Israel Business Update

Israel Business Update
Volume Il Issue 1 - January 5, 2006

Prepared by Dr. Mike Cohen of the Galilee Institute
Exclusively for Team M-EDG

Israel GDP up 5% in '06, above some revised views

Israel's real gross domestic product rose 5% in 2005, compared with 5.2% in 2005 and 4.8% in 2004, the Central Bureau of Statistics reported. The figure came in above the Bank of Israel's most recent estimate of 4.8%, reported last week. But at the beginning of 2006 the Bank of Israel had been looking for growth of 5.3% for 2006, then lowered its estimate to 4.6% after the country's summer war with the Lebanese group Hezbollah.

Israel's foreign currency reserves rose in December by half a billion dollars, and for the first time crossed the $29 billion level, reaching $29.03 billion on December 31, 2006. According to the Bank of Israel, foreign currency reserves grew $1.2 billion during 2006, similar to the increase in 2005. The reasons for the rise were two-fold. The most important was private transfers, while deposit of part of the U.S. military aid also added to the reserves. Foreign investment in Israel also reached an all-time high of $23.7 billion in 2006, the Central Bureau of Statistics (CBS) revealed on Sunday. The figure is 80 percent higher than foreign investment in 2005, according to CBS. In the other direction, Israelis invested $28.6 billion abroad, says the bureau, which is another all-time high. During 2005, Israelis invested $17.6 billion overseas. In 2001, by comparison, Israelis invested $5.1 billion outside the country. (Moti Bassok)

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Only Singapore and Taiwan Grow Faster Than Israel

In the league table of the world's biggest economies, Israel has leapt up the rankings, matching South Korea and Hong Kong by rising a dozen places. China has risen only four notches—but even in the early 1980s it was already the world's tenth-biggest economy in current dollars. India, perhaps surprisingly, has barely budged. Several oil producers have fallen down the rankings, despite the increase in oil prices towards the end of the period covered.

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Israel Telephone, Internet and Telephony Merger Approved With Conditions

Elron Electronic Industries Ltd. (NASDAQ & TASE: ELRN) today announced that further to its previous announcements, NetVision Ltd. ("NetVision") today announced that it has received the approval of the Ministry of Communications, subject to certain conditions, for the proposed merger between NetVision and Barak I.T.C (1998) International Telecommunications Services Corp Ltd. and for the proposed merger between NetVision and GlobeCall Communications Ltd.

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Israel's Epix in potential $1.2b deal with GlaxoSmithKline

GlaxoSmithKline Inc. (NYSE; LSE:GSK) has acquired an option to commercialize and market four G-protein coupled receptors programs, for the treatment of a variety of diseases, developed by Epix Pharmaceuticals Inc. (Nasdaq:EPIX). The programs are based on molecules developed by Israeli biotech start up Predix, which merged with Epix earlier this year. Epix will receive total initial payments of $35 million, including $17.5 million through the purchase of three million shares. Epix will also be eligible to earn potential milestones of up to $1.2 billion based on the achievement of certain discovery, development, regulatory and commercial milestones across the programs under the agreement.

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Clal Industries Raises $15 Million for MediWound

A strategic investor will invest $15 million in MediWound, controlled by Clal Biotechnology Industries. The investor will initially purchase stocks in MediWound to the value of $10 million from stockholders, and stocks to the value of $5 million from the company. Public reports in May said that the previous financing round of NIS 12 million was led by venture capital firm Polar Investments, which invested NIS 9 million in exchange for a 6% share in the company. The remaining NIS 3 million was raised from Clal Biotechnology Industries Ltd., which owns an 80% stake in MediWound. The company has raised a total of $14 million to date, from Clal Biotechnology Industries Ltd., Teva Pharmaceutical Industries Ltd. and the Chief Scientist.

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Topspin Medical obtains EU regulatory approval

Topspin Medical Inc. (TASE:TOPMD) has obtained EU CE Mark marketing approval for its intravascular MRI (IVMRI) catheter. The EMEA approval was granted following successful clinical trials on over 70 patients.

