Professor Michael Vitale, of the Australia and New Zealand School of Government, Attended the BIO 2006 Conference in Chicago. (April 16, 2006)

    "[B]y any measure, biotechnology activity in Australia  trails Boston, Seattle, San Diego, San Francisco, and [in the] US states of Maryland and New Jersey, in addition to many hubs outside the US."

Professor Michael Vitale was reporting his observations and conclusions in The Age following the annual Biotechnology Industry Organisation (BIO) Convention (April 9-12). And the comment above was provoked by Victorian Premier Steve Bracks speaking at a BIO press conference who reiterated his goal of making Victoria one of the world's five leading biotechnology hubs by 2010,"This is a brave goal," Professor Vitale writes.

He reports:

[T]he accountancy firm Ernst & Young used BIO to launch the latest edition of their annual Beyond Borders review of biotechnology around the world.

Generally, E&Y took a positive view the achievements of biotechnology sector in 2005, and of its prospects for the future. The sector's revenue rose about 20 per cent last year, and although it still loses money overall, the loss is a smaller proportion of revenue than ever before. Revenue in Asia Pacific rose 46 per cent, driven largely by CSL. Sadly, CSL was the only mention of Australia during the E&Y presentation.

 

Stem cells, the subject of an Australian-US collaboration announced on the first day of BIO, were described as a "disinvested technology", in which Singapore, Korea, India, and China would lead the way. It was particularly disappointing that Australia's contribution to stem cell research, in which governments invest significant amounts, was not mentioned.

 

The amount of venture capital going into Australian biotechs is uncertain, but would be significantly less than $100 million a year - 2-3 per cent of the US total. That ratio is worth thinking about. If a venture capitalist put $100 million into a single Australian company, that company would have roughly the same level of investment as the typical US biotech by the time it makes an initial public offering.

 

Australian biotechs will, for the foreseeable future, continue to be funded largely by retail investors. Venture capital and other private sources of funds are in short supply, forcing companies to list early and raise money often. Governments that expect biotechnology to produce revenue, jobs and exports must do more to support the sector than handing out wine and stuffed koalas [at international conferences]. Government support has been overwhelmingly focused on basic research; the funding mechanisms have been captured by universities and research institutes, with little attention given to the need to commercialise as well as to publish.

 

Support does not have to mean handouts - indeed, the sector would do well to move away from its dependence on government grants. A "HECS for Biotechs" program, that is loans for fledgling companies, to be repaid if and when a company's earnings reach a certain level - should be implemented. More should be done to encourage overseas biotechs to establish operations in Australia. In biotechnology as in education, our neighbours are steadily becoming our competitors - Singapore used the occasion of BIO to announce $US8 billion ($A11 billion) in biotechnology funding over the next five years,

The Australian tax system is not friendly to overseas companies or executives. Global biotechs certainly need to be in the Asia Pacific region, but they do not need to be in Australia, and for the most part they aren't.

And Concurrently The Sydney Morning Herald's Anna Patty reports,  "Directors of 18 competing medical research institutes have made a joint plea to the Premier, Morris Iemma, to stop the brain drain from NSW... [T]hey warn that declining investment in medical research facilities has contributed to the loss of at least 10 of the state's top scientists and a failure to attract staff from other countries... [I]ts share of national grants is at stake because the NSW Government has not provided enough funding for new laboratories and buildings."

Among the signatories are Tony Cunningham, executive director of the Westmead Millennium Institute, and Peter Schofield, executive director of the Prince of Wales Medical Research Institute as well as former NSW's treasurer, Labor's Michael Egan, who chairs the Centenary Institute, and former premier Neville Wran, chairman of the board for the Victor Chang Cardiac Research Institute.

Ms Patty writes, "The scientists say NSW Government funding for medical research infrastructure has already dropped from 36.9 per cent in 2000 to 21.2 per cent in 2005, as a proportion of grants from national and international sources. In that time, national and international peer review grants have doubled from $30,900,384 to $60,947,517. But state funding for infrastructure has risen from $9,751,200 to $12,139,145. State funding plays a big role in leveraging grants from agencies such as the National Health and Medical Research [Council]."

It is unlikely that the sector will receive any significant increase in support any time soon. A spokeswoman for the Treasurer, Michael Costa told Ms Patty, NSW was a national leader in cancer, spinal, diabetes and respiratory disorder research. "The NSW Government has provided more than $324 million for medical research in NSW over the last three years, together with funding for biotechnology and research and development. Last month $7 million was allocated for an asbestos research centre at Concord Hospital."

In short Mr Costa has no intention of taking the 18 directors' concerns seriously.