With the biotechnology at the forefront of the COVID-19 response, especially in clinical trials for new therapies and vaccines, AusBiotech is calling on the Government to support pre-revenue companies with access to funds including the JobSeeker payment and early payment of the R&D Tax Incentive refund.
These companies are pre-revenue and have a unique business model that enables them to translate research into lifesaving and enhancing products for patients, but leaves them in a pre-revenue phase for up to decade. Therefore, they do not have revenue to reduce by 30 per cent, regardless of their fierce need for cash flow.
With 86 per cent of the biotechnology sector in the start-up or SME category and employing more than 65,000 Australians, the majority of biotech companies operating in a pre-revenue state, are being inadvertently excluded from the Government’s JobKeeper payment, through its current eligibility criteria.
Life science companies are working around the clock on essential research and development of vaccines, repurposed and emerging therapies, as well as test kits and ventilators to combat COVID-19. Many of these companies have already indicated that their ineligibility to access the payment that will make a material difference in their ability to retain their full teams.
Lorraine Chiroiu, CEO, AusBiotech says, “Sadly, the allowance is only available to revenue-making companies. As such, it appears to systematically disadvantage the SMEs in the biotech and medtech sector. These pre-revenue companies house priceless talent and intellectual property that could be permanently lost to Australia if they are not able to weather the COVID-19 storm.”
Employer eligibility for a business with a turnover of less than $1 billion is for those whose turnover has fallen by more than 30 per cent (for at least a month).
The JobKeeper Payment was announced last week as part of its $130 billion package to help businesses keep people in their jobs and re-start when the crisis is over.
AusBiotech has also joined the growing chorus of businesses calling for the Government to fast track Research and Development Tax Incentive (RDTI) cash refunds, due in and to commit now to dropping the RDTI Bill that is before a Senate Inquiry. The critical nature of this RDTI for the life sciences sector is more evident than ever before. It is a way that Government can directly help in the global pandemic response, without spending any net new money.
The JobKeeper payment is included in the broader legislation that is due to be considered when Parliament returns on Wednesday.