Updated on 18 April 2013
In addition, the PricewaterhouseCoopers ten year report (BioForum, Oct 2012) shows the Australian Life Sciences Index has consistently outperformed the NASDAQ Composite Index and the All Ordinaries since mid-2006. Despite the GFC and the reduction in venture capital availability, biotechnology has delivered to investors. Take away the three majors from the Life Sciences Index and in 2008 the Index parted ways with the All Ordinaries and has dramatically out-performed it since, almost quadrupling its performance in the latest reading. In four years the often-cited index has failed to come anywhere close to biotechnology's SME performance. The NASDAQ Biotech Index, perhaps the best comparative measure of US biotechs, hit a 12-year high in July, but is nevertheless trailing behind the performance of the Australian Life Sciences Index. Admittedly the Australian stocks have come off a lower base but the result demonstrates a portfolio approach is an attractive investment option.
Australia's comparative advantage comes from its world-class science and medical research, its capacity for international partnerships, cost effectiveness, and a transparent and effective regulatory system. More recently the Federal Government has introduced a research and development tax incentive, which is attracting global investor attention. The emerging trends of foodtech and cleantech have gained momentum in Australia, and the medtech sector is surging forward, to follow in the footsteps of medtech industry pioneers, Cochlear and ResMed. There are more than 500 medical device companies in Australia. Of the ASX-listed biotech companies, 40 are medical device companies. Total market capitalisation of listed medical devices companies was $9.546 billion (PricewaterhouseCoopers, BioForum, Q2, FY2012). The medical diagnostics sector is a similar size (AusBiotech CEO Industry Position survey 2012).
What are the major challenges faced by the bioscience industry in the country and how can the association be instrumental in streamlining them?
When it comes to fundamental discovery in science and biomedical research, Australia is a legitimate and impressive global contributor, producing three percent of the world's research publications with only 0.3 percent of the population. However, our ability to translate this strength into tests, cures, treatments and vaccines to benefit the Australian community could be so much better than it is currently. The Global Innovation Index (INSEAD, 2012) ranks Australia 13th in terms of innovation input and 31st in innovation output. Impressive. But when these figures are converted to innovation efficiency ratio of output over input, Australia dives to a ranking of 107 out of 141 countries assessed. This stark measure shows that Australians are brilliant at coming up with ideas but inefficient at translating them into products.
In a recent submission to the (McKeon) Strategic Review of Health & Medical Research on how to increase the levels of commercially sponsored translation of research, the Association of Australian Medical Research Institutes (AAMRI) used triadic patents to measure commercialization success, as these patents are registered for the same invention in the US, Europe and Japan. AAMRI found Australia ranks 20th in the OECD in terms of triadic patents per capita, which accounts for less than 0.8 percent of the world's triadic patents. AAMRI said: "Australia's commercial translation of Government-funded research is poor by international standards...This represents tens of thousands of inventions not capitalised on each year, and means as a nation we are losing out on returns on our investment in research in terms of attracting private and foreign investment for product development, profits from the sale of products, taxation revenue, and patient benefits."
So why is Australia's performance so poor in translating its demonstrated advantage in the area of biotech innovation into products and services for the community?
One often-cited reason is the poorly-targeted and under-resourced government programs for commercialisation, particularly at the early stages of company development. Australia's biopharmaceutical industry outperforms the wine or automotive industries' exports and yet there is still little industry support for commercialization in the life sciences sector. The Federal Government spends more than $8 billion annually (ABS, 2010) on research and experimental development, with about 98.5 percent provided to the research end of the spectrum, leaving only about 1.5 per cent of that spent on commercialization: translating the research into products. It is estimated that half of the commercialization funding goes to the automotive industry.