Johnson & Johnson (NYSE:JNJ) has informed Teva Pharmaceuticals (Nasdaq:TEVA) (TASE: TEVA) that it is withdrawing from a joint biotechnology venture between the companies, say biotechnology sector sources.

Johnson & Johnson prefers to invest in Israeli medical technology, with some selective investments in pharmaceuticals projects.

Johnson & Johnson had entered into a consortium called Lapid Biotechnology, together with Teva, Pitango Venture Capital and Giza GE Venture Fund. To the surprise of the industry, the consortium failed to win an Industry and Trade Ministry tender to run a biotechnology incubator in Jerusalem.

After losing the Jerusalem tender, the consortium decided to set up a private biotechnology venture. Now it would appear that Johnson & Johnson prefers to bow out.

Earlier this week, Industry and Trade Minister Dalia Itzik met with Yehuda and Zohar Zisapel, who head the Rad BioScience group, which won the tender to establish the biotechnology incubator in Jerusalem, and the chairman of the Yozma Group venture capital fund, Yigal Erlich, who represents the Ofer Brothers' Einav group, which won the Rehovot incubator tender.

Erlich and the Zisapel brothers told the minister that if Teva set up its private biotechnology incubator and if the tender for a third biotechnology incubator, issued by the ministry at the end of July, was completed, this would constitute a substantive change in the conditions of their tenders, as four incubators rather than two would compete for biotechnology projects.

They also told the minister that if no one came forward for the third tender, they would consider setting up branches in the Negev and the Galilee in order to advance the biotechnology industry in the periphery. However, they added, if a third incubator was set up and the Teva consortium went ahead with its plans for a private biotechnology incubator, changes would have to be made in the licensing conditions for the Rehovot and Jerusalem incubators.