In­dus­tries hail Aus­tralian Fed­eral Bud­get an­nounce­ments

BioSpectrum (Asia) - - Front Page - Narayan Kulka­rni narayan.kulka­rni@mmac­tiv.com

The life sciences in­dus­try bod­ies in Australia have wel­comed the mea­sures an­nounced by the Turn­bull Govern­ment in the Fed­eral Bud­get by the recog­nis­ing of the crit­i­cal role that R&D ex­pen­di­ture plays in clinical tri­als for de­vel­op­ing lifechang­ing and sav­ing medicines and med­i­cal de­vices. This they said will help Australia to keep its hard-won mo­men­tum in clinical tri­als and con­tinue its growth in com­mer­cial­is­ing med­i­cal re­search.

In its Fed­eral Bud­get an­nounce­ment on May 8, the Aus­tralian govern­ment has come up with com­pre­hen­sive plan for “bet­ter tar­get­ing the re­search and devel­op­ment tax in­cen­tive” (R&DTI), in­clud­ing: clinical tri­als ex­empted from a $4 mil­lion cap for the re­fund­able com­po­nent; no life­time cap for the re­funds; a cou­pling of the in­cen­tive to each com­pany’s tax rate; and for larger com­pa­nies, a grad­u­at­ing re­ward premium for higher in­ten­sity and an in­creased cap.

Be­sides, the Fed­eral Bud­get is guar­an­tee­ing the es­sen­tial health ser­vices that Aus­tralians rely on, with a $12.4 bil­lion in­crease in the Health Bud­get and a $414.5 bil­lion in­vest­ment in health, aged care and sport.

The govern­ment also an­nounced that it will in­crease: Medi­care fund­ing by $4.8 bil­lion; pub­lic hos­pi­tal fund­ing by more than $30 bil­lion; in­vest­ment in new medicines by $2.4 bil­lion; and

fund­ing for aged care by $5.0 bil­lion. It will be in­vest­ing in a Na­tional Health and Med­i­cal In­dus­try Growth Plan of $1.3 bil­lion, in­clud­ing a ground­break­ing $500 mil­lion Aus­tralian Ge­nomics Health Fu­tures Mis­sion. The govern­ment is also de­liv­er­ing the More Choices for a Longer Life Pack­age to help Aus­tralians max­imise the op­por­tu­ni­ties that a longer life brings.

Re­spond­ing to the bud­get AusBiotech –

Australia’s life sciences in­dus­try or­gan­i­sa­tion – said it is re­lieved by Fed­eral Govern­ment’s care­ful ap­proach to im­pos­ing a much-feared an­nual cap, with the ex­emp­tion of clinical tri­als from the $4 mil­lion cap on the an­nual re­fund­able amount a wel­come devel­op­ment.

AusBiotech CEO, Glenn Cross, said, “AusBiotech wel­comes the recog­ni­tion of the crit­i­cal role that R&D ex­pen­di­ture plays in clinical tri­als for de­vel­op­ing lifechang­ing and sav­ing medicines and med­i­cal de­vices. By ex­empt­ing clinical tri­als from a $4 mil­lion cap and en­cour­ag­ing higher in­ten­sity in R&D, Australia will keep its hard-won mo­men­tum in clinical tri­als and con­tinue its growth in com­mer­cial­is­ing med­i­cal re­search.”

Since the R&DTI pro­gramme be­gan, Australia has ex­pe­ri­enced a 5 per cent an­nual growth in clinical tri­als. “We are pleased that the govern­ment un­der­stands the role the R&DTI plays in the devel­op­ment of med­i­cal tech­nol­ogy, biotech­nol­ogy and phar­ma­ceu­ti­cals (MBTP), with the sec­tor one of Australia’s strong­est and most com­pet­i­tive op­por­tu­ni­ties for growth,” said Cross. “AusBiotech notes that the an­tic­i­pated life­time cap for com­pa­nies claim­ing the re­fund­able com­po­nent did not even­tu­ate and this too is a wel­come devel­op­ment.”

