Israel – a R&D and manufacturing powerhouse

While global economic slowdown and insecurity have reduced consumption, export and growth throughout the world:

1. Microsoft acquired Israel’s cyber security startup, Adallom, for $320mn. Adallom exposed the break into the security server of Microsoft Office365. In recent months, Microsoft also acquired Israel’s cyber security company, Aorato, for $200mn, Equivio for $200mn and N-trig for a few scores of millions of dollars. In 2009, Microsoft acquired Israel’s 3DV Systems for $35mn (Globes, July 20, 2015).

2. The Framingham, MA-based Heartware acquired Israel’s Valtech Cardio for $360mn, which could surge to $860mn, provided that milestones are met (Globes, September 3).

3. Medtronic, the Dublin and Minneapolis-based world’s largest stand-alone medical technology development company, is launching – along with IBM and Israel’s Office of the Chief Scientist – a digital medicine incubator in Israel. In April, Medtronics invested $2mn in Israel’s DreaMed Diabetes (http://www.fiercemedicaldevices.com/, September 15).

4. According to Frans van Houten, the Chairman and CEO of the global Dutch giant, Phillips: “Israel has a major record of achievement in innovation, which Phillips is a partner to through our extensive R&D investments in Israel.” Van Houten inaugurated a joint incubator, in Israel, with Israel’s TEVA Pharmaceutical Industries – a $25mn investment by each company. The joint incubator, Sanara Ventures, will be the home of digital health, monitoring and imaging early-stage startups. In addition, Phillips operates a research & development center, in Israel, which employs 850 people. Phillips is also manufacturing special elements for its imaging systems in Israel. During the last three years, Phillips experienced a 60% expansion of its Israeli operation (Globes, September 11).

5. In 2014, Israel sold $6bn cyber-wares – 10% of global sales – compared with than $5.7bn in arms sales. The number of Israeli cyber-security companies has doubled over the past five years to 300. Eight of them were sold to foreign investors for a total of $700mn. Israel’s CyberArk is traded on NASDAQ at a $2bn valuation (The London Economist, August 1).

6. Switzerland is acquiring, from Israel’s Elbit Systems, six “Hermes 900” medium-size unmanned aerial vehicles for $250mn (Israel Hayom, September 8). India is purchasing 10 missile-armed Israeli drones, the Heron TP, for $400mn. It will significantly advance India’s cross-border military strikes capability against Islamic terrorist bases. Previously, India purchased Israel’s Harpy unmanned aerial vehicles, which are self-destructing systems, aimed at enemy radar and missile positions (India Economic Times, September 11). Russia acquired 10 Israeli intelligence-gathering drones, the Forpost. In 2011, Israel delivered to Russia 12 drones at a cost of $400mn (Jerusalem Post, September 8, 2015). Oshkosh Corporation won a $6.75bn contract to build 17,000 new light trucks to replace aging Humvees for the US Army and Marine Corps. Israel’s Plasan, one of Oshkosh’s subcontractors, is expected to get $1bn of the transaction. Plasan develops, manufactures and assembles custom-built vehicle armor systems for lightweight military vehicles, protecting most US military vehicles, including in Iraq and Afghanistan (Yedioth Achronot, August 27).

7. China’s Hebang acquired Israel’s Stockton, a world leader in the development and manufacturing of bio-pesticides, for $90mn (Start Up Israel, July 10).

8. The CEO of Turkey’s natural gas company, Turkiye Petrolleri: Importing natural gas from Israel – which is cheaper than the natural gas in Iran, Russia and Azerbaijan – would be a win-win transaction. Irrespective of the deterioration of Turkey-Israel diplomatic ties, their trade balance has grown (Globes, August 12).

