Israel's life sciences industry sees slowdown of capital being raised
'We are working to improve tax and regulatory policy to enable commercial certainty and a favorable environment' says Israeli industry leader Karin Rubinstein
The umbrella organization for Israeli high-tech and life sciences Israel Advanced Technology Industries (IATI) published a report on capital raised by local life sciences companies for the first six months of 2023.
The report indicated a decrease in activity experienced by the life sciences sector during the first half of the year. Although the cumulative number of Israeli companies remains stable compared to 2022, the period was characterized by a regression in capital raisings and the number of transactions.
A total of around $1.4 billion was raised in 83 transactions, representing a 40 percent decrease compared to the first six months of 2022 and less than 50 percent of the total funds raised in 2022. The report also showed that average financing per transaction increased by 15 percent compared to the first six months of 2022, reaching a record $17.2 million.
According to Karin Mayer Rubinstein, CEO & President of IATI: "Our main mission is to promote business stability of the tech Industry and the increasing investments both from Israel and from the world. We work to improve the taxation and regulatory policy to enable business certainty enabling environment for the venture capital and Investment funds, institutional investors, and private investors. The last year had a great impact on the investors, entrepreneurs, and employees in the entire high-tech industry and including the Israeli life sciences industry, which is extremely important to the continued development of the Israeli economy and society. The industry entered a global economic slowdown in the second half of the year 2022, which also continued into the year of 2023. We will do everything in our power to ensure that this invaluable industry in Israel grows."
In addition to the global outlook, a decrease in local investment in Israeli life science companies was recorded compared with the first six months of 2022, down to $240 million, with their percentage of total investment falling to 25 percent, reflecting a changing trend compared with previous years.
The U.S. stock markets were and remain an important source of financing for life science companies in Israel.
Despite the general trend, in the first six months of 2023, Israeli life science companies raised around $500 million on the U.S. stock markets, mainly on the NASDAQ. This amount is more than 400 percent higher than the amount raised during the corresponding period in 2022, and more than 150 percent higher than the amount raised on the American stock markets alone.
"The first half of 2023 continued the trend we observed in 2022 and especially at the end of it. In Israel's life sciences companies, the trend is not significantly different from the global trend and has been influenced by both global and local factors,” Head of Pharmaceuticals and Life Sciences at PwC Israel, Omer Gavish.
“What's more, the increase in activity on the US stock exchanges is not having an impact on Israeli companies," Gavish, who also led the aforementioned report, concluded.