Innovation fund attracting foreign investment, says fund manager

The Prime Minister’s $500 million innovation fund has already attracted significant international interest and will attract offshore investment to the country, according to life sciences fund manager Jeremy Curnock Cook.

Curnock Cook, the managing director of BioScience Managers, said several offshore biotechnology groups are taking advantage of the fund to broaden their Australian exposure. “Indeed,” he said, “a lot of the international investors that I speak to in the sector have been asking why this sort of ‘for profit’ fund with a mix of government and private money can’t be repeated in their own countries.

“I would not be shocked to see the idea copied, particularly if it turns out to be successful in turbocharging the commercialisation of homegrown healthcare technology and in returning profits to investors and the government.”

Curnock Cook said there is a high likelihood that good investment returns will be combined with greater activity in the life sciences sector as long as experienced active managers are used so that they can select companies with lower risk and potentially higher returns.

“There are certainly plenty of Australian companies with excellent, close-to-market clinical trials that will now be able to reach commercial outcomes much faster,” he said.

“This money is very welcome and will hopefully provide a template for further investments in coming years.”

Curnock Cook added that while the $500 million biomedical translation fund being overseen by Innovation Australia Chair Bill Ferris is making good progress, there are still some details to be ironed out, including the nature of the encouragement that will be offered to attract private funds.

“There are proposals for skewed returns under which the government would get a lower return until the investment is clearly profitable, and for skewed fees, which would see the government bear more of the fees until the fund was in profit,” he said.

He said whichever model is chosen, it is important for Australia’s superannuation industry to copy its offshore pension fund colleagues and invest more heavily in homegrown health science innovations with clear commercial applications.

“Part of that is coming to grips with the fact that active management fees to invest in this area will always be higher than those applying in other parts of investment markets,” he said.

“There are no shortcuts and our hope is that the superannuation funds will be prepared to pay higher fees for the prospect of good performance, as long as managers are also prepared to open up their books in a transparent way and show that this is a real fee for service, not a straight cut.”

Curnock Cook said superannuation funds also need to invest in skills and brokers in hiring qualified analysts to identify the best investments in the life sciences sector.

“Without that sort of investment in human infrastructure, one cannot hope to succeed in making the best selections of the opportunities available,” he said.