9. Japan’s Samsung Ventures co-led an $18mn round of private placement by Israel’s StoreDot (Globes, August 20). Minneapolis-based Norwest Venture Partners and London-based 83North (formerly Greylock Partners) co-led a $14mn round by Israel’s Elostrata (Globes, August 27). Israel’s Intec Pharma raised $27mn on NASDAQ (Globes, August 5). Johnson & Johnson, Adams Street Partners and China’s Sino Biopharmaceutical participated in a $27mn round by Israel’s LifeBond (Globes, August 6).

Straight from the Jerusalem Boardroom #248
https://bit.ly/3u29k9g

Foreign investment in Israel’s high-tech companies surged to new heights in the 1^st quarter of 2021 – $5.7bn in 172 deals – which is up 89% over the impressive 4^th quarter of 2020 and double the volume of the 1^st quarter of 2020.

2020 was the first year of surpassing $10bn in capital raised by the Israeli high-tech sector from investors in the US, Asia and Europe, who trust the maturity of Israel’s brain power. Investments in Israeli companies more than tripled in six years, reflecting the effective response by Israeli startups to the technological, medical, pharmaceutical, educational, social and digital challenges posed by Covid-19.

Israel’s economic performance in defiance of Covid-19 is presented by Dr. Adam Reuter, the Chairman and Founder of “Financial Immunities,” Israel’s largest financial-risk management firm, and the co-author of Israel – Island of Success:

Israel has led the globe in the rapid administration of Covid-19 vaccinations due to effective negotiations with Pfizer and an efficient, country-wide medical infrastructure.
Israel is the second lowest among OECD countries in the number of Covid-19 deaths per number of Covid-19 cases: 0.7% compared to the 2.3% OECD average. Israel features a young population (median age of 30 compared to the OECD’s 42) and an effective country-wide medical infrastructure, including top level HMOs and hospitals.
Israel is ranked 12^th from the bottom among the 37 OECD countries in the number of deaths per million inhabitants: 645 compared to 1,145 OECD average.
The International Monetary Fund’s 2025 GDP growth forecast for OECD countries: Israel – 4%, OECD average – 2.2%, US – 1.8%, Australia – 2.5%, Ireland – 2.6%, France and Canada – 1.7%, the UK – 1.6%, Germany – 1.2%, etc.
Israel’s 2020 GDP was reduced by 2.5%, compared to the OECD average reduction of 4.1%, South Korea – 1%, Norway – 0.8%, Australia – 2.6%, US – 3.5%, Japan – 4.8%, Germany – 5%, France – 8%, the UK – 10% reduction, etc. GDP growth was recorded in New Zealand – 2.4% and Ireland – 3.5%.
In 2020, Israel was ranked 20^th among the 37 members of the OECD in terms of GDP per capita, featuring $43,000 (GDP – $408bn), ahead of Japan, Italy and Spain, and very close behind the UK ($44,000) and France ($45,000).
Israel’s debt-to-GDP ratio increased from 60% in 2019 to 72% in 2020, compared to the OECD’s average increase from 66% to 82%. The 2020’s debt-to-GDP ratio was 266% in Japan, Italy – 161%, the US – 131%, Germany – 73%, etc.
Israel’s foreign exchange reserves-to-GDP ratio of 41% (3^rd among the OECD countries) attests to its financial stability, and Israel’s capability to raise foreign credit promptly in a cost-effective manner. Israel’s foreign exchange reserves in March 2021 – $186bn.
During the past decade, Standard and Poor (S&P) accorded Israel a positive credit rating trend, unlike the negative trend for the G-7 countries. In 2020, notwithstanding Covid-19, Israel’s credit rating (S&P) remained at AA.
Some 380 global high-tech giants operate in Israel, including Microsoft, Amazon, IBM, Intel, Cisco, Apple, Verizon, Applied Materials, Dell, HP, Kodak, Oracle, Philips, SAP, Medtronics, GM, eBay, GE, etc. Israel leads the world in the ratio of research and development investment to GDP: 4.9%. 85% of this investment comes from the business sector.

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