Nov 1, 2007: As fears of bird flu pandemic swept the world in 2005-06, a Melbourne-based biotechnology company Biota Holdings found itself the target of global pharmaceutical interest. Biota Holdings, a developer of Relenza, one of only two anti-virals that had proved effective in combating the lethal H5N1 strain of the bird flu (the other was Roche Holding’s Tamiflu) made news.
Earlier this year, cervical cancer vaccine Gardasil, developed by Australia’s leading biotechnology company CSL went to market. It is estimated that CSL will receive $175 million in Gardasil royalties next financial year, and $252 million in 2008-09.
Biota and CSL showcase the success of Australian biotechnology industry. However, what is lesser known about Australia is the fact that the country’s biotechnology industry rides on the back of a world-class research base in the country.
The Australian biotechnology sector itself has shown a robust growth in 2006 with a record increase in market capitalization, funds raised, number of listed companies and products close to regulatory approval. As Australian companies mature, with their products progressing rapidly towards phase III trials and beyond, there has been a 30 percent growth in market capitalization in 2006-07 compared to the previous year.
The industry
In December 2006 there were about 430 biotechnology companies in Australia with over 120 companies listed on the stock exchange. The biotechnology industry here is dominated by human therapeutics, agri biotech and diagnostics. Although the industry is small when compared to the US, Australia is a leading player in the Asia Pacific region and is currently the sixth largest biotech industry in the world market. Despite Australia having only 0.3 percent of the world’s population, its share of revenue of the global biotech industry is close to 1.5 percent—thanks mainly to the performance of CSL.
In November 2005, the Economist Intelligence Unit ranked Australia as the best location for conducting pharmaceutical clinical trials in an international benchmarking study.
According to an industry survey, undertaken by Innovation Dynamics, employment in the Australian biotech sector has never been better. Also, now with the government support and financial assistance, the employment in the biotech sector doubled in the last couple of years. The survey showed that Australian-based employment in core biotech firms grew from 6,100 employees in late 2004 to at least 12,100 employees in late 2006. The survey revealed that this growth is mainly due to an increase in the size of existing biotechnology companies. It reflects the strengthening of the Australian biotechnology sector as many companies are progressing toward later stages of drug development, and have an increasing number of products in the market.
Australia is emerging as a global player and the country’s state and local level governments have taken a unified approach to marketing Australia to the world.
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Fast Facts from Beyond Discovery 2007 report
- 25% of respondents had revenues between $2 and $10 million;
- 10% of respondents had revenues in excess of $10 million per annum;
- Most biotechs are in the start up phase (32%) with revenues below $2 million;
- Almost half of the companies surveyed (49%) derived incomes from selling products or services and one third (34%) from licensing Intellectual property;
- 10% reported they are profitable;
- 41% are currently exporting, and 60% are planning to export in the next 12 months;
- Companies are increasingly contributing to early research—up from 15% in 2004 to 24% in 2007 now similar to that from universities (21%);
- The need for funding remains the most significant hurdle (56%) for advancement;
- A significant increase in access to government funding support, up from 17% in 2004 to 26% in 2007;
- Over half of the companies have difficulty in attracting appropriate staff.
Note: All currency figures are in AUS $
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Growth momentum builds
There is a sign of maturity in Australian biotechnology along with a continued need for early stage investment support, states The Beyond Discovery 2007 report released by Research Australia at the AusBiotech conference in Brisbane on October 22, 2007. Prof Peter Andrews, Chief Scientist, Queensland released the report, which is a follow up to previous report published in 2004.
Beyond Discovery 2007 focuses on the biotech/ healthcare sector and examines survey responses exploring the research and funding origins of Australian health biotechnology companies. Sixty-eight companies completed the survey including 34 companies that did not participate in the 2004 research. Publicly listed companies accounted for 44 percent of respondents to the survey, and Victorian-based companies formed the largest group by state (32 percent).
Ms Rebecca James, CEO, Research Australia said, “While it is still early days for Australian biotechnology, there are promising signs of growth and maturity in the sector.” Research Australia, a national alliance of over 190 member and donor organizations with a common mission to make health and medical research a higher national priority has joined hands with AusBiotech and Medicines Australia for their participation and support for the study, which looks at the research origins and commercial experiences of 68 health biotech companies in Australia.
