‘Life sciences sector is a significant economic driver for Australia’
Australia is one world’s leading destination for the life sciences sector and has been ranked among the top five centers for biotechnology innovation. Life science innovation in Australia has a proven track-record, with a vaccine to present cervical cancer and a medical device enabling deaf patients to hear among the most-often-cited examples. Australian government policy and funding programmes seek to advance Australia’s strength in medical technology, digital health, agritech and foodtech, therapeutics, regenerative medicine and other key areas of the life sciences.
Australia is a world-leading location for biotechnology, is an attractive destination for foreign life science investment and is nurtured by a refreshing focus on innovation in public policy. To further encourage innovation, the federal government has introduced several reforms and recently revealed a comprehensive plan for “better targeting the research and development tax incentive” (R&DTI). These include 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. AusBiotech is an Australian life sciences organization, with a wellconnected network of over 3,000 members in the life sciences, including therapeutics, medical technology (devices and diagnostics), digital health, food technology and agricultural, environmental and industrial sectors. According to its recent report there are more than 232,000 people employed in the Australian life sciences sector, across 1,653 organisations.
AusBiotech recently announced leadership changes following the retirement of Glenn Cross. Lorraine Chiroiu is appointed as AusBiotech Chief Executive Officer. She has worked as a dedicated advocate for the life sciences sector, including almost a decade of contribution to AusBiotech, working closely with public policy impacting sector at state and Federal levels. Her advocacy has traversed regulation, tax incentives, patent protection, medical research and its commercialization.
Chiroiu has previously held the roles of Chief Industry Affairs Officer and National Communications and Media Manager at AusBiotech and prior to joining, worked in corporate and public affairs roles for a multinational biopharmaceutical company, the Pharmacy Guild of Australia, the University of Melbourne and for a health consumer organisation. Interacting with BioSpectrum Asia magazine, Lorraine Chiroiu elaborates on AusBiotech’s plans, aims and goals for the biotech sector under her leadership.
As the new CEO of AusBiotech, what are the key priorities on your list for propelling the growth of Australian biotech sector?
Building on the work on previous CEOs and Directors, I feel truly privileged and excited to be appointed to lead AusBiotech into its next phase of growth and evolution.
My key goal is to continue to accelerate the growth of the life sciences sector in Australia through addressing gaps and removing barriers to innovation, to encourage commercialisation of our world-class research, as well as demonstrating our competiveness in the global market. Personally, I am driven to position the biotechnology sector as one of the most significant economic and social contributors to Australia’s long term economic growth.
Please highlight some of the key initiatives made by AusBiotech to
foster the growth of biotechnology in Australia?
Because our key goal has been to foster a growing, strong and sustainable life sciences industry in Australia, our initiatives focus on attracting investment to the sector, advocating on behalf of the industry and promoting increased global engagement.
To achieve these goals we have managed key industry events both domestically and offshore, implemented a Global Investment Programme – we are one of only two industries in Australia that take companies around the world to pitch their value to investors - and developed new resources and educational material. The study confirms that the life sciences sector is a significant economic driver for Australia; it is a major employer of high-value jobs and Australia is globally competitive in the life sciences. Positioned consistently in the world’s top countries in biotechnology innovation, the research shows that 53 per cent of life sciences organisations in Australia are industry-based, with 875 companies and approximately 30 per cent of the workforce in the sector is employed by industry, just over 69,000 people. A critical focus area is as a co-ordinated industry representative to the Federal Government as we work to reduce barriers and increase incentives. We feel this work is extremely important for the ongoing viability of the sector in Australia and were very pleased that we continue to be ‘heard’ by governments.
Will the recent policy changes and reforms by the Federal Government help in further fuelling the sector’s growth?
We believe the R&D Tax Incentive is the most critical centre-piece programme that supports Australia’s world-class research to transition to a viable commercial product and technology pipeline. We were very reassured that the Federal Government’s approach in the latest Federal Budget to the “better targeting of the research and development tax incentive” in the 2018 Budget will exempt clinical trials from the newly introduced $4 million cap for the refundable R&D Tax Incentive, and that a lifetime cap on refunds, as was widely speculated, was not introduced. We are pleased that the Government recognises the critical role R&D expenditure plays in the development of world class technologies, and fostering the growth of a leading and innovative Australian biotech sector.
Where do you see the largest demand for Australian products and services?
