ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the February 2007 issue


High-Tech thrives as politics boil

A short three months ago we wrote "that a state commission of inquiry, to determine the responsibility of the poor performance of the Israel Defense Forces, and the management of the war by the government has not been put into place, as yet. Bickering among the top echelons of the army is prevalent and getting considerable exposure in the local media".

Investigators are questioning the Prime Minister's purchase and sale of real estate. Moreover the president, whose role is mainly ceremonial, is facing criminal charges related to sexual harassment. The former Minister of Justice is facing criminal charges related to charges of rape and another Member of Knesset is facing charges for improper political appointments".

Since then the Winograd Committee has been put into place and is expected to announce its findings next month. There are calls for the findings to be made public. Ahead of its publication the Chief of Staff Dan Halutz has resigned, yet leaks from the interrogations by the Winograd Committee indicate that Halutz has put most of the blame on the Prime Minister and the Defense Minister.

The trial of the Minister of Justice is coming to an end and its findings will be made public.

A few days ago, in a public speech Israeli President Moshe Katsav asked parliament to relieve him temporarily of his duties to fight a rape charge, President Katsav stated that if Attorney General Mazuz decides to indict him, he would step down. While Israelis bemoan the current state of affairs and level charges of corruption at its ministers and legislators it should be pointed out that the wheels of justice are grinding and efforts are being made to redress the wrongs. Economies, if they are to function effectively, require political stability. The current political rumblings would be expected to have a negative effect on Israel's economy. Many countries have seen economies crash while their political echelons tottered. Israel appears to be the exception, especially in light of the experience of a war whose aims were not realized.

Having lived through the aftermath of the Yom Kippur War in 1973 we felt confident that the troubled house of Israel would be put in order.

Yet throughout this traumatic period, Israel's economy continues to boom. Expectations are that in 2007 the economy will grow by a robust 5%. $1.6 billion of venture capital money was injected into the Israeli high tech sector. Twenty companies succeeded in initial public offerings. The number of merger and acquisition deals has set a new record. Israel's high tech universe appears to have a life of its own and is undeterred by political turmoil. By late spring we should see all inquiries to be concluded and undoubtedly changes will be made at the highest echelons of Government. ÊHowever, we continue to be confident that Israel's economy spearheaded by its high-tech will continue to thrive. The demand for personnel is strong and there is no indication that the flow of investment capital will cease.

Laboratory equipment maker BioView Ltd. (TASE:BIOV) announced that it had received US Food and Drug Administration (FDA) approval to market its "Duet" automated scanning imaging workstation in the US for a further indication on top of those that have already been approved. The automated system will now also be used to detect the Her2/neu gene, which is expressed in abnormally high levels among some breast cancer patients.

Studies have shown that metastatic breast cancer, in which the Her2/neu gene has a substantial presence, is an exceptionally aggressive form of cancer but also one, which will respond to treatment with Herceptin. A cancer in which this gene is not overtly expressed will not respond to this drug. Testing is therefore of key importance in the process of treating breast cancer patients, and the company says its new procedure will enable her2/neu levels to be measured more accurately, and it will also serve as a complementary procedure to the manual testing methods that laboratories currently use.



Reprinted from the Israel High-Tech & Investment Report February 2007

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