Brisbane attracts top biotechs
The sixth edition of Australia’s largest annual biotech event ‘AusBiotech 2007’ in Brisbane attracted over 1,300 visitors from across academia, government agencies and private sector.
Brisbane, the capital of Queensland is a hub for the biotechnology and pharmaceutical industry in Australia. Brisbane boasts of world-class hospitals and medical and research institutes offering a highly competitive cost of research and development, clinical trials and manufacturing.
Welcoming the delegates and exhibitors to the four-day national biotech conference and exhibition themed “Smart Targeting Into Global Markets”, Ms Desley Boyle, Minister for Tourism, Regional Development and Industry for Queensland, said “We are proud that last year, the world’s first cervical cancer vaccine, Gardasil was launched following a discovery by Queensland scientist Prof Ian Frazer. Queensland scientists are now working on projects like painkillers from a marine shellfish; cancer treatments from kangaroo bacteria; unmanned aerial vehicles with robotics inspired by bees; using algae to produce hydrogen as a fuel; DNA testing to find the most tender beef cattle; organ, bone and tissue regeneration; growing your own replacement arteries; a skin patch that delivers vaccines and a new drug that inhibits fat cells.” Queensland companies have 23 lead candidates in drug development, with a good number of these going to phase III clinical trials.
Dr Anna Lavelle, CEO of the biotechnology industry umbrella group, AusBiotech informed that at this event there were about 400 international visitors and over 87 international speakers. “The event is now on the radar of big pharmas looking for partnering and investment opportunities,” Dr Lavelle informed.
At the event, the top 12 pharmas were present as were the top five biotech companies. Over 130 exhibitors from India, Italy, Korea, Malaysia, Japan, Taiwan, New Zealand, China, United Kingdom and Canada participated in this mega biotechnology event of Australia.
The next AusBiotech will be held from October 26-29, 2008, in Melbourne. Capital of the state of Victoria, Melbourne is home to CSL and Sigma Pharmaceuticals—Australia’s two largest listed companies.
Highlights
A partnership for biofuels from sugarcane
Farmacule BioIndustries, an Australian technology company focused on development of technologies and products from sustainable molecular farming industry, has entered into a partnership with Syngenta, the world’s largest agribusiness company, the Queensland University of Technology (QUT) and qutbluebox, to establish the Syngenta Center for Sugarcane Biofuel Development, which will develop cellulosic ethanol and biofuels derived from sugarcane.
The Queensland Government will contribute $4.6 million for the establishment of the center at QUT’s Gardens Point campus, and construction of a biocommodities pilot plant in Mackay.
Under the terms of the agreement, Farmacule would secure full distribution rights for the resultant bioethanol technology and products in Australia, New Zealand and the Pacific islands. The company will also be entitled to future royalty streams from Syngenta when the bioethanol technology and products are successfully commercialized in sugarcane and other crops across global markets.
Phylogica takes burns drug into human trials
Australian drug discovery and development company Phylogica has said that its underdevelopment burns drug, PYC35B will progress to human trials in 2008.
Phylogica CEO Dr Stewart Washer said the company had received good results from the latest pre-clinical study conducted independently by Fiona Wood’s McComb Foundation.
“The dose response study using the Phylomer peptide D-PYC35B in a mouse wound repair model found that at a low concentration (3 micromolar) there was a significant improvement in both the rate of wound healing as well as a significant reduction in the size of scar formation,” Dr Washer said.
Novotech invests $7 million to set up India office
Novotech, Australia’s largest Contract Research Organization (CRO) will set up operations in Mumbai, India with an investment of about $7.2 million. The Mumbai office will be the first Asian operations for Novotech to be operational by the end of this year.
Mr Alek Safarian, CEO, Novotech said, “Many of our US clients are looking at entering Asia, and so offering a seamless operation serves a growing client base from the Australian and American regions. Novotech is highly regarded in the US and the EU for managing the Australasia/Asia Pacific component of global trials, and a stronger presence in Asia would further guarantee the Novotech stamp of excellence in high standard, speed, efficiency, and reasonable cost trials.”
