For nearly a decade, analysts and experts in the Israeli bio-pharma industry have reported a steady decline in the number of new drugs approved for use by the US Food and Drug Administration (FDA). This is the result of many factors, including the long time required for complicated testing, verification, and approvals, the massive amount of funding needed to sustain these long-term
development efforts, and new and evolving insights into illnesses and cures.
As a result, today, many young companies remain in the start-up and research and development stages characterize the industry. About 70% of are not yet in revenues and growth. Despite the maturing of the industry in recent years, it is still characterized by companies that do not reach production and sales stages. While this is common around the world, it is particularly pronounced
in Israel. Most of the scientific innovations that are discovered in Israeli universities and research centers are developed and finally manufactured outside of Israel, and the foreign companies that acquire them are the ones to earn the huge profits from the sales of the drug. The reasons for the slow development of the Israeli bio-pharma industry and the few successes in this field is a lack of supply of financing that is currently insufficient in scope and quality.
This study attempts to examine the accepted argument and to examine additional market failures in the industry by analyzing data that reflects the state of industry today and its development in recent years. The study will propose an innovative financing model that will help to solve the identified market failures and that will help move the industry forward.