AusBiotech has released a new report illustrating for the first time the disproportionately-negative effects that the biotech sector faces above other innovative industries, by the proposed changes in the new Research and Development Tax Incentive (RDTI) Bill.
The new report R&D Tax Incentive: Additionality and spillovers for the life sciences industry was commissioned in response to a Senate Inquiry’s recommendation to fully understand the impacts before proceeding with any proposed RDTI changes. AusBiotech commissioned the research to examine, analyse and understand the additional benefits that the RDTI brings to Australian life sciences. This research is fundamental to informing decision making.
The previous recommendations for making changes to the RDTI were based on a Centre for International Economics (CIE) report, however, the available dataset lacked the granularity needed to capture the particular sensitivities of life science research and product development.
The new data captured in AusBiotech’s report is markedly different from those captured in the CIE Report, clearly illustrating the significant impact on the biotech sector in comparison to the broader innovation happening within Australia.
Key findings in the report include:
- 63 per cent of respondents advise that the RDTI materially influenced the decision to undertake R&D.
- 61 per cent of respondents advise that the proposed changes would not only affect their expenditure on research and development (R&D) but would also threaten the sustainability of their businesses.
- 57 per cent advise that changes would impact on the amount of R&D their companies undertake in the future.
- 29 per cent (average) anticipated a reduction in R&D.
- Clinical trials are critically important to survey respondents, and particularly to businesses who provide third-party services for clinical trials. However, the broader ecosystem shows that the volume of clinical trials is dependent upon the health of companies relying on broader RDTI contributions.
- As well as the additional R&D that occurs due to the RDTI, significant spillovers are also generated in relation to employment, training and skills development, together with growth of the sector and advances in health and innovation.
Eight issues have also been highlighted that need to be better understood before proceeding with any changes to the RDTI, and two further measures are recommended to maintain the sustainability of the high growth and job-producing potential of the Australian life sciences sector in the medium term.
AusBiotech encourages all life science companies to make a meeting with their local Federal Member to highlight the importance of the RDTI; to explain what the impact will mean to their business; and to illustrate the importance of what’s at stake if the proposed changes go ahead. Find your member here.
Download the report here.