Implicit, US DTRA develop drug against bio-threat
Implicit Bioscience, an immunology focused drug development company based in Brisbane with office in Seattle, USA, has signed an agreement with the United States Defense Threat Reduction Agency (DTRA) to develop its clinical-stage drug ‘oglufanide disodium’ that has the potential to protect soldiers against the real bio-threat of melioidosis, an infectious immune attacking disease now regarded as a high priority threat to the US national security.
Melioidosis is an uncommon but potentially fatal form of bacterial pneumonia spread through contaminated soil and water and prevalent mostly in South East Asia and Northern Australia. According to the US officials, many countries are developing biological agent that would cause melioidosis in an aerosol or freeze-dried form. It would be easy to spread and would lead to widespread casualties.
‘Melbourne aims to be among the top five biotech hubs in the world’
 The state of Victoria released a 2007 Biotechnology Strategic Development Plan, at AusBiotech 2007. Through this plan, the Victorian government will take action to drive growth across biotechnology sectors. Mr Gavin Jennings, Minister for Innovation, Government of Victoria, Australia, who released the 2007 Biotechnology Strategic Development Plan, aims to take Melbourne to the top position in the biotechnology world. Some excerpts from the interview:
What is the strategy you are deploying to make Melbourne one of the top five biotech clusters in the region?
Melbourne, aims to be one among the top biotechnology hubs in the region. To achieve this, we are banking on building infrastructure, research capacities and intellectual capital, and make partnering connection between researchers and people who take up research beyond early innovation stage to the clinical trial and commercialization stage. We want to continue to build up that infrastructure as much as we can. We have evidence to show that there is an increase in area of research and innovation. There is an increase of 66 percent in terms of investments critical to mass of people who operate from Melbourne. Our biotechnology industry is valued at over A$21 billion.
How much investment Victoria government has made to develop the growing biotechnology industry?
The government of Victoria has invested A$2 billion in the last six years in the innovation space, which is combination of medical device and biotechnology space including the infrastructure development.
‘For Asia, Australia can be a conduit to Western markets’
 Where do you see opportunities for overseas companies to do business with the Australian biotechnology companies?
Australia can operate as a conduit for Asian companies into the European and US markets and vice versa. Australia has a very lucrative market and multiple investment opportunities on its doorstep—in India, South Korea, Malaysia, China and Singapore. We have a chance to not only develop strong partnerships with Asian companies and governments but the added ability to become a conduit for US and European countries wanting to enter into the Asian markets themselves.
In Australia, which sectors of biotechnology are doing well in terms of revenue generation?
Pharmaxis has demonstrated that Australian companies can take product to market and this is an important milestone for the industry. Biota is revenue positive and this is in the vaccines area, Gardasil the cervical vaccine is also out in the market and will be profitable for Merck and CSL. Australia has a long history of strength in immunology and vaccine research.
Angel investors from the US and Europe are making investments in the Australian companies. What is the scale of investments flowing in from the local investors and venture capitalists?
Many of the local funds have invested domestically as they are often interested in deals that are smaller than the US or European funds. At AusBiotech 2007, 14 angel investors from the US and Taiwan attended the "Investment Day" organized ahead of the conference program.
How are you supporting the local emerging companies?
Pharmaxis has demonstrated that Australian companies can take product to market and this is an important milestone for the industry. Biota is revenue positive and this is in the vaccines area, Gardasil the cervical vaccine is also out in the market and will be profitable for Merck and CSL. Australia has a long history of strength in immunology and vaccine research.Many of the local funds have invested domestically as they are often interested in deals that are smaller than the US or European funds.
At AusBiotech 2007, 14 angel investors from the US and Taiwan attended the "Investment Day" organized ahead of the conference program. Australia has established the BioNet AsiaPacific (BNAP) initiative which includes 10 countries—India, South Korea, Taiwan, Singapore, Japan, New Zealand, Malaysia, Thailand and UAE with Australia as the Chair and the Secretariat in the region. This platform will allow countries to work together co-operatively and corporate members of the country industry associations can upload their company profile on a database-software that is searchable. Each country has signed a MoU and has agreed to reciprocal membership.
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