Biomed, Victorian style: big science

Locals thank strong government support for helping to boost Victoria's biomedical industry, Melissa Trudinger discovers.

The Victorian government dubs the state 'the place to be', and has long claimed itself to be 'the' biotechnology state in Australia. With more than 250 biotechnology companies at last count, not to mention its stellar collection of research institutes and universities, the state certainly has a lot working in its favour -- particularly if you ask the locals.

"It's the dominant state," says Melbourne-based biotechnology analyst David Blake. He believes the main force behind Victoria's success in the sector is its strong private equity base, which he says comes from the long-standing engineering and manufacturing sector associated with the state. The local economy, he says, has created wealthy individuals who are used to investing their money and have enough capital to invest into more risky ventures like biotechnology.

"The mass of capital available here is not available in other states at the same scale," Blake says.

Another thing about Melbourne that Blake believes contributes to the industry is the fact that companies, and even the research sector, compete on their merits. The tendency for people in other cities to feel like big fish in a small pond can become a weakness, he says.

There seems little doubt that Victoria's biotechnology sector has also been boosted by a number of very successful programs at the state government level.

At the BIO2001 conference in San Diego, Victorian Premier Steve Bracks announced his government's lofty intentions to see the state as one of the top five biotechnology locations worldwide by 2010, as it launched its Biotechnology Strategic Development Plan, worth $320 million over the four-year period to 2005.

Among its programs were plans to establish a biotechnology unit within the Department of State and Regional Development, now the Department of Innovation, Industry and Regional Development (DIIRD) to drive investment in the industry, build the state's skills base, and support initiatives such as the Bio21 cluster.

Reaping rewards

Alongside the state government's commitment to build up the infrastructure and platform technologies available to researchers and companies within the state, the strategy is reaping rewards for the industry.

Larry Ward, co-chair of the Victorian branch of national industry group AusBiotech, and business development manager at local company Virax, says DIIRD is an enthusiastic biotechnology supporter for the state.

"They are trying to set up the environment for growth of the industry," he says. Ward is on an advisory committee for the implementation of the government's strategic initiatives. "It's important that the industry works with the government, but it's also important that the government gets the view of the industry," he says. Feedback from the "workers at the coalface" is crucial to the success of the programs, he believes.

Another supporter of the government's biotechnology initiatives is Prof Dick Wettenhall, director of the Bio21 Institute, which is due to be launched next year. "It's really clear that the state governments, and Victoria in particular, are creating opportunities," he says. "It has to be highly appreciated by us, and it certainly is by me."

Among the strongest of the government's initiatives is the infrastructure grants program, which has so far provided $120 million to strengthen research infrastructure, with nanotechnology, clinical trials, microarray facilities, plant genomics centres, research institutes and precincts, and more on the receiving end in the biotechnology and life sciences sectors. Add to that the $50 million for Bio21 and the $157 million to be spent on the country's first synchrotron, and it starts to add up to a significant amount of money.

There is a lot of careful planning by DIIRD's Science, Technology and Innovation (STI) group going into the distribution of funds, according to Wettenhall.

"The government has required a close degree of accountability for the money they have given out," he says. Among their requirements are a need for applicants to have a serious business plan and the grants are followed up by STI to ensure accountability.

"I think the [state government] programs have been exceptionally valuable in building up the infrastructure," says Monash Institute of Reproduction and Development head Prof David de Kretser.

De Kretser is chair of a DIIRD committee set up to examine the platform technologies available to researchers and biotechnology companies in the state, and identifying what is missing. He says a report on the biotechnology and research infrastructure for the sector should be available later this year.

"I think the state government has been doing pretty well," he says. "To some extent they have been showing the way."

But de Kretser also believes it would be better for the state and Commonwealth governments to work more closely together on some of the infrastructure programs.

"I would hope there ought to be strong federal support, not just for the building of the synchrotron, of projects, and for construction of beamlines," he says. But federal Science Minister Peter McGauran recently re-emphasised the feds' stance against chipping in to help build the synchrotron in the Melbourne suburb of Monash.

