Queensland Life Sciences Industry Report 2012 (PDF, 3.5MB)

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Queensland Life Sciences Industry Report 2012 58 In an early 2011 article, David Blake, Co-editor of BioShares wrote: “The ASX-listed biotech sector has gone through a period of tremendous transformation in the last two years as a dozen or more companies have matured into successful companies, generating revenues or verging on having products registered. At the same time upwards of 30 have had to close their doors or significantly change their business….However, with the Nasdaq Biotech Index, …showing a very strong uptrend, perhaps biotech, not just in the US, but in Australia and elsewhere is about to be very popular with investors again.” 89 Some of the deals that will have contributed to positive industry sentiment include the following: Cephalon offered to pay Mesoblast $130 million upfront and another $220 million to acquire a nearly 20 per cent stake in the company in December 2010. The total deal value, should Mesoblast achieve development and commercial milestones, could reach US$1.7 billion. Acrux licenced its testosterone treatment to Eli Lilly in March 2010 in a deal worth up to US$335 million plus potential royalties of about US$220 million. Qiagen acquired all the ordinary shares in Australian diagnostics company Cellestis Ltd in August 2011 in a deal worth $341 million. 9.2 Outlook — Barriers, Risks and Challenges 9.2.1 Opportunities for Industry Expansion Survey participants (82) commented on strategies to assist expansion of the industry. Respondents selected from ten options including an ‘Other’ option (Table 52). TABLE 52: Areas that will assist expansion of the Life Sciences Industry Rank Area Proportion of total responses 1 Improved industry representation 17% 2 Government organisations becoming early adopters of Queensland innovations 15% 3 research or manufacturing facilities and educational institutions 12% 5 Increased foreign investment into Australia 10% 6 9% 8 Skills enhancement through university courses 8% 9 Improved engagement between clinicians and researchers 3% - Other (see below) 5% Responses (direct quotes shown) in the ‘Other’ category included: Leveraging the skills and professional networks that exist Trade base and support just to keep R&D and manufacture alive at all Scholarships to enhance skills development in industry Grants for collaboration with SMEs Reduced regulatory framework Changes to investment rules to allow investment capital to flow to commercial R&D organisations Reinstate Commercial Ready Program; abolish payroll tax for R&D/manufacturing firms Maintaining staff capability as a large cohort move towards retirement over the next 10 years Several respondents offered comments (direct quotes) on roles for government in encouraging expansion of the Life Sciences Industry: “Bet on the innovators — with real money, not just moral support or programs which require innovators to spend money on other researchers” “Very important that Government do not encroach on successful commercial entities already established in Queensland such as contract manufacturing, or building such facilities [where they] already exist. Very important to train researchers [on] how to commercialise research outcomes or have systems in place that allow publicly funded research to be commercialised for [the] public good.” 9.2.2 Barriers to Future Income Growth — Access to Capital In the 2009 survey, a lack of access to capital was identified as the most significant barrier to future growth and the greatest risk/challenge facing organisations. This is not a new concern, with limited access to finance or capital also identified as the major barrier to growth by respondents to the Queensland TMD Survey in 2007. Access to capital is an issue that affects companies right across the Australian Biotechnology Industry 90 as well as those active in innovation in any Australian industry. For innovative Australian companies, limited access to funds and skilled personnel were the two most commonly identified barriers to innovation in an ABS study published in 2010. 91 A similar situation is evident in many international Life Sciences industries, including the USA, Canada and New Zealand. Jones Lang LaSalle in a Life Sciences Cluster Report 92 noted that: “investment capital will be the biggest hurdle for Canada’s emerging Life Sciences sector. The recession reduced spending in the sector and although venture capital returned in 2011, it remains in short supply.” 89 D Blake, ‘Will The IPO Market Open For Australian Biotechs in 2011?’, AFG Venture Group Dispatches. 90 AusBiotech, ‘Biotechnology Industry Position Survey’, January 2012 91 Australian Bureau of Statistics 8158 — Innovation in Australian businesses, 2008-09, quoted in Australian Government, ‘Australian Innovation System Report 2011’acessed at http://www.innovation.gov.au/AISReport. 92 Jones Lang LaSalle, ‘Life Sciences Cluster Report, Global 2011’; accessed 4th July 2012. www.joneslanglasalle.com/ResearchLevel1/Global_Life%20 Sciences%20Cluster%20Report_2011_gb.pdf.
Similarly, the major constraint to both the R&D and commercialisation activities of New Zealand bioscience companies in 2005, 2007 and 2009, was access to capital. 93 In January 2011, US President Obama announced a new initiative, Startup America designed to ‘accelerate high-growth entrepreneurship’. Recognizing that access to capital was a critical barrier to the creation and growth of innovative start-up companies, the initiative included strategies designed to unlock access to capital and reduce barriers to entrepreneurship. 94 In the current survey, companies were asked to comment on the extent to which limited access to finance was impacting their business. For 72% of respondents (97), limited access to finance was having an impact (very significantly, 32%; significantly, 21%; moderately, 19%). 28% of respondents indicated that this barrier was having little or no impact (Figure 26). Figure 26: Impact of limited access to finance of QLS companies (97 respondents) 43% of companies (96) were optimistic or very optimistic that this barrier could be overcome e.g. through successful capital raising, deploying other strategies to raise funds, or alternative strategic directions. 19% were pessimistic or very pessimistic about overcoming the barriers to accessing capital (Figure 27). Figure 27: Outlook of companies affected by limited access to finance (96 respondents) 9.2.3 Barriers to Future Income Growth (other than access to finance) Looking beyond the issue of access to capital, survey participants (104) nominated other major barriers to future income growth from eleven options including an ‘Other’ category (Table 53). TABLE 53: Barriers to future revenue growth Rank Area Proportion of total responses 1 Limited access to government grant funding 15.6% 2 Small size of domestic market 13.0% Increased domestic and/or international competition 12.8% 4 Increased regulatory compliance costs 11.9% 5 Inability to secure skilled technical and managerial staff 11.0% 6 Access to overseas markets 9.8% 7 Increased patent protection costs 6.9% 8 Lack of access to analytical testing, research or clinical trial services 5.9% Lack of commercialisation experience or expertise (e.g. to reach proof of concept) 10 Inability to outsource sufficient manufacturing capacity 5.7% 3.8% 11 Other 3.6% 9.2.4 Risks and Challenges Survey respondents (111) nominated the issues that they considered to be the major risks or challenges facing their organisation (Table 54). Respondents were able to select more than one risk. TABLE 54: Major risks or challenges facing QLS organisations Rank Risk/challenge Proportion of total responses 1 Access to sufficient capital for growth or market entry 14.0% 2 High Australian Dollar 12.8% Regulatory Issues 12.8% 4 Global financial turmoil 11.7% Access to R&D funding 11.7% 6 Workforce challenges (e.g. skills shortages) 11.5% 7 Competition 8.9% 8 Consumer behaviour 7.3% 9 Climate change and associated regulatory change 3.1% 10 Technology and systems 2.5% 11 Transport and distribution 2.0% 12 Other 1.7% 93 NZBIO 2010 Bioscience Industry Report 2010; commissioned by the Ministry for Science and Innovation. www.nzbio.org.nz/portals/3/files/Final%202010%20 Bioscience%20Industry%20Report.pdf; accessed 4th July 2012. 94 See The White House accessed at http://www.whitehouse.gov/economy/business/startup-america. 59
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Queensland Life Sciences Industry Report 2012 (PDF, 3.5MB)

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