Israeli Life Sciences Industry Faces Stagnation in 2025 Despite Global Growth

The Israeli Advanced Industries Association (IATI) annual report on the life sciences sector reveals stagnation in Israel for 2025, contrasting with a global boom in the field. While the 2024 report showed recovery and optimism, 2025 saw a relative standstill with only sporadic positive signs in certain areas. Globally, the biomedical sector is flourishing in 2026, but it remains uncertain if Israel's industry will follow suit.

The report, prepared by IATI and the Innovation Authority in collaboration with PwC Israel, will be presented at the MIXiii Health-Tech conference. It shows a decline in investments in Israeli life sciences from $2 billion in 2024 to $1.4 billion in 2025, even lower than the $1.7 billion invested in 2023. The main drop occurred in medical devices, which had grown in 2024. Adjusting for fluctuations in this sector, overall investment levels have been stable since 2023 but remain far below the peak during the COVID-19 pandemic years when Israel attracted significant global health investment.

The average company valuation and deal sizes also fell in 2025, with average fundraising rounds around $10 million overall and $6 million in medical devices, indicating many companies are raising smaller amounts to survive ongoing challenges. Nevertheless, some notable fundraisings occurred, including Syremis Therapeutics with $165 million, Empathy with $72 million, and Elaos with $60 million, all in mental health and therapeutics.

Public market activity was weak in 2025, with only $116 million raised compared to $637 million in 2024, mostly on Nasdaq, and no new life sciences IPOs on the Tel Aviv Stock Exchange. Mergers and acquisitions remained stable, with $1.3 billion in sales, slightly down from $1.4 billion in 2024 but significantly boosted by the $2.4 billion sale of 89bio. Export levels stayed steady, with medical device exports around $3-3.5 billion and pharmaceuticals slightly down to $1.7 billion.

The sector employs about 81,000 people, with 67 new companies founded in 2025, mostly in digital health and medical devices, bringing the total active biomedical companies to 1,800. This is below the COVID-19 peak years when over 100 new companies were established annually. Geographically, Tel Aviv leads with 310 companies, followed by Rehovot and Jerusalem.

Early signs for 2026 show some optimism with a major $150 million fundraising by AI medical imaging firm AIDoc and several significant acquisitions, such as Cathworks by Medtronic for $585 million. However, the Israeli market has yet to match the enthusiasm seen internationally. IATI CEO Karin Meir Rubinstein highlighted the ongoing challenges amid global market shifts and interest rate changes affecting the startup ecosystem.

Summary: The Israeli life sciences industry experienced stagnation in 2025 with decreased investments and fundraising, contrasting with global growth. Despite some large deals and stable exports, the sector has not yet recovered to its COVID-era peak, though early 2026 shows cautious optimism.

Points: - Israeli life sciences investments fell from $2B in 2024 to $1.4B in 2025, below 2023 levels. - Medical device sector saw the largest investment drop after growth in 2024. - Average fundraising rounds shrank to $10M overall and $6M in medical devices. - Public market fundraising in Israel dropped sharply to $116M in 2025, mostly on Nasdaq. - Mergers and acquisitions remained stable, boosted by 89bio’s $2.4B sale. - The sector employs 81,000 people with 67 new companies founded in 2025, mainly in digital health. - Early 2026 shows some large fundraisings and acquisitions but less enthusiasm than global markets.

Topic: economy

Entities: {"people":["Karin Meir Rubinstein","Dror Bein"],"organizations":["IATI","Innovation Authority","PwC Israel","Syremis Therapeutics","Empathy","Elaos","AIDoc","Medtronic","Cathworks","Endospan","Artivion","Olympus","89bio"],"places":["Israel","Tel Aviv","Rehovot","Jerusalem","Haifa","Herzliya-Raanana"]}