Critical mass

A big issue for the continued growth of the sector in Victoria, and indeed in the rest of Australia, is the creation of a sustainable biotechnology sector. To date, much of the growth has been at the early stage, with dozens of start-up companies trying to find their feet. But realistically, many companies around the country have listed too early on the Australian Stock Exchange, and are finding it hard to maintain their momentum as their cash reserves dwindle.

"Compared to the US or the UK, we often spin off companies at a very early stage," says Prof Bob Williamson, director of the Murdoch Children's Research Institute. Biotechnology companies here are often expected by investors to be successful within two or three years, but on a small fraction of the funding that a typical US start-up company would receive. "We now need to look at sustainability."

And increasingly, this issue is coming to the forefront. With the range of programs available from the federal and state governments to assist small companies in getting off the ground in the early stages, and the encouragement of the academic system for researchers to commercialise their technology, it is becoming easier for good ideas to obtain enough funding to get off the ground, and this has led to the explosive growth of the industry in the last few years.

But the challenges facing the industry increasingly include maintaining cash flow, managing growth and staffing, says Tim Murphy, the executive director of the BioMelbourne Network, an industry organisation concerned with promoting and facilitating the development of the industry within the state.

"The state is certainly putting its mind to this issue [of sustainable growth] -- it has been for a while," Murphy says. "I think the state is learning to be more responsive to industry needs, and looking toward the next stage."

Geoff Brooke, of venture capital group GBS Venture Partners (formerly Rothschild Bioscience Managers), agrees. "Clearly the state government is trying very, very hard to create a deeper biotechnology industry here," he says.

In the six or so years since Brooke returned to Australia, the industry has moved ahead in leaps and bounds. But Victoria, and indeed Australia, needs more pharmaceutical presence, he says.

"We need service providers for industry that can help add value to the development chain," Brooke says. "In my view the government should be trying like crazy to get big pharma to set up facilities here. I would be giving massive incentives to big companies to set up here."

An enhanced exposure to the pharmaceutical sector would create a snowball effect, according to Brooke, bringing with it jobs, training opportunities, and the ever importance expertise needed to take a therapeutic product from discovery to market.

Larry Ward agrees with Brooke, saying that skills in the product development area need to be built up. "Our research is great, technology transfer is getting better, but we need to work on product development. It's a long process that needs lots of [different] skills."

Companies like CSL provide a fertile ground for product development experience, and people like former Amgen vice-president George Morstyn, who have returned to Australia willing to share their experiences, contribute significantly, says Ward, but more expertise is needed.

Space for improvement

One area where GBS Venture Partners' Geoff Brooke sees a need for improvement is space for incubating companies, including lab space. This is an area that is rapidly expanding around the state, with the development of research clusters integrating small biotechnology companies, and technology parks for larger companies.

The Alfred Medical Research and Education Precinct (AMREP), which combines the Baker Medical Research Institute, the Macfarlane Burnet Institute for Medical Research and Monash University on the Alfred Hospital campus, and also houses a number of biotechnology companies including Cytopia and Starpharma, is one of the first of the biotechnology and research precincts to get off the starting blocks.

"The Alfred precinct is a good example of companies working within a precinct," says AusBiotech's Larry Ward. "Academics are exposed to a commercial environment and companies have exposure to high powered science."

Fast on the heels of AMREP is the new Monash Science, Technology, Research and Innovation Precinct (STRIP), with the first stage of construction nearing completion, and tenants including Biota Holdings and the National Stem Cell Centre.

According to Dick Wettenhall, Bio21 will fulfil another need for the sector, providing incubator space for embryonic companies, both in terms of business development and lab space. And science parks are developing in locations like Bundoora and Caribbean Gardens in Scoresby, providing space for expansion.

The state government has a number of programs supporting the development of clusters and precincts, and even the local governments are entering the fray, with an initiative led by the City of Melbourne underway to form the Victorian Biotechnology Councils Network, which is planned to enhance regional development and help set up regional alliances.

But David de Kretser cautions that the Victorian industry should be wary of too much fragmentation. "We should be conscious of the fact that given the size of what's going on in other countries, Melbourne has to be a single precinct, enhanced by organisations like the BioMelbourne Network. We really should be looking at the whole eastern seaboard of Australia as being able to offer opportunities, that is, view the whole country as one precinct" he says. "It's better to do this than be insular and non-cooperative."