Biotech CEOs are optimistic about 2016

According to the 2016 Biotechnology Industry Position Survey of industry CEOs, biotechnology is front and centre of Australia’s post-mining boom economic transition.

The 2016 survey, conducted by AusBiotech with support from Grant Thornton and a contribution from Novotech, was open to all ASX-listed and unlisted biotechnology companies. 44 companies responded and 60 companies participated in roundtable discussions held around Australia between February and March 2016.

The survey revealed key themes including economic value; business sentiment; finance, investment, listing and costs; and government policy. It found that the past year has seen increasing recognition of biotech’s growing contribution to Australia’s future wealth by government, media, local and global investors.

“Australian life sciences companies have attracted well over $2 billion in deal flow over the last 18 months, which is bolstering confidence and showing it can be done,” said AusBiotech CEO Dr Anna Lavelle. She said the Australian biotech sector’s high quality has been reflected in major global deals, including Novartis’ acquisition of Spinifex Pharmaceuticals for as much as AU$1 billion and AstraZeneca’s licensing agreement with Starpharma that could deliver over AU$500 million.

The survey reveals the importance of these deals to boosting confidence in the sector, showing that the interest and investors are there. The deals also have the added impact of showing key decision-makers in government and the investment community that the industry is delivering for Australia.

Government policy appears to be heading in a better direction given the contrast with last year’s survey, when industry leaders expressed significant concern over the failure of Australia’s policymakers to adequately respond to an increasingly competitive global environment. The sector has this year responded positively to recent developments in the commercial and policy environment, with 75% of survey respondents saying they expect 2016 to be a year of growth. This contrasts with 2015, which was described by only 60% of respondents as ‘excellent’ or ‘good’.

In a particularly significant turnaround, 41% of respondents said the environment in Australia (economic conditions and public policy) was now conducive to growing a biotechnology company, up from 16% last year. 70% expect to hire more staff — up from last year’s 64% and broadly in line with 2014 (69%) — further signalling the sector’s potential contribution to Australia’s transitioning economy.

The survey shows leaders remain concerned over the constant tinkering and reviews of the R&D Tax Incentive, with 90% saying program stability is ‘very important’ or ‘important’. 81% say they are concerned about the recently completed review led by Innovation and Science Australia Chair Bill Ferris AC, Chief Scientist of Australia Dr Alan Finkel AO FTSE and Secretary to the Treasury John Fraser. There are also concerns surrounding inadequate responses to other policy issues and general political instability.

“To ensure the momentum continues, the government needs to provide an environment where Australia’s biotechnology companies have consistency and stability around R&D tax and other incentives,” said Michael Cunningham, national head of life sciences, Grant Thornton.

The full report is available on the AusBiotech website.

Image credit: ©Rawpixel/Dollar Photo Club