88 THE US-ISRAEL | Legal Review 2025/26 The most effective structures achieve two objectives simultaneously: protecting the investor on entry, while preserving the ability to move decisively once the opportunity is validated. Choosing the right entry lane. Most US entrants tend to use one of four principal structures: (i) minority growth investments (often coupled with enhanced governance rights); (ii) control acquisitions (whether immediate or staged); (iii) strategic partnerships or joint ventures (particularly where distribution, market access or clinical validation is the primary objective); or (iv) platform build-ups (establishing an initial foothold and subsequently pursuing Israeli add-on acquisitions). In the Israeli healthcare sector, structured paths to control are often particularly attractive. For example, a minority entry combined with call options, staged closings or performance-based economics can be very effective. When designed carefully, these structures align incentives while significantly reducing integration and execution risks. Minority protections and control mechanisms that matter in Israel. For minority positions, the protections that best preserve value include board representation and committee rights, robust information rights and veto rights over reserved matters. Additionally, investors should secure anti-dilution and participation mechanics tailored to likely follow-on needs, alongside clear exit arrangements, such as drag-along and tag-along rights, call options and appropriate coordination mechanisms for an IPO or an M&A exit. Regulatory and cross-border approvals. Depending on the nature of the asset, investors should carefully map out Ministry of Health approvals and licensing implications. This is particularly crucial for provider assets and other regulated activities, as well as for navigating competition and antitrust considerations. IP, know-how, and IIA issues. If the target has received funding from the Israel Innovation Authority, investors should adopt a concrete plan addressing all required approvals and notifications. This plan should account for realistic timelines, potential repayment or royalty implications, and a transaction structure that preserves operational flexibility. Data strategy is now a transaction term, not merely a compliance point. For digital health and other data-intensive assets, investors should require a documented lawful basis for data use, a clear crossborder transfer strategy and a robust cybersecurity architecture. In addition, any partnership documentation should clearly allocate data rights, explicitly addressing ownership of derived insights, model weights and deidentified datasets. A resilient healthcare market Despite geopolitical volatility, Israel’s healthcare sector continues to demonstrate notable structural resilience. That resilience derives from institutional stability, universal healthcare coverage, and sustained investment in innovation. Israel’s healthcare sector is structurally resilient for a straightforward reason: it is built on universal coverage, mandatory participation and strong system-wide institutions. The baseline demand for healthcare services is non-discretionary, and the operating model is firmly anchored by four nationwide, non-profit health plans that deliver a mandated benefits package. Markets are signalling confidence while still pricing risk. Israel’s capital markets and currency performance through 2025 and into early 2026 reflect strong investor confidence, even as they continue to price in geopolitical and macroeconomic risks. The Tel Aviv Stock Exchange’s 2025 annual review reported that leading indices reached record levels, with significant gains observed in the TA-35 and TA-90 throughout the year. Functionality under stress. Even under acute geopolitical stress, the system has continued to function seamlessly. For instance, during Operation Roaring Lion, markets remained fully open. Most strikingly for international investors, Israeli equities and the shekel have consistently shown resilience, often rebounding sharply during and after geopolitical developments. This combination - uninterrupted functionality paired with a market capable of rapid repricing - is a defining feature of Israel’s investment environment. Macro fundamentals remain supportive. Recent economic data indicates solid GDP growth in 2025, with central bank forecasts projecting even stronger growth in 2026, subject to broader stability assumptions, alongside easing inflation. To make this resilience investable rather than merely theoretical, US investors should translate risk mitigation into practice through robust documentation and governance. This typically includes implementing MAC clauses and closing conditions calibrated to genuine operational risks. It also means conducting thorough business continuity diligence covering clinical staffing, supply chains, cyber resilience and contingency sites. In addition, investors should undertake comprehensive insurance reviews, manage currency and funding risks and allocate regulatory change risk clearly. The broader point is that Israel’s healthcare sector is not immune to uncertainty; no market is. However, it is
RkJQdWJsaXNoZXIy MjgzNzA=