Bloomberg Businessweek

 TECHNOLOGY

an artiicial intelligence company working in bio-
logic drug development. “It turned out that my ini-
tial concerns were misplaced.”
As the world’s largest manufacturer of generic
drugs and Israel’s sole Big Pharma outit, Teva has
provided thousands of Israelis with skills needed
by the industry. But the drug sector hasn’t had the
same efect as tech giants such as Intel Corp. and
Check Point Software Technologies Ltd.—or the
Israeli military—which have spawned thousands
of smaller companies that have supercharged the
country’s growth. Less than 1 percent of Israel’s
labor force works for pharmaceutical companies,
vs. about 5 percent in technology.
But the draw of the $2 trillion global health-
care market is proving hard for tech veterans to
ignore. While they used to focus on areas such
as cybersecurity and autonomous vehicles,
now they’re flocking to medtech companies.
Investment in Israeli pharma and digital health
startups grew more than 50 percent in the last two
years, to $425 million, according to Start-Up Nation
Central, a nonproit that promotes the country’s
tech sector. “Tech people are looking to connect
with health people,” says Yair Schindel, head of
health-care venture capital fund AMoon Partners.
“When they meet up with folks that have 10, 15, 20
years of Big Pharma experience with Teva, it’s a
serious match.”
Teva has long been Israel’s biggest company
by revenue and market value. While it pros-
pered on sales of knockof drugs, it only recently
started focusing on its own branded medica-
tions, a business that more closely mirrors the
innovation and risk-taking common in startups
than the commoditized world of generics. Then
in December, with falling proits and debt that
exceeds the company’s value, Teva said it would
cut a quarter of its global workforce of 56,000,
including roughly 2,000 jobs in Israel.
The drugmaker’s woes echo the 1987 shutdown
of the Lavi project, an unwieldy state-sponsored
attempt to build ighter jets. The program’s demise
left thousands of engineers and scientists without
jobs. But its failure is widely seen as having been
a catalyst for the country’s tech industry, which
accounted for almost half of Israel’s $101 billion
in exports last year and employs about 200,000
people. Pharmaceutical exports, by contrast, were
just $7.5 billion last year, and Teva accounted for
well over half of that.
Like many advanced economies, Israel these
days is awash in private cash, much of which has
been plowed into medical tech startups. Executives
at those companies are using the money to hire

○ Many laid-of Teva

veterans remained

drawn to the

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global health-care

market

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