Merck and Pfizer are investing in Israel's medical expertise. The trend raises questions about Israel's future development in knowledge intensive fields.
Pharmaceutical giants Merck and Pfizer are investing for the first time in Israel in order to exploit Israel's unique human capital and skilled medical work force.
Israel's human capital is its comparative advantage. The proportion of academics in the Israeli work force is the highest in the world.
Many of these academics are concentrated in low productivity fields. The drug discovery that Merck and Pfizer intend to pursue in Israel is an upgrade on the domestic generic manufacturing industry.
Integrating Israelis with relevant human capital into similar but higher productivity fields extends Israel's product space and is an engine of growth.
Israel to date has specialized globally in high-tech, defense, water, and medical devices.
The introduction of Big Pharma raises the following questions:
B. Hayoun, The Marker (in Hebrew), 11/21/2007.
O. Coren, Haaretz, 11/20/2007.