Biotech heavyweights CSL and Cochlear have said the federal government needs to offer stronger incentives to encourage local innovators to build their inventions in Australia rather than overseas.
While the local medical technology sector has welcomed Prime Minister Scott Morrison’s $1.5 billion plan to boost advanced manufacturing across six key industries, including medical products, it has warned that policymakers need to think beyond simply throwing money at the sector.
Dig Howitt, the chief executive of ASX-listed hearing implant maker Cochlear, said the government’s focus on medical products was welcome, but warned that creating high-quality jobs in the sector would need funding initiatives to be backed up by other policies.
This could include tax incentives for profits made from locally developed intellectual property such as those offered by many other countries, he said.
“In particular, introducing a tax incentive that encourages onshore commercialisation of R&D should be a priority. Twenty-four countries around the world currently have such an incentive in place, including 15 EU nations. These countries have an advantage over Australia when growing, retaining and attracting medical innovation and manufacturing,” Mr Howitt said.
A spokeswoman for CSL, which has been critical to the government’s COVID-19 vaccine strategy, said the company was pleased to see the focus on the medical technology sector, but noted that significant “market-based policy initiatives” would be needed for the plan to succeed.
“CSL looks forward to policy initiatives that strengthen the expertise and capacity we have in Australia including tax incentives to promote the onshore commercialisation and manufacturing of intellectual property derived from domestic R&D. We are hopeful that schemes of this type will be included in the budget next week,” the spokeswoman said.
The federal government has been trying to revise Australia’s research and development tax incentives scheme for the last two years, with cost savings previously projected to amount to as much as $1.8 billion.
On Thursday, the Prime Minister told the National Press Club that more details about research incentives would be outlined in next week’s budget.
Boss of Melbourne-based biotech firm Starpharma, Jackie Fairley, told The Age and The Sydney Morning Herald that Australia must incentivise local production post-pandemic. Ms Fairley said Starpharma would consider making the COVID-19 nasal spray treatment it is currently developing in Australia at some point. However, the company is likely to start production in Europe.
Ms Fairley has 30 years of experience in the local sector and she felt local manufacturing options for medical technology had shrunk over the last decade.
“I think it’s important to retain advanced manufacturing capabilities and [introduce] appropriate incentives to consider manufacturing locally,” she said.
“This is a very small market – it’s located a long way from a lot of the other ones.”
Meanwhile, managing director of venture capital firm OneVentures, Paul Kelly, said “the devil is going to be in the detail” of the government’s manufacturing plan.
OneVentures is a major private investor in medical startups through its $170 million healthcare fund. Dr Kelly said the local startup ecosystem was strong, but Australia must compare its incentive settings to other countries like Israel and Singapore.
“It’s about making sure what we’re offering is competitive, because globalisation means that innovation can go anywhere,” he said.
The Prime Minister also spoke on Thursday about the government’s manufacturing plan having a decade-long time horizon, and members of the medtech community said they backed this long-term vision.
Chief executive of startup accelerator MedTech Actuator, Buzz Palmer, said the next few years would be critical for the sector.
“The next 10 years are going to be very interesting — and Australia is aligned beautifully in many ways for this moment, there is a moment right now we can capitalise on,” Dr Palmer said.
Any manufacturing blueprint would need to have a strong plan for how to spin research out of labs and into commercial settings faster, he said.
“The truth is if we’re able to commercialise IP [intellectual property], the dividends that are created are phenomenal.”
Source: Thanks smh.com