Can-Fite gets two US patents

Can-Fite BioPharma Ltd. (TASE:CFBI) has announced it has obtained patents on its new arthritis drug, and it’s A3 adenosine receptor from the US Patent Office. This gives the company exclusivity for these drugs in the US market, which accounts for 40% of the global pharmaceutical market through to 2023.

Banner Year For Acquired Israeli Hi-Tech Firms

Seventy-six Israeli hi-tech firms were acquired by or merged with foreign firms in 2006 at a total value of $10.58 billion. That figure represents nearly one-third of the total $35.8 billion paid for Israeli hi-tech firms since 2000. In 2006, 20 Israeli companies raised $693 million through initial public offerings on US, European, Asian and Israeli stock exchanges. The most noteworthy Israeli M&A deal during 2006 was the acquisition of Mercury by Hewlett-Packard for $4.5 billion. Other significant deals included the acquisition of M-Systems by SanDisk for $1.55 billion and the acquisition of Lipman by VeriFone for $793 million.

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Award winning Bioethicist explains how cultural values shape Israeli medical care

“If you have a child, people stop you on the street to tell you your child is not dressed properly, may not look well fed,” said Vardit Ravitsky. The Israeli-born Ravitsky, a lecturer in the department of medical ethics and a fellow at the Center for Bioethics at the University of Pennsylvania in Philadelphia, spoke as part of the Reform temple’s nine-session fall kollel (study gathering) on biomedical ethics (see sidebar). “All individuals are autonomous in the United States; that defines how they live their lives,” said Ravitsky. “In Israel cultural values are communitarian. Israeli bioethics is shaped by this communitarian society. Israeli culture is a mixture — a soup of Jewish tradition, religious assumptions, and traditions growing out of secular Zionism,” said Ravitsky. “There is a higher degree of social solidarity.”

American Teachers & students turned on by hands-on science in Israel

On her first trip to Israel, Ridgewood resident Michelle Kortenaar learned how to turn a human ear into a radio speaker. And when she returned to New Jersey, she brought that skill, and many other novel science teaching strategies, back to her physics and biology classes at the Solomon Schechter Day School of Essex and Union in West Orange. She learned the unique approaches to hands-on science teaching at a summer institute for teachers sponsored by the Weizmann Institute of Science in Rehovot, Israel.

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Hi-G-Tek R&D to Remain in Israel

Hi-G-Tek, a leading developer and provider of radio frequency ID (RFID) solutions for high-value assets and sensitive materials, has assembled an executive team with decades of combined management experience and an impressive list of advanced technology expertise to its credit. R&D will continue in Israel under the leadership of Micha Auerbach, who is the one of the original founders. Auerbach started the company in 1989 in Israel to develop low-powered, advanced microelectronic products for biomedical and military applications. Among its early clients was the Israeli Defense Forces, for which Hi-G-Tek produced a system that provides theft and tamper protection for ammunition and weapons armories. Auerbach will serve as the main liaison between the corporate headquarters in Maryland and the company's R&D team, located in Israel. He holds 14 patents in countries around the world. Before Hi-G-Tek, he was an innovator in microelectronics and biomedical research, including hybrid development and applications, and telemetry for pacemakers.

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Continental Airlines to feature the Jewish State as a tourist destination

Israel has signed an agreement with Continental Airlines to feature the Jewish State as a tourist destination on the airline's in-flight entertainment. Under the deal, estimated to be valued at NIS 340,000, Continental flights will feature six-minute promotional videos which the Israel Ministry of Tourism projects would present Israel to some 2 million people. The clips will be screened on all Continental flights with in-flight entertainment including its international routes and some domestic flights in the US. The deal also allows the ministry to promote the screenings in the airline's three in-flight magazines and on its radio station. "This agreement will enable passengers, many who have had no exposure to Israel, to get to know the country as a tourist destination," Tourism Minister Isaac Herzog said.

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The Israel Business Update