For com­pa­nies claim­ing the non-re­fund­able off­set, a grad­u­at­ing premium will be in­tro­duced to in­cen­tivise higher R&D in­ten­sity, and the

$100 mil­lion cap will be el­e­vated to $150 mil­lion. Claimants will be able to add a premium to their cor­po­rate tax rate of 4 – 12.5 per cent (cur­rently 8.5 per cent), depend­ing on R&D in­ten­sity (pro­por­tion of R&D ex­pen­di­ture over to­tal an­nual ex­pen­di­ture), thus giv­ing com­pa­nies with higher in­ten­sity a higher off­set.

A move to link the R&DTI ben­e­fit to each com­pany’s tax rate means that new leg­is­la­tion is not needed each time the cor­po­rate tax rate changes and al­lows for a fixed premium above other tax de­duc­tions as the En­ter­prise Tax Plan takes ef­fect.

The govern­ment said it is “com­mit­ted to driv­ing cut­ting edge re­search and devel­op­ment in Australia by both sup­port­ing small in­no­va­tive firms and re­ward­ing larger busi­nesses that do more to in­vest in de­vel­op­ing new prod­ucts, pro­cesses and ser­vices that help make Australia more com­pet­i­tive and cre­ate more jobs … the Govern­ment will re­form the pro­gram, sharp­en­ing its fo­cus on additional el­i­gi­ble busi­ness R&D while en­sur­ing its on­go­ing fis­cal af­ford­abil­ity.”

The govern­ment also out­lined plans for “in­tegrity and af­ford­abil­ity” through in­creased re­sourc­ing for ad­min­is­tra­tors and “greater trans­parency around who is claim­ing the R&DTI will pro­mote pub­lic ac­count­abil­ity for those ben­e­fit­ting from tax­payer sup­port”, as well as im­proved guid­ance ma­te­rial on el­i­gi­ble R&D ac­tiv­i­ties. A three-month limit will be im­posed on ex­ten­sions.

The R&DTI has been suc­cess­ful in help­ing at­tract more in­vest­ment in and fos­ter­ing a strong Aus­tralian med­i­cal tech­nol­ogy, phar­ma­ceu­ti­cal and life sciences R&D sec­tor, which en­cour­ages long-term in­vest­ment in Australia that cre­ates highly-skilled jobs, at­tracts clinical re­search and grows the econ­omy.

MTPCon­nect – the Aus­tralian Govern­ment In­dus­try Growth Cen­tre for the med­i­cal tech­nol­ogy, biotech­nol­ogy and phar­ma­ceu­ti­cal (MTP) sec­tor – too has wel­comed the Aus­tralian Govern­ment’s 2018 Bud­get, with a tar­geted fo­cus on eco­nomic growth to drive on­go­ing in­no­va­tion, re­search trans­la­tion, in­dus­try re­search col­lab­o­ra­tion and com­mer­cial­i­sa­tion in the Aus­tralian MTP sec­tor. In ad­di­tion, the an­nounce­ment of sig­nif­i­cant health ini­tia­tives will ben­e­fit Aus­tralian pa­tients through ac­cess to med­i­cal in­no­va­tions.

MTPCon­nect CEO Sue Ma­cLe­man be­lieves that the Bud­get has pro­vided wel­come re­forms and sup­port for the MTP sec­tor. Sue Ma­cLe­man said “We also wel­come the sig­nif­i­cant health ini­tia­tives in­clud­ing the $1.3 bil­lion Na­tional Health and Med­i­cal In­dus­try Growth

Plan, in­clud­ing

in­ter­na­tional clinical tri­als col­lab­o­ra­tions, a ge­nomics mis­sion, a chronic con­di­tion ac­cel­er­a­tor pro­gram, and in­dus­try-re­search col­lab­o­ra­tion pro­grams. In ad­di­tion to jobs cre­ation, this plan will be piv­otal in driv­ing growth for SMEs, and ac­cel­er­at­ing dis­cov­er­ies to­wards proof-of-con­cept and com­mer­cial­i­sa­tion in the MTP sec­tor.”

