Research funding must boost commercialisation to secure Australia’s biotechnology industry

If the nation's globally focused biotechnology industry is to thrive, Australian governments must secure existing programs to promote commercialisation of research, an expert panel has told a CEDA forum in Adelaide.

AusBiotech, CEO, Dr Anna Lavelle said few Australians realise that the nation's biotechnology industry, including biopharmaceuticals, was worth $32 billion with 350-400 companies producing greater export income than the wine or auto-manufacturing industries.

The forum heard that South Australia had a strong presence in the biotechnology sector.

The panel described biotechnology companies as those that use living organisms to produce products or processes to improve crops, medical treatment or fuels.

Traditional biotechnology includes fermentation while new biotechnology includes the use of gene technology for cancer treatment, the panel said.

Bionomix, CEO, Dr Deborah Rathjen, said SA is the base for Bionomix which produces small molecule pharmaceuticals with "block buster potential" - sales of around $1 billion per annum.

The company has international partnerships and is producing new drugs with fewer side-effects to treat anxiety and depression, and treatments for metastatic renal cancer and breast cancer, she said.

The expert panel which also included industry representatives, Headland Vision, Proprietor, Dr Meera Verma, GBS Venture Partners, Partner, Dr Joshua Funder, and Biosensis, Director, Dr Leanna Read, said greater policy focus was required to:

• Promote commercialisation of research and translation of research into products;
• Secure continuity of existing industry programs;
• Remove obstacles to growing biotech companies such as stamp duty on deals between biotech companies and withholding tax for loss-making companies;
• Promote Australia as a destination for clinical trials, which would drive better treatment and greater opportunities for translation in the Australian health care system;
• Create industry sabbaticals for academics to allow them to participate in translational or commercialisation projects while maintaining their tenure and students;
• Promote superannuation fund investment in innovative companies by leveraging government funding;
• Boost the Innovation Investment Fund from $100 million to $500 million per annum to successfully attract superannuation funding in innovative industries; and
• Remove the moratorium on Genetically Modified crops in South Australia.

Dr Verma said that while the Australian biotechnology sector had great opportunities for expansion, it was hindered by a number of roadblocks.

"Agricultural biotech is being strangled in SA because there is an arbitrary holistic moratorium on GM crops. That indicates a lack of understanding about the science behind it - a lack of interest in challenging those ideas... We are the only state that has it - even Tassie doesn't have it (the moratorium) any more," she said.

"It would be great to get these (roadblocks) all in a bucket and say right, if we are really going to be serious about innovation… let's turn this thing around."

Long timeframes to bring medical products to market, coupled with a shallow venture capital market, created particular challenges for Australian companies, the panel said.

They also discussed While biotechnology companies relied on collaborative deals particularly with overseas companies to gain skills, intellectual property and capital for different stages of development, these transactions were hampered by taxes such as stamp duty and withholding tax.

"One of the big things I find annoying is withholding tax - you do a deal as a biotech company and you find five to 10 per cent of the money goes to the Federal Government and why? You are a loss making company and you pay what, for a very small company, is a significant portion of that windfall to the Government," Dr Rathjen said.

The panel said continuity of existing government programs such as Commercialisation Australia which provides funding to companies to develop a product for market and the research and development (R & D) tax credit which leverages private investment in innovation, was critical to biotechnology which has long horizons for returns.

"If we change governments, they will change the scheme. I think that is one of the worst things about these government programs - industry hates change. I don't care about the perfect program - it takes you a long time to learn the tricks of it," Dr Read said.

While research funding currently prioritises basic research, more funding must be devoted to translating research into marketable products, the forum heard.

"We currently spend $9 billion per annum on R&D and of that, less than one per cent if you take out the auto subsidies, we spend on translation. We need to allocate a percentage of funding into translation - we could start with three per cent and move to 15 per cent of R&D," Dr Funder said.