AusBiotech’s bioeconomy building

The Australian biotechnology industry has been hit with a double-whammy this year: the global credit crisis has put a brake on high-risk capital investments and the sharemarket has looked dodgy all year.

Then the Federal Government decided to put its two cents’ worth in and cut funding to the most important program for start-up technology companies in the country, Commercial Ready.

As AusBiotech CEO Dr Anna Lavelle puts it, the biotechnology industry in Australia cannot be sustained by market forces alone. The Federal Government signaled early its intention not to fund industry in a sector-specific way, but had to back off from that step once it became obvious that large swathes of its heartland would be none too pleased if it allowed the local car manufacturing industry to go under.

The biotech industry is not holding its breath that relief will come soon, following the release of Dr Terry Cutler’s green paper on the national innovation system.

And yet, as Anna Lavelle also likes to say, biotech is the future. She refers to the growing, global concept of the bioeconomy, in which biotechnological innovation becomes part of the solution to many of the issues we face today.

“What I like to say is, if you think of everything that’s on the front page of the dailies, anywhere in the world, what is it?” she says.

“Fuel costs, food, biosecurity and terrorism, healthcare, the ageing population, climate change – they are the big issues. Now all of these things can be impacted by biotechnology, so how could it not be the thing of the future? It is right in the sweet spot of all of our key issues. [Biotechnology] is not the whole answer but it is part of the answer for all of those things.”

Climate change is the obviously the most important issue facing the world, and will continue to be so for the foreseeable future. And biotechnology has a major role to play in finding solutions, she says.

“We really need to be ramping up our attention on climate change initiatives, looking at how we can make non-arable land arable, dealing with drought-tolerant crops,” she says.

“That brings us into the question of GMOs, and in the last 12 months both NSW and Victoria have lifted the moratoria on GMOs, although WA and Tasmania want to maintain theirs. That’s fine, the states can make their decisions, but the east coast is now able to grow GM crops and that is where the companies are going to be targeting their efforts.”

Lavelle believes that particular battle is over, although probably not the war, and that the current debate consuming the world over food versus fuel doesn’t have much relevance here.

“We are not that interested in corn or what is called first generation biofuels – not interested,” she says. “We are only interested in second-generation biofuels, which are going to use things like the rubbish from sugarcane, the bagasse. You can’t do anything else with it so you might as well get some energy out of it.

“And also algae: there is a pilot program in South Australia looking at algae and trying to turn that into an energy source. There is a lot of interesting in those sorts of things that are not related to food. So I think Australia has done the right thing there.

“In a way, America is at a disadvantage in that area, as they are still having that debate, and unfortunately for them, it is going to be tough in Congress. A number of the congressmen have a conflict because they own significant amounts of acreage under corn and that is used for biofuels. We don’t have that conflict in Australia.”

---PB--- Commercialisation and Commercial Ready

The axing of the Commercial Ready and Commercial Ready Plus – a proof-of-concept grant - programs came as a body-blow to the Australian biotech industry, as not only did it cut up to $700 million out of the innovation system, but the actual cost is doubled if the matching venture capital money is taken into account.

Lavelle says it was a tremendously damaging decision with absolutely no support in the sector. “Nobody thinks it is a good decision. Even people who have never got a Commercial Ready grant and never will get a Commercial Ready grant think it is a bad idea.

“It was non-equity diluting funding that could then be matched with private equity. These programs are third-party validated by the private investors. If the private investors don’t think they are any good then they are not going to put their money into it.”

Lavelle had hoped a bridging program would be recommended by Cutler’s Innovation Review board to see the biotech industry over the hump, but is concerned that something must be done expeditiously. “We cannot have them waiting until the next budget – another year of rolling it out. By then companies would have gone overseas or gone under.

“The biotechnology industry in Australia cannot be sustained by market forces alone. I’m very concerned with the fact that we put large sums of money into research and development at our universities, which is a good thing and needs to happen, but we are very sloppy about pulling that fantastic work out the other end and commercialising it. Biotechnology cannot be successful without appropriate public policy. Having sympathetic and supportive public policy is the enabler that gets the industry heading in the right direction. That’s what we need in Australia.”

AusBiotech 2008 is being held at the Melbourne Convention Centre from Sunday, October 26 until Wednesday, October 29.