Bioeconomy in transition

This year’s AusBiotech conference will focus on the transformation of the Australian biotech industry, following its evolution and the application of its bioactivity across areas such as agriculture, food technology and health. In this preview we provide a bumper sample of what’s in store for Brisbane at the end of October.

‘Bioeconomy in Transition’, the theme of this year’s AusBiotech conference, recognises the potential the biotech sector has in generating economic activity in Australia.

“One very interesting and often misunderstood thing is that on a global scale Australia has a very large life science sector. And it’s a broad sector - agriculture, industrial, and medical devices and diagnostics,” said AusBiotech Acting Chief Executive Officer Glenn Cross.

Filling the manufacturing gap

Cross believes the biotech sector has the potential to fill some of the gaps left by the demise of traditional manufacturing areas such as textiles, footwear, heavy manufacturing and more recently, the automotive industry.

“There are two areas that the life sciences and biotech sector offers to fill this gap, that is food manufacturing and technology, and medical devices and diagnostics,” said Cross. “Manufacturing is a key area in which biotech can transform the Australian economy.”

Food technology and manufacturing will be a key component of the conference, with a full day reserved for agriculture and food technology.

Medical devices and diagnostics will be covered across a number of sessions including a session on personalised medicine (see below).

“This is a key area for driving the life sciences sector forward,” said Cross of medical devices and diagnostics. “It has the ability to absorb skills from the automotive industry as well as add a new manufacturing and skills base through areas like nanotechnology, biomaterials and small-scale manufacturing.”

Add to this the slowdown in the resources and mining sector, and the opportunities increase.

“We are seeing increasing interest from the Australian resource investment community to support biotech,” continued Cross, adding that the risk profile in life sciences is similar to the resources industry.

“We are seeing an increasing level of interest from private investment - high net-worth individuals and people who would traditionally invest in the mining sector plus institutional funds.”

Cell therapy manufacture and bioprocessing is another area of potential growth, although it is a few years behind medical devices and diagnostics. But progress is underway, with global bioprocessing giant DSM opening a new biopharmaceutical plant in Brisbane during the conference. This will be the first commercial bioprocessing plant in Australia and sets up another avenue for the bioeconomy to expand into.

The Asian opportunity

Another key issue for Australian biotech is Asia. Australia is in a strong position as the largest player in the Asian biotech cluster - and Asia is currently the third-largest biotech cluster on the global playing field after the US and Europe.

Cross predicts the Asian cluster will, over time, become as big as the other two and says this has been a focus for AusBiotech over the last few years.

“AusBiotech has been making a strategic push for Australia to become a key player in the Asian biotech sector,” he said, clarifying that at the moment this push is primarily across human health and agriculture. “We see these two areas as key for Australia to build a successful future in the life science sector in Asia.”

Australia is placed well to drive innovation and R&D, which are being recognised as important in Asia. The potential exists to attract investment from Asia and Cross said now is the time for Australia to develop its industry.

“We have one of the key biotech industries in the region, but that won’t last forever,” said Cross. “China especially, and perhaps India, are going to have significant industries of their own so now is the time. Australia needs to make sure it is well placed so that we maintain our position of prominence in Asia.”

The patent box

Encouraging the government to contribute to the biotech sector through public tax policy is an area of focus for AusBiotech.

These new initiatives are about creating a different model and a new way of thinking about building the economy. Two new tax incentives that AusBiotech is working on - innovative manufacturing incentive and a patient investor incentive - are one way of providing support for the biotech sector in becoming a key transformer of the economy as Australia moves away from relying on the resources sector.

These tax incentives provide benefits to the sector that then flow onto the economy by generating growth around advanced manufacturing, agricultural and biotech companies.

“We have broad opportunities in life sciences and agriculture but we also have the opportunity to replace old manufacturing with new advanced manufacturing, and most of that’s going to come from our sector,” said Cross. “There’s not going to be a lot of advanced manufacturing opportunities in Australia other than through nanobiotech, medical devices and diagnostics.”

AusBiotech has been doing some solid work in encouraging the government (and the coalition as this issue of ALS went to print) to introduce an innovative manufacturing incentive through the tax system. According to Cross, eight European countries and China have introduced such an incentive, and the US is about to introduce it.

“Typically, in Europe, they’ve reduced their corporate tax rate on the manufacturing incentive from 30 or 40% to 10 or 15%,” said Cross. “So we would be looking at a significant reduction in corporate tax rate on product manufactured as an innovative product that holds a patent, especially where that patent may have resulted from R&D conducted in Australia and where the R&D tax incentive was part of that input.”

AusBiotech was finalising a position paper on this incentive as this issue of ALS went to print. Cross had had initial discussions with the current government and coalition to ensure that both parties were aware of the policy.

“It’s called patent box in Europe and it is known as a patent box policy,” said Cross. “It is across the board, not just in the life sciences; it’s a broad-based innovative manufacturing incentive tax.”

Cross said the R&D tax incentive has resulted in an increase in clinical trials in Australia, which in turn has grown the sector by creating more jobs in that area.

An important aspect of the manufacturing innovation incentive is that it will provide companies with an incentive to stay in Australia rather than move offshore, retaining companies in Australia and developing a manufacturing base.

“It’s on the radar of both parties, certainly the Industry Department in Canberra is well aware of it and they know what is happening in Europe. As soon as the election is over, we’ll be starting that program in conjunction with other major industry bodies that have manufacturing components.”

The second initiative AusBiotech is working on is a position paper to offer more personal tax incentives to people to invest long term in the biotech sector, so-called ‘patient investors in the sector’.

“Our sector takes a long time for creation of wealth and we believe there should be personal tax incentives for people who are prepared to put their money into a company and leave it there for a long period of time.”