Biotechnology

Australia’s life skills

Small companies rich in intellectual property dominate Australian biotechnology. The industry has shown double-digit growth for the past decade, on the back of increased capital investment (local and foreign), patents, company start-ups, IPOs and international partnerships.

As a consequence of the global stalling of VC funds, the value of many Australian biotechnology companies fell for the first time last year. But the contraction of funding opportunities has led to a period of consolidation, and the industry is now geared to move forward more robustly than ever before.

Support for the industry
Uniformly, Australia’s federal and state governments have targeted biotechnology as a key to economic growth. State governments have established technology clusters to foster local interactions, and to act as a springboard into the global industry.

Public schemes – BIF (pre-seed), IIF Fund (venture capital), R&D tax credits for SMEs, COMET (early-stage commercialisation) – support the fledgling industry. There have been amendments to pooled development funds, changes to the capital gains tax provisions, amendments to international double-tax treaties, and support of national Centres of Excellence. State governments actively recruit global partners and compete for investment opportunities.

The national Office of the Gene Technology Regulator has established a clear regulatory framework for the biotechnology industry, and has established linkages with Intellectual Property Australia, the Therapeutics Goods Administration, Biotechnology Australia, and AQIS (the Australian Quarantine Inspection Service).
Public-private cooperation

The borders between public and private biotechnology are increasingly blurred in Australia. With recent developments such as the Centres of Excellence in Stem Cells and Integrative Legume Research, the Major National Research Facilities (MNRFs), the Institute of Molecular Biology, and Cooperative Research Centres (CRCs), in each case there has been crucial collaboration between private enterprise and public institutions.
More sophisticated commercial activities have accelerated the growth of the industry. Increasingly, the public sector is encouraged to commercialise its intellectual property. Last year, 49 spin-off companies emerged from Australia’s universities, the CSIRO, and medical research institutes. More than a third of these spin-offs were biotechnology-based.

Australian biotechnology companies employ about 6000 people, and have a market capitalisation around A$15bn. The allied pharmaceutical industry has an annual turnover of A$4bn, generates an annual A$900m in exports, spends A$160m in R&D expenditure, and employs 14,000 people.

Competing internationally
Australians succeed in competitive international arenas like the Olympics, the Academy Awards and Nobel prizes in medicine. In biotechnology, dollar for dollar, person for person, company for company, Australians offer innovation and value second to none. There is something about the mix of life sciences and Australian culture that makes for a productive union.

The strength of Australian biotechnology lies in its human capital. Australia produces a high proportion of life science graduates when compared with competing nations. The industry is built largely on the output of publicly-funded R&D including universities, medical institutes, the CSIRO, and CRCs.

Australia’s natural resources are another core asset. Australia is one of 17 megadiverse countries with high levels (more than 80%) of endemism. The antiquity of Australia’s separation from other landmasses increases the chances of harbouring unique natural compounds, the so-called new chemical entities (NCEs). Cerylid, a bioprospecting company, has identified an NCE with novel anti-cancer activity, for example. NCEs isolated from other regions tend to belong to the less profitable ‘me-too’ class of compounds.

Australia shares time zones with some notable growth economies. Many Asian governments are committed to biotechnology, yet they lack the R&D backbone that Australia enjoys. With its solid core, Australia is the biotechnology leader of the Asia-Pacific rim (excluding North America).

Australian expertise in environ-mental management blends with biotechnology. The expertise covers degraded land and water resources, stretched over vast tracts of soil types and climates.

Ongoing community debate plays an active role in the development of the Australian industry. Australians are somewhat more open-minded than their EU counterparts, yet less accepting than Americans. At present, there is heightened uncertainty about the value of GM foods, with widespread acceptance of biotechnology in human and animal health.

A global enterprise
By necessity, Australian biotechnology is a global enterprise – the local market is not large enough to sustain the industry’s development. Rich in IP, Australian companies have learnt to leverage their know-how around the world.

A few Australian companies (CSL, Cochlear, ResMed) are global entities in their own right. Others, like Proteome Systems, have established a global presence through an array of strategic alliances. But most Australian biotechnology companies are small, and have limited access to funds and commercial expertise. They require international partners to prosper.

Mutually-beneficial partnerships are the hallmark of Australian biotechnology. Partnerships, in this regard, are defined in the broadest commercial terms. In a risky business, fraught with long lead times and high rates of cash burn, innovative commercial deals are as important as innovative technology.

Outsourcing and globalisation are two global progressions that serve Australian biotechnology companies well. While local, innovative companies generate novel commercial leads, they rely on the prowess of multinationals to broach the global market.

The business opportunities listed in the panel on p67 bear more on quality than quantity. In the business of biotechnology, clear agreements to specific matches are critical to commercial success. Though many and varied, partnerships with Australian biotechnology are incorporated under the themes of:

• innovation;
• quality;
• value;
• commitment;
• complementarity; and
• global utility.

Websites:
www.biotechnology.gov.au
www.biotechnologydirectory.com.au
www.austrade.gov.au
www.investaustralia.gov.au
Pictures: CSIRO Science Image Online