Biotechnology front and centre of Australia’s economic transition

Latest News

AusBiotech’s 2016 Biotechnology Industry Position Survey of industry CEOs confirms biotechnology continues to be front and centre of Australia’s post-mining boom economic transition.

The Survey, now in its sixth year, was open to all ASX-listed and unlisted biotechnology companies. 44 companies responded and 60 companies participated in roundtable discussions held around Australia in February and March.

The sector has been a pivotal contributor to Australia’s economy since it emerged over three decades ago. Yet the past year has seen increasing recognition of this growing contribution by government, media, local and global investors.

The 2016 Survey, conducted by AusBiotech with support from Grant Thornton and a contribution from Novotech, revealed key themes including economic value; business sentiment; finance, investment, listing and costs; and, government policy.

Dr Anna Lavelle, CEO of AusBiotech, said: “Australian life sciences companies have attracted well over $2 billion in deal flow over the last 18 months, which is bolstering confidence and showing it can be done.”

Dr Lavelle said the past year has seen global recognition of the sector’s quality, reflected in major deals, including Novartis’ acquisition of Spinifex Pharmaceuticals for as much as AU$1 billion and AstraZeneca’s licensing agreement with Starpharma that could deliver over half a billion (AU) dollars.

The Survey reveals the importance of these deals to boosting the confidence of the sector – it is clear the interest and investors are there, said AusBiotech. It said they also have the added impact of showing key decision-makers in government and the investment community the industry is delivering for Australia.

It said the timing of these deals and the emergence of companies across the sector has been pivotal given governments’ renewed focus on innovation.

"There has been a significant change amongst political and policy decision-makers, recognising the importance of the biotechnology sector to Australia’s future prosperity.

"Policy appears to be heading in a better direction given the contrast with last year’s Survey, when industry leaders expressed significant concern over the failure of Australia’s policy-makers to adequately respond to an increasingly competitive global environment."

“The full benefit of this new direction is yet to materialise and we are looking for more action from decision-makers in the Federal Government,” said Dr Lavelle.

The sector’s response has been positive to recent developments in the commercial and policy environment, with 75 per cent of Survey respondents saying they expect 2016 to be a year of growth. This contrasts with 2015 - only 60 per cent of respondents described the year as ‘excellent’ or ‘good’.

In one of the more significant turnarounds in this year’s Survey, 41 per cent of respondents said the environment in Australia (economic conditions and public policy) was now conducive to growing a biotechnology company, up from just 16 per cent last year.

Importantly, 70 per cent expect to hire more staff, up slightly from last year’s 64 per cent and broadly in line with 2014 (69 per cent).

Significant issues of concern remain, particularly in relation to the R&D Tax Incentive, inadequate responses to other policy issues and general political instability, which will be an enduring theme in the current Federal Election campaign.

The Survey shows leaders remain concerned over the constant tinkering and reviews of the R&D Tax Incentive, with 90 per cent saying program stability is ‘very important’ or ‘important’, and 81 per cent saying they are concerned about the recently completed review led by the Chair of Innovation and Science Australia, Mr Bill Ferris AC, Dr Alan Finkel AO FTSE, Chief Scientist of Australia and Mr John Fraser, Secretary to the Treasury. The outcome of the Review is yet to be revealed.

“To ensure the momentum continues the Government needs to provide an environment where Australia’s biotechnology companies have consistency and stability around R&D tax and other incentives,” says Michael Cunningham, National Head of Life Sciences, Grant Thornton.

The full report is available on the AusBiotech website.