Panel
Israel as a Global Health Innovation Beta Site
Milken InstituteYulia Eitan, Chaim Bitterman, Gary Jacobs, Roger Stein, Yaron Nordorfer, Harlan Weissman, Glenn
- Healthcare systems face a fundamental paradigm shift toward operating models designed to accelerate innovation, reduce costs, and improve global equality, driven by the recognition that escalating funding trends are becoming unsustainable and require bending the cost curve.
- Strategic plans include the establishment of large-scale, unidentified data banks by 2015, initially supported by agreements with the Weizmann Institute and other universities, to facilitate efficient care delivery, measure interventions, and provide historical depth exceeding 20 years.
- New financing architectures, such as portfolio-based models and social impact bonds, aim to address the high risks and low success rates (approximately 5% for oncology) of biomedical research by aggregating assets to offer stable, uncorrelated returns attractive to institutional fixed-income investors rather than traditional venture capital.
- Government involvement is proposed as a critical enabler to mitigate early-stage risks through first-loss positions, create funding streams for the post-incubation "valley of death," and select specific high-impact areas like Alzheimer's or diabetes to serve as beta sites for market validation.
- Specific initiatives include a new enterprise planned for 2015 to offer data access to hundreds of entrepreneurs, a major policy program launching within three months involving universities and health providers, and an expansion of models to include the Israeli Arab sector with government co-investment and royalty-based repayment structures.
- While venture capital returns for biomedical research have averaged between negative 1% and 1% over the last decade due to the billion-dollar cost and 10-11 year timeline required to develop a single cancer drug, the proposed shift toward specialized funds and government guarantees seeks to make these investments more viable and profitable.
- The outlook suggests Israel possesses a unique opportunity to lead globally in healthcare innovation financing and clinical trials, leveraging its young arena status and robust infrastructure to foster a sustainable ecosystem where education evolves to create technology providers and market feedback loops accelerate the adoption of effective technologies.