Israel's Ministry of Industry, Trade and Labour is considering introducing a number of measures designed to encourage multinational drug firms to establish R&D centres in the country. Currently, no international drug or biotech company has research facilities in Israel.

This is primarily due to Israel's poor patent laws and data protection provisions, which means that commercially valuable information contained in regulatory submissions is vulnerable. New legislation introduced in March 2005 failed to adequately address this issue, according to research-based drugmakers in the country. With around 90% of Israel's stock exchange comprising generics producers, this situation is unlikely to be rectified in the near future.

However, the government is hoping to overcome some of these obstacles by offering a generous package of grants and tax breaks. They are particularly focusing on biotechnology, with funding for such projects 50% higher than for non-biotech projects. It is hoped that the entry of foreign biotech firms will help raise the level of local drug development and technology.