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Pfizer, the world's largest non-generic drugmaker, is in advanced talks to establish a research and development center in Israel. It will probably erect its center in the central Galilee, government sources say.

Pfizer representatives met with Industry, Trade and Labor Minister Eli Yishai two weeks ago to discuss the issue. Jerusalem circles think that the center could go up within six to eight months.

Pfizer spends $7 billion on R&D a year. The U.S. company changed its senior management last May, and a new center in Israel could become part of a fresh push to develop new drugs.

Some of the company's vice presidents have visited Israel to consider either investing in an existing science incubator or establishing a new center modeled on tech incubators. The plan is apparently to collect early-stage projects from academic or research institutes and develop the molecules into pharmaceuticals. A similar biotechnology-focused incubator, owned by Teva, Hadasit and venture capital funds, is already operating in Jerusalem. The establishment of an R&D center in Israel by an international drugmaker has been a central goal of the Industry, Trade and Labor Ministry in recent years, in part to develop the biotech sector.

Establishment of such a center here could mean competition for Teva, which develops generic drugs based on proprietary drugs from companies like Pfizer. The New York-based company recently sued Teva for patent infringement in marketing of the generic version of Neurontin, which treats epilepsy.

Pfizer, which makes Viagra, ended 2006 with revenues of $48.4 billion and a net profit of $19.3 billion. These results include one-time income of $16.6 billion from the company's sale of its consumer products division to Johnson & Johnson. Nevertheless, Pfizer's profits were down 77 percent in the third quarter compared with the same period in 2006. Its quarterly profits totaled $761 million, and revenues declined by 8 percent to $12 billion, which it attributed among other things to fierce competition from makers of generic drugs.

Pfizer is one of the firms calling for Israel to amend its Pharmaceuticals Law. Pfizer says the law does not provide enough protection for the original developers of pharmaceuticals. The company, which has been kept up to speed on efforts by the Ministry of Industry, Trade and Labor to amend the law, has not predicated the establishment of an Israeli R&D center on a change in the law.

Pfizer and other international drug companies have successfully lobbied the U.S. government and the European Union to press for amending the law. In talks Yishai recently held in the United States with representatives of the U.S. Department of Commerce, the hosts stressed the importance of this issue. The Pharmaceutical Law is one factor in Israel's inclusion on the U.S. list of copyright-infringing nations. .

Apropos Viagra, recently the U.S. Food and Drug Administration ordered Pfizer to amend the paperwork that accompanies the drug. Specifically, the warning: use of Viagra to ease erectile dysfunction may cause hearing impairment. No less than 29 users since 1996 reported loss of hearing accompanied by ringing in their ears and other symptoms of trouble. Whether or how Viagra causes these conditions is unknown. But it is not the only drug implicated: so are Eli Lilly's Cialis and GlaxoSmithKline's Levitra.