AusBiotech’s annual survey of biotechnology industry CEOs shows the strongest year on record, but the result is overshadowed by pervasive fear that proposed changes to the Research and Development (R&D) Tax Incentive will damage Australia’s flourishing and globally-competitive sector.
AusBiotech today released the Biotechnology Industry Position Survey 2017 showing industry leaders’ concern that commercialisation of Australian biomedical research is set to be damaged if the package of measures put by the ‘Ferris, Finkel, Fraser’ Review of the R&D Tax Incentive is adopted by the Federal Government in the up-coming Budget.
The Survey’s key findings revealed that last year was the strongest on record, but sentiment is tentative for the year ahead as the Australian industry awaits a key decision on the R&D Tax Incentive that will significantly worsen the environment for life science SMEs.
Seventy two per cent of respondents described the past year as an ‘excellent’ or ‘good’ year, the strongest result since the annual survey began and up from 60 per cent in the previous survey.
The sector raised more than $1.3 billion in capital in 2016 - again the greatest amount on record – and in the year ahead 77 per cent of respondents expect to grow.
However a sharp drop in manufacturing and a softening of employment intention, on top of large fall in the conduciveness of the environment for growing a life sciences business, point to an indecisive environment and a wait-and-see approach.
Companies planning to increase their staff this year fell to 64 per cent, from last year’s all-time high of 70 per cent. Only 29 per cent of respondents said the environment was conducive to growing a biotechnology company, down from a much healthier 41 per cent last year. The drop is explained by a sharp rise in those who view the environment as neutral, which increased to the majority of 52 per cent.
Despite the successes and anticipated growth of the industry, optimism was overshadowed with concern surrounding the R&D Tax Incentive. In particular the industry is concerned about the proposed $2 million cap to the refundable component on the program that will hit the industry hard.
Around half of survey respondents said proposed changes to the program, specifically the $2 million cap on cash claims, represented a fundamental risk to employment, their ability to attract investment and compete globally.
In unprompted responses, 49 percent of companies said the R&D Tax Incentive was the issue that most concerned them at a Federal Government level, and preserving the policy was the strongest request for the May Budget.
Glenn Cross, CEO of AusBiotech, said: “Australia’s life science sector continues to grow and prosper, adding significant economic benefit for the Australian people. Much now depends on the public policy decisions of the current federal government as they could decimate the sector with one poor decision concerning the R&D Tax Incentive.”
The 2017 Survey, conducted by AusBiotech with support from Grant Thornton, examined economic and value of the industry; business sentiment; financing, investment, listing and costs; and government policy in relation to Australian biotechnology, a sector that has the potential to lead Australia’s transition to an innovation-based economy.
The respondents included 46 ASX-listed and unlisted biotech companies, specialising in medical devices and diagnostics, therapeutics, agricultural biotech and digital health. The 2017 Survey can be accessed here.