Big Pharma And Investors Eye Australian Bio-Innovation Powerhouse

Australia is the biotechnology hub of the Asia-Pacific region and is increasingly regarded internationally as a bio-innovation powerhouse. No other location in the region can offer the combination of skilled personnel, advanced technology, economic stability, scientific excellence, and regulatory strength that Australia can.

Ernst & Young (E&Y) rated Australia first in the Asia-Pacific region and sixth globally in its census of top biotech countries. Approximately 370 Australian biotech companies, most focused on global markets, generate 67% of Asia-Pacific's total public biotechnology revenues.

Australian researchers have been at the forefront of many developments in agricultural biotechnology and medical science, including plant genetics, stem cell research, proteomics, and medical device technology. Australian scientists hold numerous patents for biotechnology breakthroughs in a wide range of fields. Australian scientists were among the first to contribute to the discovery of penicillin, and they were second in the world to produce a baby through in vitro fertilization. An Australian company, Cochlear, pioneered the development of bionic hearing implants. Some of the more recent Australian world "firsts" include the discovery that Helicobacter pylori causes gastric ulcers, the mapping of the surface of the influenza virus's neurominidase enzyme, and the purification and the cloning of three of the major regulators of blood cell formation.

COOPERATIVE ENVIRONMENT

Australia's exceptional track record in medical research is due in part to numerous world-class public sector research groups like the Commonwealth Scientific and Industrial Research Organisation (CSIRO), the National Stem Cell Centre (NSCC), and Major National Research Facilities (MNRFs) such as the Australian Proteome Analysis Facility. There are also nine medical Cooperative Research Centres (CRCs), which are joint projects between industry, academia, and government. Roughly one-third of the 71 CRCs focus on biotechnology, and they have attracted significant global industry support. The CRC for Asthma includes US-based 3M Pharmaceuticals as an industry partner.

Commercial firms have committed close to US $1.3 billion over the life of the CRC Program. More than US $478 million has been announced in the latest round of funding, including A$13.15 million for a new Australian Biosecurity CRC to develop new capabilities to respond to the threat of infectious diseases in the agricultural sector. The center will focus on developing new technology and knowledge for disease detection and surveillance.

Australia also boasts numerous clusters of biotechnology expertise. These include the Queensland Bioscience Precinct, which is jointly funded by CSIRO and the University of Queensland, and brings together 700 scientists from the Institute for Molecular Bioscience, CSIRO, and the Queensland Department of Primary Industries. In New South Wales, the Australian Technology Park in Sydney houses 80 technology companies and four universities, while South Australia's Thebarton Bioscience Precinct in Adelaide encompasses biotech companies GroPep and Bionomics, as well as Adelaide University. Melbourne has four major biomedical clusters, which house approximately 4,500 researchers and include over A$500 million in research funding.

In 2003, the Australian government introduced the Pharmaceuticals Partnerships Program (P3), aimed at increasing high-quality pharmaceutical research and development activity in Australia, with a commitment of A$150 million over five years. P3 is a competitive program with three entry rounds, and it will be accessible to all Australian pharmaceutical companies that conduct R&D in Australia. The first round of successful proposals were announced in April 2004.

Australia's system for protecting intellectual property is recognized as one of the most effective and modern in the world. In 2003, the Institute for Management Development ranked Australia's patent and copyright enforcement ahead of countries such as the UK, Japan, Hong Kong, and Singapore. There are mutual recognition arrangements between Australia and key international regulatory authorities. The FDA signed a memorandum of understanding with the Australian Therapeutic Goods Administration (TGA) that allows the two organizations to exchange information on good manufacturing practice inspections of pharmaceutical facilities. This has streamlined the approval process for Australian-based pharmaceutical companies seeking to market their products in the US and made Australian biotechs a desirable investment.

INVESTMENT

Bioshares (

www.bioshares.com.au

), a specialist investment magazine following the Australian biotech and pharmaceutical industries, reports for 2003:

• Two-thirds of healthcare and biotech stocks posted positive gains, and about one-third are now generating revenue.
• Over A$500 million was raised by life science companies through IPOs and follow-on capital funding.
• The Australian Stock Exchange (ASX) healthcare and biotech sectors had a market capitalization of A$23.4 billion (18% more than a year ago), with the ASX drug-discovery and pharmaceutical sub-sectors capitalized at A$11.7 billion.

A study released in 2003 by the Australian Graduate School of Management (Professor Michael Vitale and Associate Professor David Sparling) reports that local biotechs listed between 1998 and 2002 performed well against several benchmarks. For example, an A$1,000 investment in Australian biotech in 1998 would now be worth more than A$61,000. During the same period, Australian biotechs significantly outperformed US biotechs, and the overall performance of listed Australian biotech companies was better than that of the Australian stock market as a whole.

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