Ageing populations, complex diseases and escalating healthcare budgets are well recognised and have been highly reported on. These issues are global and are being experienced worldwide. It is the potential for the Australian biotechnology sector to deliver innovative solutions to many of these complex issues that will underpin the continued demand for our products and services in the sector. Our ability to produce some of the world’s leading scientists, conduct high quality clinical trials as well as provide stable investment community support for early stage companies will continue to ensure global demand for many companies within our sector. The opportunities aren’t just limited to human health – but also extend to agriculture, food supply and climate change technologies as well.
From your personal perspective experience of the Australian industry in which sectors of healthcare (pharma/biotech/medtech) are the Australian players strongest?
Australia has a strong track record of success across the whole healthcare spectrum. CSL, our largest and most successful biotech company, having built its A$88 billion market capitalisation from its speciality blood plasma biotechnology, and cochlear implant company, Cochlear Limited, which was established in 1981 and has since led to profoundly changed lives for more than 350,000 people are perhaps the best known example of Australian success. However there are many other successful examples within each of the sub-sectors and each are characterised by different structural drivers. Medtech companies for example may generate revenues on a faster timeline than biotech or pharmaceutical companies given less stringent regulatory approvals are required for a medical technology and diagnostics versus a drug intended for human consumption.
Nanosonics is an example of a very successful medical technology player, with its proprietary disinfection technology, that was founded in Australia
in 2001 and now has a market cap of over A$900 million. Just recently, developer of a liver cancer treatment, Sirtex Medical, has accepted a $1.87 billion takeover bid from China’s CDH Genetech, marking the biggest deal in biotech history.
What according to you is the secret sauce for the Australian biotech industry being able to consistently perform well?
Access to capital is the top-of-mind response to this question, however, while critical, the more complex answer is a finely-balanced and healthy ecosystem, that includes sympathetic policy, access to global skills, quality research, competitive technology, intelligent regulation, a favourable macroeconomic environment and access to capital.
What, according to you, are some of the challenges faced by Australian companies in biotechnology space?
Access to capital is the life-blood of the industry, and a key challenge AusBiotech seeks to address in its role. Building on the previous question, our challenge is to work toward the ideal, finely-balanced and healthy ecosystem; identifying and seeking redress for the gaps and hurdles.
What has the government done to address these challenges?
The goal of successive Federal Governments to develop a successful innovation eco-system for the biotechnology sector requires the maintenance of a stable, supportive and consistent policy environment that encourages companies to make decisions that attract investment and grow R&D activity. The sector welcomed changes to the R&D Tax Incentive, which protected many of its most important features, along with government working with the investment community on the creation of the $500 million Biomedical Translation Fund. In late 2015, the Government launched MTP Connect, an industry-led initiate to accelerate the rate of growth and commercialisation of medical technology, biotechnology and pharmaceutical (MTP) sectors. This has been a successful initiative, and AusBiotech has working jointly with MTP Connect on several projects and policy issues.
How is the biotech startup landscape in Australia? How is the government encouraging innovation in the country?
The desire to transition Australia to an “innovation” economy over the past decade has created a favourable location for biotechnology start-ups. We have witnessed a maturing of the sector, both with regard to early stage companies but also the investors, as sophisticated and professional venture capital firms have increasingly entered the market. Additionally the listed market is more receptive to biotechnology companies with an estimated 140 listed life sciences companies currently trading on the ASX. Government policies have been favourable and encouraged the foundations of innovation and a strong biotechnology sector.
Business sentiment across the industry is the strongest on record. The survey shows another jump, to 77 per cent, in the number of companies reporting that last year (2017) was an ‘excellent’ or ‘good’ year. The vast majority (87 per cent) expect their business to grow in 2018, a significant jump on last year’s result and no respondent expected their business to contract. A record 37 per cent believe the Australian operating environment remains conducive to growing a biotechnology business, adding to 47 per cent that felt the environment was neutral. The employment outlook for 2018 has strengthened to the highest on record, with 73 per cent of companies indicating an intention to hire, up from 64 per cent in 2017.
Where do you see Australia’s biotech sector five years from now?
A convergence of industry maturity, deal flow, regulatory advances, increased capital and development programmes, makes this the most buoyant I’ve seen the sector in my near-decade-long tenure at AusBiotech. The opportunity is ours to further build this industry towards its potential as a driver of our economy and quality of life.