Australia: A growing hub for early-phase CRO activities
Australia is one of the most mature markets in Asia-Pacific for conducting clinical trials. The country has a rich research environment, coupled with highly experienced investigators and research professionals, and an excellent health care infrastructure. According to a report by Frost & Sullivan (2016), Australia is the country of choice for early-stage pharma, biotech and CRO research given its low tax status compared to the U.S.
Australia is recognised as the hub for early phase clinical trials worldwide. Every year more than 1,000 research projects are carried out in Australia by pharmaceutical, medical devices and biotechnology companies, with a spend of more than $ 1 billion on clinical trials according to a report from Frost & Sullivan (F&S). Australia is fast-becoming the preferred choice for many biotech and pharmaceutical companies that see the benefit of conducting early stage clinical trials in the country. However, every country may have varying reasons to choose Australia as their outsourcing spot. One universal appeal is the fast approval times with lower costs and comparable quality. There are many advantageous reasons as to why companies continue to choose Australia as a destination, particularly for early phase development.
Cost-efficiency: The Australian government offers attractive R&D tax incentives including cash rebates. According to a cost comparison study, Australia is 28 per cent cheaper than the US before tax incentives; and 60 per cent cheaper after tax incentives.
Elaborating on the global legislative priorities on tax reforms and how is it impacting the CRO industry in Australia, Dr John Moller, Chief Executive Officer, Novotech, Sydney,says, “In the U.S., the reduction of the statutory corporate tax rate is likely to support further R&D investments from US-domiciled biotech companies in 2018 and onwards. However, amendments to the US Orphan Drug act will be reducing the tax credit allowed for clinical testing expenses from 50 to 25 per cent of qualified clinical testing expenses. The halving of this financial support is expected to increase the number of orphan drug research activity undertaken outside of the U.S. Finally, repatriation of cash held overseas may fuel mergers and acquisitions in the biopharma sector and a greater acceleration of R&D investments. On balance we see these factors leading to a higher level of biotech funding in the U.S., and this funding will take biotechs a lot further in Australia, reducing the need for dilutive capital raisings.”
He further says “With biotech companies investing in more complex and global programmes, we expect the number of outsourced projects to continue growing and sponsors to increasingly consider Asia-Pacific as a key location for their trials. In Australia, the recent tax reform has further reinforced the R&D expense refund scheme, which is considered as one of the most supportive in the world for clinical trials and which drives many small and medium sized biotech companies to run their early phase trials in Australia.”
Regulatory speed and flexibility: The Australian clinical trial process allows flexibility without compromising quality. It avoids duplication of processes, saving the sponsors both time and money. Australia also has a unique and collaborative approach to trials. There are currently over 86 specialist clinical trial networks that offer efficient access to the capabilities of many therapeutic areas and quick turn around on feasibility information, making the selection of Australian sites relatively hassle-free. In addition, many of these networks also offer value added options such as being able to negotiate the trial costs on behalf of all member sites.
Clinical trial quality: Clinical trials continue to be
a strength of the Australian research and development landscape. The clinical trial ecosystem in Australia is an intricate web involving pharma companies, CROs, clinical trial sites, patients, ethics committees, and many branches of the government. Australia has a network of universities, independent medical research institutes, clinical trial networks, biobanks, and CROs. Scientific research conducted in Australia ranks the highest in Asia-Pacific in terms of productivity, impact, and one of the most rigorous patent protection systems in the world.
Multiple drawcards as a CRO location
Increased R&D activity and a shift towards outsourcing are key drivers of the exponential growth of Asia Pacific CRO market. According to F&S report, this growth has the potential to outsource more than three-quarters of R&D spending by biotech and pharma companies. It is understood that there is a connect between CRO and pharma and biotech companies in achieving their R&D targets. Talking about the future relationship of a CRO with pharma and biopharma companies to achieve their mutual targets, Dr Moller notes, “The outcome of clinical trials strongly relies on how the study is managed operationally by the CRO and which investigators are involved in the trial. Novotech heavily invests in building formal partnerships with major hospital and medical specialist sites through formal site partnership agreements, as well as in site management services which facilitate rapid start-up activities and patient recruitment to meet the sponsor’s objectives.”
Companies intending to conduct clinical trials in Australia look for experience in the specific phase and therapy area. Experience of working with smaller biotech firms and multinational companies is a must for a CRO. This provides sponsors the assurance that the CRO thoroughly understands the challenges working with smaller foreign biotech firms and businesses in a different time zone. However, there is a catch. “Biotech companies are sometimes attracted to global CROs for large-scale late phase trials for their perceived ability, systems, global reach, and regulatory expertise. A challenge they often face, however, is a mismatch in strategic alignment because global CRO businesses are structured to serve complex multinational pharmaceutical companies. Small to medium sized biopharma research companies typically have a leaner clinical trial infrastructure and the focus is on speed, cost, the ability to adapt to new operational requirements quickly, and reducing operational risk. Because of these fundamental differences, biopharma companies can be side-lined and not receive the attention they may from a regional specialist such as Novotech”, adds Dr Moller.
Model to support innovation
Given that the investment in terms of time and money to develop a new therapeutic or device are significant and that the milestones during development can be difficult to reach, a collaborative approach, which implements all available resources to help ensure the success of clinical research for Australian innovations is a sound idea. With the next generation of therapies comes higher level of protocol complexity and patient recruitment hurdles. Dr Moller adds, “Novotech focuses on structuring relationship with key investigators, other regional CRO specialists, and on providing best in class systems to its clients. This ensures smooth management of large and complex trials.”
The Next Decade
With a strong research environment, Australia is a vibrant, world-recognized destination for early phase clinical trials. A leader across the key dimensions of speed, quality and cost, Australia has fast, flexible clinical trial approval processes at a competitive global cost. Dr Moller believes, “One of the most important trends that we see is an increasing investment in upfront clinical development strategy, including the use of carefully designed adaptive protocols. In our view, an efficient approach to clinical trial design will have the greatest impact in containing the escalating cost of drug development.”
Many biotech companies are also turning towards a regional CRO alliance model to execute their global studies. The government also provides attractive incentive schemes to boost R&D. Dr Moller is very positive. “After the major slowdown for capital raised by biotech companies in 2016, looks like 2018 will be a record year with equity financing that totalled $35 billion during the first two quarters compared with $ 22 billion over the same period in 2017.”
Australia’s superior scientific talent and excellent medical infrastructure makes it a preferred destination for early phase clinical trials, and the prevalence of CRO companies.