Cook's MD named health and pharma executive of the year

Managing director of Cook Australia and AusBiotech member Barry Thomas has been named the 2013 ‘Health and Pharmaceutical Executive of the Year’ by The CEO Magazine. The Executive of the Year Awards, held last week in Sydney, recognise individual excellence of high-level executives and the contributions they have made to their companies.

Thomas took the opportunity to speak out on the need for a tax incentive to keep manufacturing and related R&D in Australia and his support for the Australian Innovation and Manufacturing (AIM) Incentive - a ‘patent box’-style incentive that applies a lower tax rate to profits from locally manufactured goods, based on intellectual property (IP).

Industry leaders, including AusBiotech, Cook Medical, Deloitte and the Export Council of Australia, are seeking further tax reform to provide incentives for innovation and manufacturing to support Australia’s future and keep us internationally competitive by attracting business and the resulting jobs and exports.

AusBiotech advocates making tax incentives an asset for innovation and business, with three pillars:

• Retain the R&D Tax Incentive, which is a top priority for the life sciences industry;
• Introduce the AIM Incentive, to keep home-grown IP in Australia once it reaches commercialisation, as well as attracting IP from overseas; and
• Introduce fiscal incentives for investors in pre-revenue companies.

The purpose of the AIM Incentive is to encourage innovation by providing an incentive to locate high-value jobs associated with the development, manufacture and exploitation of IP, including patents, in the country with the incentive. The incentive can also be used to attract overseas IP and associated benefits (such as jobs, skills and manufacturing) to Australia.

While R&D incentives are designed to encourage activities that will result in innovation, the AIM Incentive is aimed at commercial activities that follow on from the R&D activities by providing tax relief on income from qualifying IP.

Australia needs the AIM Incentive as IP is highly mobile and can be easily separated from the jurisdiction where it was developed and migrated to low-tax jurisdictions or where there are ongoing incentives. As support phases out, Australian IP is vulnerable to being sold or manufactured overseas and the resulting community and economic benefits going with it.

In the last two decades, Australia has been steadily losing manufacturing to Asia, while governments continue to prop up traditional manufacturing with public money. Meanwhile, innovative manufacturers with the jobs and economic support of the future, like life sciences, are being left to unfavourable market forces. Over the past six years, more than 100,000 manufacturing jobs have been lost, with a further 85,660 forecast to go before 2018.

Nine nations (eight in Europe and China) have enacted patent box-style regimes. In 2012, a bipartisan bill with a 10% tax rate for qualifying IP income was introduced in the US House of Representatives. Some countries’ patent box incentives go beyond patents.

The AIM Incentive also has the potential to attract new investment from overseas, as well as keeping ‘home-grown’ manufacturing within the country. It will encourage high-tech innovation and advanced manufacturing to stay in Australia.