AusBiotech’s annual survey of biotechnology industry CEOs shows that while Australia’s strength in life sciences remains in a growth trajectory, there is a worrying fall in business sentiment across the sector with uncertainty over the fate of the R&D Tax Incentive.
AusBiotech, supported by Grant Thornton, today released the Biotechnology Industry Position Survey 2019 showing business sentiment in the sector is pessimistic due to the steady erosion of government support.
Only 14 per cent described the Australian operating environment as ‘conducive to growing a biotech business’ – down from 37 per cent the year before. This is the worst result this decade and points to a challenging period ahead. Twenty-six per cent said the environment ‘works against growing a biotech business’, up from 16 per cent in 2018.
The Survey’s key findings revealed business sentiment measures show a cooling of industry confidence in the face of an uncertain political environment and an ongoing quest of the Government to limit the R&D Tax Incentive (RDTI).
While industry metrics are still sound and growth expected, the survey revealed a ‘wait and see’ approach from companies in regard to employment – with a sharp increase in the plan to hold staff levels steady (24% to 47%) and a decrease in the intention to hire (73% to 51%). The characterisation of the past year saw a significant drop in those that experienced an excellent year (from 29% to 19%).
The industry’s frustration on the continued threat to the RDTI was ‘loud and clear’. Both the lack of vision for industry growth levers and plans to cut support to the sector has shown a disillusionment across the industry; the likes of which we have never seen before.
The R&D Tax Incentive is the most critical centre-piece programme in the translation of Australia’s world-class research into treatments, cures, diagnostics, medical devices and vaccines. The programme has been successful in helping attract more investment in R&D and fostering a strong Australian life sciences clinical trials and the R&D sector.
Lorraine Chiroiu, CEO AusBiotech says, “Industry is frustrated at the Government’s lack of commitment to a business environment that better supports our cutting-edge research and development, however, Australia’s strength in life sciences still shines globally and contributes nationally – economically and socially.”
Michael Cunningham, National Head of Life Sciences, Grant Thornton Australia says, “We need greater support to the commercialisation process to keep the profits and future development opportunities from the life sciences sector here in Australia. Emerging markets in the Asia-Pacific region are making biotechnology a priority, and Australia must continue to provide an attractive landscape for life sciences firms to conduct R&D, manufacturing and domestic distribution activities to fuel growth in 2019 and beyond.”
Alongside business sentiment and policy concerns, the Survey found:
- There is a prevailing view that support for tech transfer and commercialisation diminishes as research leaves public institutions on the commercialisation pathway.
- Poor metrics, combined with a lack of understanding of the skills and investment needed for the industry’s future, has conspired to drive poor policy decisions.
- Regenerative medicine is lighting up the horizon, with Australia preparing for a regenerative medicine revolution. This relatively new science field is expected to disrupt the health treatments available to patients world-wide.
- Medicinal cannabis has burst onto the scene. The global sentiment towards medicinal cannabis is changing, and Australian biotechnology companies are claiming the space to demonstrate the medicinal value for patients.
The 2019 Survey can be accessed here.