Other healthcare access considerations include pharmacovigilance (PV) and inclusion in the “health basket.” The need for improved PV in Israel has been underscored in recent years by several high-profile cases in which pharmaceutical products have reached Israeli consumers with adverse side effects caused by formulation changes. In response to these developments, a branch of the International Society of Pharmacovigilance (ISoP) is being founded in Israel with the goal of increasing awareness about PV throughout the region. Furthermore, the Israeli Ministry of Health recently mandated that all prescription products must have multilingual labels in Hebrew, English, Arabic, and Russian.
Historically, the high price of drugs has not been part of the public debate in Israel, and the government has rarely used price controls as is the case in other countries. However, recent economic stress in the form of rising military and defense costs coupled with a slowdown in the global economy has led the government to search for budgets to cut and taxes to raise. As such, the Israeli Ministry of Health is now placing new and existing products under greater scrutiny to limit spending. For instance, only 77 new medications and medical devices were added to the basket of reimbursed products in 2012. This number was significantly lower than the approximate 200 new drugs and technologies that were included in each of the previous two years (8). Inclusion of drugs and technologies in the National Health Basket is crucial for organizations seeking marketing success in Israel. Here, manufacturers will require data on clinical, epidemiological, and economic characteristics, including its predicted impact on the available budget.
Successful market entry and in-region partnering
Israel is home to one of the world’s largest generic-drug makers, Teva Pharmaceuticals, yet despite its presence, the Israeli pharmaceutical market remains in favor of patented medicines. In 2010, it was reported that patented drugs accounted for more than 50% of all pharmaceutical sales in the country and approximately 70% of the prescription drug market (9). Moreover, according to Benny Zeevi, co-chairman of the Israel Advanced Technology Industries (IATI), Israel’s flourishing biotechnology industry is transitioning from a period of incubation to one of maturity. The number of biotech companies has nearly tripled since 2003, and the number of registered clinical trials is continuing to rise (10).
The government recently established a new biotech incubator that joins more than 20 other incubators or accelerators to help attract large, international pharmaceutical companies to Israel. Although some large pharmaceutical companies may be turned off by Israel’s moderate population size or by the perception of a volatile political environment, other large global organizations recognize the market opportunities that exist in this country. In 2009, Pfizer partnered with Protalix Biotherapeutics and together developed the first approved plant-based biologic for treating type 1 Gaucher’s disease (11). In 2011, Merck KGaA’s subsidiary Merck Serono invested US$13 million in a new drug development incubator with the goal of having at least six startups working on new medications or technologies by 2018.
Israel’s dynamic venture capital market has delivered a stream of substantial investments in R&D. With increasing awareness of chronic diseases and a highly skilled workforce, Israel’s pharmaceutical and diagnostic markets are expected to grow even stronger. Taken together, Israel seems like a great place to turn to for future investment opportunities.
Moving forward in Israel
Israel has a long history of biotechnology innovation and growth and with an educated and diverse population, high-quality healthcare system, and resilience to global financial stress it remains a strong partner for R&D, clinical research and market growth. Additionally, Israel is a popular destination for medical tourism. As of 2010, up to 30,000 foreigners come to Israel every year for treatment, mostly from Russia (12). Israel, like the US, is also a frequent “first adopter” of new technology and medical innovation. Manufacturers, however, need to be aware that the Israeli government’s fiscal austerity and sick funds traditionally have kept the most expensive branded drugs and treatments unavailable. Cheaper generics and low physician and healthcare provider salaries have been used to control overall costs.
References
1. “Israel ranks 4th globally in health care efficiency,” Times of Israel (August 2013).
2. OECD Health Data (2013).
3. OECD Reviews of Health Care Quality: Israel (2012).
4. The World Bank, Research and development expenditure (% of GDP) (2013).
5. M. Scudellari, The Scientist (July 2013).
6. Meidata, Israel Medical Devices Industry-Market Overview 2012.
7. Global Data, Research and Markets: Healthcare, Regulatory and Reimbursement Landscape--Israel (2012).
8. Scripp Business Insights, The Pharmaceutical Market in Israel (2012).
9. Industry Trend Analysis, Investment In Innovation Necessary (2010).
10. N. Elis, The Jerusalem Post (April 25, 2013).
11. J. Fox, Nature Biotechnology (June 2012).
12. “Health Ministry to probe Israel medical tourism industry following Haaretz exposé,” haaretz.com (November 2010).
—Jill E. Sackman, D.V.M., PhD, is a senior consultant and Michael Kuchenreuther, PhD, is a research analyst, both at Numerof & Associates, Inc.