About Biotechnology - Industry Overview
“Biology is likely to become the greatest single driver of the global economy...The life code is a lever and perhaps the most powerful instrument human beings have ever used. It will make the Industrial Revolution seem simple, even quaint. It will become the world’s dominant language, and all of us will have to be literate to thrive.”
Juan Enriquez (Managing Director at Excel Venture Management, Founding director of Harvard Business School’s Life Sciences Project and serves on a number of boards including The Genetics Advisory Council of Harvard Medical School and The Chairman’s International Council of the America’s Society.)
Since its emergence in the early to mid-nineties, the biotechnology industry in Australia has achieved a great deal in its short and productive history.
Respected commentators and intellectuals agree that biotechnological innovation is the foundation-stone of our future, and a ‘game changer’. It is anticipated that it will underpin our economy and provide solutions to intractable problems of human and animal diseases, climate change, fuel alternatives, food security – as well as improving our quality of life.
Despite the challenges of the global economy and the degree of difficulty in building a biotechnology and life sciences sector from scratch, Australia is doing very well by any comparative measure, with an impressive return on investment from a maturing stock of quality companies. Australian biotechnology boasts a raft of success stories and a world-class industry.
Australia is already a leading location for biotechnology companies with over 900 biotechnology companies (400 therapeutics and diagnostics and 500 – 900 medical technology companies (Innovation Dynamics, 2008 & IBIS World, 2005)). The Australian biotechnology sector is still dominated by human therapeutics companies, but encompasses the fast-growing sectors in agriculture, food technology, medical devices and diagnostics, industrial applications and cleantech.
Australia’s comparative advantage is shining through as pharmaceutical manufacturing exports are on the rise. Pharmaceuticals have officially taken over as Australia’s number one export, with $4.1 billion in 2011-12. This is substantially more than the car industry at $2.8 billion and more than double the wine industry at $2 billion, for the same period. This illustrates the economic significance of the sector to Australia and provides a very different view from 20 years ago.
With respect to industry credentials, there are currently 100 ASX-listed life sciences companies, with a market capitalisation of $40.7 billion (BioForum, Oct 2012). In a global context, the Australian biotech sector boasts the largest listed biotechnology sector as a proportion of GDP in the world (Beyond Borders, 2011).
In addition, the PricewaterhouseCoopers ten year report (BioForum, Oct 2012) shows the Australian Life Sciences Index has consistently outperformed the NASDAQ Composite Index and the All Ordinaries since mid-2006. Despite the GFC and the reduction in venture capital availability, biotechnology has delivered to investors.
Take away the three majors from the Life Sciences Index and in 2008 the Index parted ways with the All Ordinaries and has dramatically out-performed it since, almost quadrupling its performance in the latest reading. In four years the often-cited index has failed to come anywhere close to biotechnology’s SME performance.
The NASDAQ Biotech Index, perhaps the best comparative measure of US biotechs, hit a 12-year high in July, but is nevertheless trailing behind the performance of the Australian Life Sciences Index. Admittedly the Australian stocks have come off a lower base but the result demonstrates a portfolio approach is an attractive investment option.
Australia’s comparative advantage comes from its world-class science and medical research, its capacity for international partnerships, cost effectiveness, and a transparent and effective regulatory system. More recently the Federal Government has introduced a research and development tax incentive, which is attracting global investor attention.
Jobs of the future will be found in innovative industries like biotechnology. The biotechnology industry already provides an estimated 40,000 direct Australian jobs (Commonwealth of Australia, 2008) in the biotech and pharmaceuticals sector, plus at least 10,320 (IBIS World, 2008) in the medical technology sector. In addition, there are many thousands of direct jobs in the agricultural and industrial biotechnology sectors and indirect jobs in dependent areas such as clinical trial teams, high-tech manufacturing, medical research and supplies to the medical technology sector and in services such as those provided by patent attorneys. Innovative industries provide high-skilled jobs with long-term prospects.
• CSL is Australia’s largest biotechnology company.
• The emerging trends of foodtech and cleantech have gained momentum, and the medtech sector is surging forward, to follow in the footsteps of medtech industry pioneers, Cochlear and ResMed.
• Australia is home to numerous world class medical research organizations, including the Garvan Institute, Institute for Molecular BioScience, Menzies Research Institute, John Curtin School of Medical Research, Walter and Eliza Hall Institute of Medical Research (WEHI), Australian Institute of Bioengineering and nanotechnology, Brain Insititute, Diamentina Institute, The Lowy Research Centre, Victor Chang Cardiac Research Institute, Baker Medical Research Institute, The Burnett Centre and South Australian Research & Development Institute.
• Most states of Australia’s mainland are now able to commercially cultivate 3 types of GM crops that have been approved by the GM regulator.
• Australian state governments are developing and implementing independent regional initiatives. Each has strong medical research programs, some having specialist expertise in areas including tropical medicine, bio-discovery, regenerative medicine, bioremediation, agricultural/industrial biotech and medical devices.