A new royalties agreement between CreoScitex and the Chief Scientist of the Ministry of Industry and Trade establishes that the company will pay the scientist's office royalties of $21.5 million in the next five years, the maximum legal amount of time to make such payments. In return Creo will receive grants for generic R&D in Israel totaling about half its investment.
Michael Rolant, the company's president in Israel, said the company took that route in order to expand its activity in Israel. He also said Creo intended to invest $45 million in R&D in Israel every year, which is why the company expects to receive grants for a sum higher than the one that will be paid according to the agreement.
The special program offered by the chief scientist, joined by other Israeli companies such as Indigo(Nasdaq:INDG, INDGW) and Comverse Technology (Nasdaq:CMVT), makes it easier for corporations to calculate the royalties they would have to pay to the Chief Scientist based on the size of the R&D grants they received in the past. To determine the overall amount, future sales of the projects and developments the Chief Scientist's ofice has funded are estimated, and then a repayment plan is devised.