Biotech assesses implications of trade deal

While the proposed Free Trade Agreement between Australia and the United States is likely to have an impact on the biotechnology industry here, it's not yet clear exactly how that will shake out.

The FTA -- which will impact on imports and exports, intellectual property, investment into Australia by US interests, and health issues including the Pharmaceutical Benefits Scheme -- was signed on Monday by representatives of the two governments, although it remains to be ratified.

Among the potential benefits is a lifting on tariffs over the next four years for most Australian exports into the US.

Not so clear is the impact of the lifting of the AUD$10 million barrier to investment into businesses in Australia, and the increase of the takeover threshold from AUD$50 million to $800 million. But foreign ownership restrictions on CSL will be retained.

The jury is also still out on the changes to the Pharmaceutical Benefits Scheme. The key change appears to be improvements to the transparency and timeliness of PBS processes, as well as more input opportunities and avenues for appeal for companies seeking to list new medicines. At the same time, the government says that access to affordable medicines will be maintained, and prices will not be increased as a result.

In addition, the government has promised to introduce more transparency to the marketing approval process for generic pharmaceuticals, reinforcing the intellectual property rights afforded drugs coming off-patent under the existing framework.

According to the CEO of pharmaceutical industry body Medicines Australia, Kieran Scheemann, the FTA agreement would result in a more transparent and approved PBS system and better and timelier access to new medicines.

His sentiments were echoed by former Pfizer executive and biotechnology company director Kevin Fahey.

"I have also heard the argument that multinational pharmaceutical companies would be more likely to invest in Australian R&D if they got more return on their new generation drugs," Fahey said.

Blood fractionation arrangements are also an issue in the FTA, with the move to examine by 2007 whether competitive tender should be used to select supplier of fractionation services. Currently CSL has the contract for fractionation services in Australia. But the policy of Australian self-sufficiency for blood products would not be removed.

Bob Moses, former CSL VP and chairman of several biotechnology companies including Amrad and Meditech Research, said that the FTA would probably take some time to settle in.

"My general view, though, is that it is in the long term very healthy for the Australian economy and trade with the US," he said.

"I have no doubt it will open doors for more comfortable entry of biotechnology into the US."