“We are ex­cited about the pos­i­tive im­pact for pa­tients and the Aus­tralian pub­lic into the fu­ture. We will work closely with both the Aus­tralian Govern­ment and MTP sec­tor to sup­port the roll­out of all of these pos­i­tive pro­grams that are sure to help us ce­ment our worldlead­ing place on the in­ter­na­tional stage,” she added.

Dr Bron­wyn Evans, Chair of MTPCon­nect, said, “The Aus­tralian Govern­ment has recog­nised the guid­ance, sup­port and real im­pact that the In­dus­try Growth Cen­tres have pro­vided in their re­spec­tive sec­tors. MTPCon­nect has es­tab­lished it­self as an im­por­tant part of the

MTP in­no­va­tion ecosys­tem in Australia, work­ing closely with in­dus­try as­so­ci­a­tions, re­search in­sti­tutes, com­pa­nies and govern­ment. The de­liv­ery of two years of additional fund­ing for the Growth Cen­tre

Ini­tia­tive will help to de­velop a sus­tain­able fu­ture for both the sec­tor and the or­gan­i­sa­tion.”

Sim­i­larly Medicines Australia, which drives the cre­ation and devel­op­ment of an en­vi­ron­ment for the con­tin­ued sus­tain­able growth of the in­no­va­tive re­search based pre­scrip­tion medicines in­dus­try has wel­comed the an­nounce­ment of $1.4 bil­lion for the list­ing of in­no­va­tive medicines on the Phar­ma­ceu­ti­cal Ben­e­fits Scheme (PBS). This will help en­sure all Aus­tralians have ac­cess to new and in­no­va­tive medicines they need when they need them.

Medicines Australia also said “It is en­cour­aged by the $1 bil­lion fu­ture list­ing pro­vi­sion and the Govern­ment’s com­mit­ment to list all new medicines rec­om­mended by the PBAC. It will look for­ward to fur­ther dis­cus­sion on this, and on the re­vised pay­ment ad­min­is­tra­tion sys­tems for high cost medicines.”

In a re­lease Medicines Australia noted that with new highly tar­geted medicines com­ing in through the pipe­line, con­tin­ued in­vest­ment in the PBS is needed. The Govern­ment has ac­knowl­edged the bud­get is in good shape, now it’s time to see some in­vest­ment in high value ar­eas such as the PBS and the in­no­va­tive medicines in­dus­try.

A strong PBS not only helps pa­tients, it also sup­ports thou­sands of med­i­cal re­searchers and jobs and the re­search-based medicines and health sec­tors, and en­cour­ages in­vest­ment in med­i­cal re­search in Australia.

Medicines Australia is pleased with the govern­ment’s com­mit­ment to re­search and devel­op­ment within the in­no­va­tive phar­ma­ceu­ti­cal sec­tor with the ex­emp­tion of clinical tri­als un­der changes to the R&D Tax In­cen­tive and no in­ten­sity thresh­old.

Medicines Australia notes the new PBS list­ings an­nounced in the Bud­get that will pro­vide fur­ther im­por­tant health ben­e­fits for pa­tients. This in­cludes Re­frac­tory mul­ti­ple myeloma, re­laps­ing re­mit­ting MS, PreP, re­lapsed of re­frac­tory Hodgkin’s lym­phoma; $42.5 mil­lion over five years 2017-18 for Ma­ter­nal Per­tus­sis, High dose 65 years plus flu, 12 Month meningo­coc­cal ACWY.

There are still unanswered ques­tions aris­ing from the Bud­get, which Medicines Australia will be work­ing through over the com­ing days. Medicines Australia re­mains com­mit­ted to work­ing con­struc­tively with the govern­ment to de­liver a so­lu­tion that will en­able the govern­ment to in­vest in the PBS so that new in­no­va­tive medicines can con­tinue to be listed for Aus­tralians.

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