companies with renewable energy solutions

EMERGING INDUSTRY- ENERGY Israeli Renewable Energy Highlights Solar air-conditioning Sun-heated water tanks Over 85% of residential buildings in Israel use solar collectors, representing 4% of Israel’s energy demands. Home to the largest Solar Thermal company worldwide. Cooperation between R&D and Academia.

EMERGING INDUSTRY- ENERGY Local Market Current Installations: 45 MW (Home, Commercial PV) National Targets: (5%) 850 MW by 2014 (10%) 3500 MW by 2020 Electricity Supply Tenders: “Ashalim Project” – Accountant General Office Schedule: In short list, tender out in Q 2/2010 Technology: PV 15 MW x 2 CST 110 MW x 2 Land Tenders: “Timna Project” – Land Authority Land for 50 MW CST

EMERGING INDUSTRY- HEALTHCARE Innovation - 1 st in Medical 4 th in Biopharma 创新—医疗器械第一，生物制药第四 Medical patents/capita Source: USPTO Bio. Pharma patents/capita

EMERGING INDUSTRY- HEALTHCARE Academic Environment Great Potential for long term growth Human Capital: Ph. D. graduates Source: Israeli Bureau of Statistics, VATAT, salary. com, Tripletec manpower agency & HR 20 interview

EMERGING INDUSTRY- HEALTHCARE Science & Novelty 科学与革新 Nobel Prize Winners 诺贝尔奖得主 Total of 9 Nobel Prize winners in Economy (2005, 2002), Literature (1966) and in Peace (1978, 1994). 共有9名诺贝尔 奖得主分别是 2005，2002年的经济学奖，1996年的文学奖 以及1978年和1994年的和平奖。 Prof. Avram Hershko & Prof. Aaron Ciechanover Winner of the 2004 Nobel Prize in Chemistry 2004年诺贝尔化学奖获得者阿龙·切哈诺沃（左）、阿夫拉姆· 赫什科 （右） Prof. Ada Yonath Winner of the 2009 Nobel Prize in Chemistry 2009年诺贝尔化学奖获得者阿达·尤纳斯

EMERGING INDUSTRY- HEALTHCARE Major Technological Fields: 主要医疗领域 • Implantable therapeutic devices 可植入式治疗器械 • Diagnostics & Monitoring – Device & Biomarkers 诊 断及监控—器械及生物标记 • Therapeutic molecules 治疗分子 • External Imaging 外部成像 • Internal Imaging 内窥成像 • Drug delivery 药物传输 • Cell & Tissue Therapy 细胞及组织治疗 • Minimal Invasive Surgery 微创手术

116 EMERGING INDUSTRY- HEALTHCARE 350 300 120 111 96 97 100 Money raised by Israeli Life Science companies 88 86 以色列生命科学公司筹集的资金量 80 80 ($M) 250 200 60 150 40 100 20 50 0 184 320 284 369 351 318 03' 04' 05` 06' 07' 08' Capital Raised ($M) Number of companies Source: IVC-Online, Jan 2010 272 0 09' Number of Companies 400

EMERGING INDUSTRY- HEALTHCARE Israel’s Life Sciences Industry - Blockbuster Launched Products Product Indication Copaxone (glatiramer acetate) Multiple Sclerosis 多发性硬化症 Rebif (interferon beta-1 a) Multiple Sclerosis Exelon (rivastigmine tartrate) Alzheimer’s 老年痴呆症 Doxil / Caelyx (Doxorubicin liposome) Cancer 癌症 Azilect (rasagiline ) Parkinson 帕金森症 Erbitux Cancer 癌症 Company Licensee Revenues 2008 Academic Institute Teva $M 2, 260 Weizmann Institute Michael Sela €M 1, 331 Weizmann Institute Michel Revel $M 815 Hebrew University Marta Rosin $M 430 Hebrew University Hadassah Hospital Alberto Gabizon $M 175 Technion Moussa Youdim Weizmann Institute Michael Sela Merck-Serono Novartis J&J Schering. Plough Teva Launched July 2006 Merck-Serono Bristol-Meyers Squibb €M 565 Launched 07 -08 M$ 749 Inventor

EMERGING INDUSTRY- NANO MATERIALS Israel Nanotechnology industry Highlights • 80 High-tech companies are developing technologies based on Nanotechnology • 390 joint projects for Academia and Industry. • 420 Nanotechnology patents. • 3250 Academic publications by Israeli researches. • 675 new PHD’s for Nanotechnology annually. • 52 leading Israeli Nanotechnology scientist returned to Israel in recent years.

EMERGING INDUSTRY- NANO MATERIALS One example. Endless possibilities Qlight Nanotech • Qlight’s technology is based on unique semiconductor nanocrystals. • Enable light conversion from UV and blue wavelengths to any other wavelength in the visible range • Qlight has collaboration with Merck KGa. A, for developing semiconductor nanocrystal materials for application in LED lighting and flat panel displays.

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