A look at year that was and what’s in store for 2012

For the biotechnology industry and for AusBiotech this has been a monumental period with the Tax Incentive legislation passing, the strong performance of the sector in an unpredictable economic market, and most recently with the Senate Inquiry into the gene patents Bill agreeing with AusBiotech and the sector that the bill “should not be passed.”

This has arguably been the best year ever for the biotechnology industry with the strong performance of the sector. The industry’s success, maturation, and resilience are demonstrated by the significant M&A activity we are seeing, the licencing deals that are being done and the capital raisings.

The performance of the overall industry has remained positive, despite economic woes continuing around the globe. The Australian biotech industry is the fifth most innovative in the world, according to an article by the Scientific American World View magazine.

A trend that started more than a year ago is continuing as Australian biotechs attract growing interest from international investors. This is shown via the deals that are being done, as attendance steadily increases at the AusBiotech Investment series events.

There’s a buzz amongst investors, most notably about the value offering available here, and there is also much excitement about the Tax Incentive and what it will mean for the future of the companies being showcased.

The model is working for us and the ‘fruit’ from the trees we planted 10 year ago is ripe. This is the pattern of development that shows governments and investors that we have been able to successfully deliver returns to investors during a time of restraint. Since 1998, the market capitalisation of the Australian life science sector has grown from $4.8bn to $31.7bn.

Securities in the biotech sector have outperformed the ASX 300 consistently since 2009. Australia can also boast it has the largest listed biotechnology sector as a proportion of GDP in the world. These metrics are indicating internationally that we are a country that can take discoveries through the innovation process to commercialisation, and to value inflection points that investors reward.

The industry is still celebrating the long-awaited and very exciting news that the R&D Tax Incentive legislation had finally been delivered, marking the best news the industry has had in years. The passage of the R&D Tax Credit legislation is the successful culmination of more than two years of advocacy by AusBiotech.

Start-up innovation companies, especially biotechnology companies trading in loss, will sit in the sweet spot and will be the biggest beneficiaries from the Tax Incentive’s 45 per cent refundable component, and the legislation will also benefit large innovative companies by reducing the cost of conducting eligible R&D activities in Australia by up to 10 per cent, making Australia a more competitive location for conducting biomedical and pharmaceutical R&D and clinical trials.

The Senate committee asked to inquire into the Patent Amendment (Human Genes & Biological Materials) Bill 2010, reported on the 23 September, finding that “the Bill should not be passed.” We hope that this outcome will now pave the way to see the Bill abandoned and attention turned to how the “Raising the Bar” Bill can instead meet the needs of Australians.

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The view of AusBiotech and many other high-standing organisations and individuals is that not only will the Bill not do what it intends, but it may well cause many other unintended consequences – the worst of which would result in a reduction in access to new medicines, diagnostics, and technologies for the community.

AusBiotech initiatives this year include an expanded offering of investment events, showcasing member companies. In the midst of the GFC we have been able to establish a sustainable investment series, which has gone from strength to strength and we now have an established offering of events both around and Australia and overseas, particularly in the US.

AusBiotech also this year launched AusEVENTS, a professional conference organising (PCO) business for science and technology events, which has already held its first event in late 2011 – The Alternative Fuels Summit.

AusBiotech is focused on the hard issues; on capital attraction; on delivering to members’ business bottom line; and to supporting the development of good public policy.

The reality for Australian public policy is that Australia can no longer see itself as simply a mine and a farm, although they are very important parts of our economy. We cannot see ourselves as a ‘one-shot-on-goal’ economy. We need to diversify and ask the question: What are the emerging industries? What are the future industries that will generate wealth and jobs for young Australians? And those industries are in the biotechnology space.

If we look at the headlines on the front pages of our daily papers, the big issues of our time include food security, alternative fuels, ageing populations, climate change – and governments have a responsibility to support the industries that are developing technology-based solutions to address them.

In policy terms AusBiotech in 2012 will be focussing on the roll-out of the Tax Incentive, more attention to advanced manufacturing and greater access to venture capital funds. The annual CEO Industry Position Survey will begin in mid-January and provide an important opportunity for members to participate in the consultation process to determine AusBiotech’s policy priorities.

AusBiotech will work with new Ministers next year after the Prime Minister announced a re-shuffled front bench this month, and a newly expanded mega Department of Industry, Innovation, Science, Research and Tertiary Education (DIISRTE) to be established and led by two Cabinet Ministers – The Hon Greg and Senator the Hon Chris Evans.

AusBiotech will continue to work with former Innovation Minister, Senator the Hon Kim Carr, who will be dedicated to manufacturing, an issue that has gained significant importance for AusBiotech of late.

Members please note that the AusBiotech office will close for the Christmas/New Year break from midday 23 December and re-open on 9 January 2012. On behalf of the Board and team at AusBiotech, I wish you all a very happy and safe Christmas and look forward to working with you on your behalf to make 2012 the best year for biotechnology yet.