Opinion
The secret to the success of Israel’s medical device industry
"Global medical device companies are actively scouting Israeli startups—many of which are founded by alumni of those same corporations—as they search for future growth engines," writes Eyal Lifschitz, Managing Partner at Peregrine Ventures.
Many people are unaware that Israel is one of the world’s leading powerhouses in medical devices. Israeli innovation in the medical device sector—across its many facets—is extremely significant, rivaling even that of the country's renowned cyber industry. Over the past three decades, it’s hard to find a major medical technology that entered commercial use without being invented and developed entirely in Israel or based on components designed by Israeli entrepreneurs. These technologies include, among others: imaging systems (CT, MRI), stents, pacemakers, defibrillators, insulin pumps, neurological devices, diagnostic equipment, digital health platforms, surgical robots, and many other products.
This longstanding and successful innovation has improved life expectancy and quality of life for tens of millions of patients worldwide—while also achieving impressive commercial success. Yet despite this, Israel’s medical device industry receives relatively little public attention compared to other high-tech sectors. One reason is that most medical device technologies operate in a business-to-business (B2B) environment—from development through acquisition by global corporations—so the public rarely encounters them. Many of the medical technologies used daily are based on Israeli innovation but are marketed under the names of international medical conglomerates. Additionally, the success of these technologies is measured not only in commercial terms but also by their clinical impact, patient benefit, and cost savings for healthcare systems. This is true even though the commercial achievements—particularly in the U.S. market—are enormous.
One key driver of success in this field is the deep familiarity of Israeli entrepreneurs and executives with the U.S. healthcare market—the largest and most advanced in the world. Due to the technological complexity of medical devices, many startup executives relocate to the U.S. following successful exits in order to promote their products within global companies. These include founders, manufacturing managers, quality assurance leaders, marketing and sales executives, and more. Their time in the U.S. gives them valuable exposure to the internal processes, standards, and operations of medical device giants.
Often, after spending several years working for the acquiring company, these Israeli executives return home and start anew: they establish new startups, raise capital, and develop fresh technologies—quickly drawing interest from global corporations on the hunt for the “next big thing.” Today, Israel is home to hundreds of entrepreneurs and executives who have made this round trip—from Israel to the U.S. and back—and have gone on to launch dozens of new companies in the field.
At the same time, global medical device companies like Medtronic, Edwards, Johnson & Johnson, and others have recognized the quality of Israeli human capital and have established R&D centers in Israel to develop the next generation of medical technologies. These centers, operating according to the strict standards of their parent companies, have trained another generation of Israeli professionals—many of whom later become independent entrepreneurs themselves.
These hundreds of individuals—entrepreneurs, engineers, product managers, and regulatory experts—are a national asset. They combine the hallmarks of Israeli high-tech—rapid development, operational flexibility, efficiency, and resourcefulness—with the rigorous standards of the American industry, deep understanding of U.S. healthcare regulations, complex corporate processes, and intimate knowledge of the American healthcare market. In contrast, Europe today is where Israel was two decades ago: while there is some interesting innovation, it largely lacks the corporate understanding of the U.S. market that is crucial for success.
Global medical device companies are actively scouting Israeli startups—many of which are founded by alumni of those same corporations—as they search for future growth engines. These corporations typically show little interest in “me too” products and instead seek entirely new categories capable of generating billions of dollars. They understand that Israeli management teams know how to develop products efficiently and cost-effectively while maintaining the highest standards.
For example, an Israeli startup in the heart valve space will know from day one which materials are approved by the FDA for use in such products—and which are not—and will avoid wasting time on non-compliant development.
This high level of trust in Israeli management teams leads global corporations to invest directly in Israeli startups—even at very early stages (Seed and Series A)—with the goal of securing early access to breakthrough technologies. And the numbers speak for themselves: according to a 2024 report by PwC and IATI, 70 new life sciences startups were founded in Israel last year, 27 of them in the medical device sector. Despite a challenging year and ongoing security concerns, total exits and IPOs in the field reached $1.4 billion—most of them in medical devices—with notable acquisitions including SoniView, CartiHeal, Endostream, and many others. Moreover, 92% of the new companies were registered and are operating in Israel.
Human capital is the unique resource that helped build Israel’s high-tech industry into a global leader. But when combined with American corporate standards, as it is in the medical device sector, its value is multiplied—and it becomes a powerful engine of growth for the entire Israeli tech ecosystem.
Eyal Lifschitz is Managing Partner at Peregrine Ventures, a venture capital firm specializing in investments in startups and growth-stage companies in the life sciences sector.
