Call for a strategic effort towards advanced manufacturing

CSL (ASX:CSL) Chief Financial Officer Gordon Naylor has stated that Australia is in the position to secure a globally competitive, locally based advanced manufacturing sector which would see the country finally close the gap between its research and commercial worlds.

Speaking this week at an event held by CEDA (the Committee for Economic Development of Australia), Naylor said the ability to secure advanced manufacturing investment — particularly in the medical research sector — would be within reach if Australia made a genuinely strategic effort.

“Australia has the essential building blocks for an advanced manufacturing sector capable of converting Australia’s R&D efforts into high-value products for global markets and in turn building strong enterprises, high-quality jobs and a virtuous circle supporting the foundation R&D infrastructure,” Naylor said.

“The problem is, we are not strategic, when other countries are, in seeking to make Australia a commercially attractive location for investment in advanced manufacturing. So other countries secure the investment and Australia does not.”

Naylor made note of CSL’s own experience last year in locating a state-of the-art specialty blood products plant in Switzerland, despite the company undertaking a major part of the foundation R&D in Australia. He explained, “One of the most significant impediments to Australia’s competitiveness, at least as a location for advanced manufacturing for export markets, is its high corporate tax rate — fully three times that of some other jurisdictions.”

Naylor claimed that Australia’s competition is not low-wage, low-cost countries, but rather highly educated countries with strong research institutions and skilled employees. He said if Australia is to see more investment in advanced manufacturing, governments must appreciate that capturing footloose investment would bring new sources of taxable revenue.

With this in mind, CSL has suggested that Australia should adopt a strategic differential tax rate of 10% for advanced manufacturing, which would arguably not cannibalise existing tax revenues because it targets economic activity that would not otherwise be undertaken in Australia.

“If we in Australia were serious about advanced manufacturing, then more of what CSL does would happen here and there would be many outward-looking, globally competitive Australian enterprises flanking us — with great benefits for the nation,” Naylor said.

Naylor’s presentation came in the wake of CSL Behring’s submission of a Biologics License Application (BLA) to the US FDA for its novel investigational recombinant factor VIII single-chain (rVIIISingleChain) for the treatment of haemophilia A. In a pivotal clinical trial, rVIIISingleChain met all primary endpoints.

“Today, we have the only recombinant single-chain factor VIII product in late-stage development for the management of haemophilia A,” said CSL Chief Scientific Officer and Director of R&D Dr Andrew Cuthbertson. “We are excited to be one step closer to providing this innovative treatment to patients in the US.”

CSL (ASX:CSL) shares were trading 1.65% higher at $97.76 as of around 3.30 pm on Wednesday.