AusBiotech says plan to disadvantage life sciences innovation


Initial feedback from the life sciences sector finds the Innovation and Science Australia (ISA), 2030 strategic plan is another example of a plan skewed away from the needs of life sciences to short-horizon innovation.

ISA, Australia’s independent science, research and innovation advisory board, provides recommendations to the Federal Government as a “plan for Australia to thrive in the global innovation race”. The 125 page plan Australia 2030: Prosperity through Innovation articulates a view of the nation’s needs to ensure Australia’s world-class research can translate into social and economic prosperity.

The Plan nominates five imperatives and 30 recommendations that ISA sees as central to shaping the strategy and taking the opportunities.

Notably, the Plan makes unwelcome recommendations about the Research and Development (R&D) Tax Incentive, suggesting a $4 million cap and a lifetime cap of $40 million on the refundable components of the program and a one percent “intensity” hurdle for companies claiming the offset.

Relative to many other sectors, the commercialisation of medical technologies, such as therapeutics and vaccines, have longer development timeframes of a decade or more, due to significant scientific and regulatory hurdles to reach patients, and there is higher expenditure on R&D, often in excess of $1 billion each. For these reasons, life sciences R&D must be treated differently to other sectors.

While in a typical firm spending might be expected to be relatively large with significant assets and revenues, this is much less likely when it comes to the commercialisation of medical and biotechnologies, where the development will be done by an SME where the company’s only asset is likely to be the intellectual property it is seeking to develop; its sole activity is R&D; and it frequently has no revenue.

The Sector says the plan is underwhelming, lacking cohesion and the apparent compartmentalisation of the Industry and R&D imperatives fall short on coordinated or whole-of-government thinking.  

A dynamic, bi-directional interplay is what’s needed rather than the implication that innovative solutions originate only from universities and research institutes. 

AusBiotech agrees that the role of R&D is a key driver of innovation and laments that Australia lags behind its global peers in gross expenditure on R&D as a percentage of GDP. However, the Plan does not propose any increase in Government funding, but instead suggests the redirection of existing successful programs to provide more incentives to increase business R&D. In particular, the plan prefers more direct support for industry rather than tax-based measures such as the R&D Tax Incentive, which is fraught with issues.

While AusBiotech accepts that there is merit in both direct grants and tax incentives, the plan to damage one highly-successful program to provide an alternative, more complex, less certain grant programs make little sense. This would also create a greater administrative burden.

AusBiotech’s full response to the ISA 2030 Plan can be found online.