Israeli biotech field blossoming but held back by slow approval process, experts say

JERUSALEM—While Israel is fast becoming a leader in the biomedical and biotechnology fields, industry experts say the Israeli Health Ministry may be unduly hindering its growth.

Famously called a “start-up nation,” a nickname coined by Dan Senor and Saul Singer in their 2009 book about the Jewish state’s economic miracle, today Israel proudly parades that title, proving to be a fertile ground for thousands of tech start-ups. But Steve Rhodes, CEO and chairman of the Trendlines Group, a company that helps young Israeli companies developing medical devices, biotech and pharmaceutical products get off the ground, says the book overlooked certain industries. In the last 15-20 years, thousands of biotech and meditech companies have opened in Israel, and the country ranks fourth in the world for patents filed on medical devices, he says.

But all too often, says Rhodes, the Israeli Health Ministry takes an inordinate amount of time to approve companies for clinical trials. As a result, many companies travel to Eastern Europe or elsewhere to conduct this testing, losing Israel untold dollars.

“The system here is overly cautious,” Rhodes says in an interview with JNS.org. “I’m in favor of being careful, but when the FDA and the Europeans give approval faster than we do here, it really means there’s something not right in the process here. It’s a lost opportunity for Israel in many respects.”

While the Health Ministry says it takes an average of six months to approve a medical device for clinical trials, Rhodes and others say it takes much longer.

“I’ve seen devices where it took almost a year to get approval, where the only real risk to the patient would have been if it had fallen off the table and hit them in the foot,” he says.

According to Dr. Mitko Shoshev, the head of Bulgarian Operations for Global Clinical Trials, it can take 60-90 days to get approval on drug treatment clinical trials in Eastern Europe, depending on the country. In 2009, he says, Russia approved 577 trials, Ukraine 340, and Poland 498. In Israel, both the medical institute’s Helsinki Committee (the Israeli name for an institutional review board) and the Health Ministry must give approval for a trial. Drug and medical device companies invested NIS 367 million in Israeli hospitals for clinical trials in 2012, an increase of 17 percent from 2011, according to a 2012 Health Ministry report.

In 2007, just over 300 FDA-regulated clinical trials were conducted in the U.S., and fewer than 100 were held in the Middle East, according to a 2010 study by the Tufts University Center for the Study of Drug Development.

Rhodes attributes Israel’s approval pace to a fear of risk-taking, one which he says also costs Israeli hospitals business from companies abroad who would come to Israel for their trials if it were more feasible.

“Everyone is so afraid of liability and of taking risk and of accepting responsibility that the process takes a long time,” Rhodes says.

“At a time when the health system needs financial help, the ability to perform clinical trials could bring in a lot of revenue for our health system. There are a lot of US companies that go to the U.S. to do clinical trials, and I’m sure they would prefer to come to Israel [for the quality of the hospitals].”

Depending on the country in which the trial is conducted, the type of trial, the nature of the device, the number of patients, the follow-up time and other factors, the cost will vary. Eran Feldhay, the CEO of Misgav Venture Accelerator, estimates that costs of $3,000-$15,000 per patient will cover most trials, but says costs can be below or above that range in some cases.

How much it costs

Rhodes even suggests Israel could become a world center for clinical trials, which would bring in foreign capital, forge ties with those companies, and strengthen local hospitals.

A Health Ministry spokeswoman counters that the approval process is reasonably cautious and always depends on the product. Whether it’s for a drug, vaccine or device, the length of approval time varies, the spokeswoman tells JNS.org.

Trendlines operates some 60 companies, half of which are medical device companies and the other half agro-tech and clean tech, with “a smattering” of other technological fields, and starts about eight companies in Israel each year, according to Rhodes. Trendlines only invests in Israel, housing the young companies in its Gush Etzion or Misgav facilities.

Rhodes says his companies would prefer to stay local to conduct clinical trials, a necessity before receiving market approvals, because it’s costly and inconvenient to go abroad.

“It’s much better to do the clinical trials in your backyard so you don’t have to be traveling and spending money on hotels,” says Rhodes, who made aliyah from Chicago in 1985. If a problem arises, it’s much easier to fix it if you’re nearby, he says.

Andrew Schiffmiller, the CEO of BioHug Technologies, says he has found Israel’s Office of the Chief Scientist in the Economy and Trade Ministry to be encouraging of innovation, and Israel’s culture of informality to allow access to people and organizations that would not be possible in other countries. But he agrees with Rhodes that approval for clinical trials takes a longer time than he expected.

BioHug, which launched in 2007, has just begun selling its stress management vest targeting individuals on the Autism Spectrum Disorders, or people simply dealing with extra anxiety. The calming device worn over clothing gives the wearer comforting squeezes to reduce stress, and can either run on manual mode or automatic depending on the individual’s needs.

BioHug received approval from the Israeli Health Ministry for clinical trials after nearly 10 months of waiting. Today it is selling in Israel and the United Kingdom directly through the company, but is waiting to be granted several patents and for FDA approval.

“Oh boy,” Schiffmiller tells JNS.org, in response to a question on how long the approval process took for the BioHug. “In our experience it took a very long time.”

Schiffmiller explains that even before the ministry gave its approval, BioHug also had to receive approval from the hospital in Nazareth where the trials were conducted. “We thought it would take less time because it wasn’t invasive. It wasn’t something you implant surgically or something that restrains you,” he says.

On the other hand, IonMed, which is readying to launch its plasma-welding device for closing post-operative incisions in the next several months, conducted several successful clinical trials in Armenia, says Ronen Lam, co-founder and vice president of business development for the company. The regulatory process was much faster there, he says, than in his native Israel.

“Here in Israel when you apply to get an approval it can take you between six months to one year. In Armenia, maybe one month is enough,” Lam tells JNS.org.

Lam and his brother Amnon, a co-founder and CEO of IonMed, aim to obtain their CE mark (mandatory for products sold in the European Economic Area) in the next few months and start the regulation process with the FDA by 2014. But they would prefer to stay in Israel for the clinical trials.

“We are going and spending millions of dollars outside of Israel and this is just because of bureaucracy and nothing else,” Ronen Lam says. “I believe that most of the Israeli start ups would prefer to do them in Israel.”

Ronen Lam says IonMed will be the only company on the medical market offering a product that uses cold plasma technology for wound closure, a procedure with improved aesthetic results compared to staples and stitching, which also reduces the risk of infection. 

Dr. Michal Ben-Attar, the CEO of SciGen Israel, which produces the only third-generation vaccine for Hepatitis B, says the biotech field is blossoming in Israel, but that many young companies looking to undergo clinical studies need more support in producing their materials.

“In Israel there are about 100,000 companies in a bit more advanced phase that need support for the clinical phase,” Ben-Attar tells JNS.org. SciGen built a facility to house five to six companies and provide them with support.

Ben-Attar says she wants to help those companies “reach a better place in Israel and not have to go outside.”

SciGen conducted clinical trials in Israel, Singapore, Thailand, Poland, Hong-Kong and Vietnam on neonate, adults, healthy non-responders and the immune suppressed population, according to Ben-Attar. “From the end of research and development stage it took about seven years for getting the approval from the Ministry of Health in Israel,” she says.