SUBMISSION TO THE Queensland Biomedical and Life Sciences 10-Year Roadmap AUGUST 2016 AUSTRALIAN ACADEMY OF TECHNOLOGY AND ENGINEERING
SUBMISSION TO ADVANCE QUEENSLAND Queensland Biomedical and Life Sciences 10-Year Roadmap The Australian Academy of Technology and Engineering (ATSE) 1 welcomes the opportunity to provide input into Advance Queensland s Biomedical and Life Sciences 10-Year Roadmap. Below are responses to the specific questions most relevant to ATSE, which were outlined in Advance Queensland s Discussion Paper: Data Question 1: A more up-to-date profile of the Queensland biomedical and life sciences sector is needed. What do you consider is a reliable method for data capture to accurately profile this industry in Queensland? ATSE agrees that data capture on the sector is critical and needs to be improved. It is vital that the data profile is up-to-date, in order for there to be an appropriate level of understanding on the depth of the industry. An updated data profile would likely open the eyes of Advance Queensland on how many industries there are in the sector. For example, many of the biomedical and life sciences companies are startups. Thus, data capture must be inclusive of all businesses, especially start-ups. An updated profile of the sector could be easily obtained from industry peak bodies, as many already have all the necessary data in their systems. The Queensland Government could employ a Project Officer to contact all peak bodies and request to obtain information on their industry members. Peak bodies include Queensland Life Sciences, Ausbiotech and Heath Tech Meetup. With a capable project manager, the data completion work could be completed in 3 weeks and then the Government would have a comprehensive database that would have a wide range of uses. It is worth noting that Health Tech Meetup is a volunteer-run organisation. In order for it to continue to support the industry over the long term, it needs government support in terms of providing funding for personnel infrastructure. Finally, to improve efficiencies, the Queensland Government should provide better access of information across its divisions. This way, project officers across divisions will be aware of the current state of the industry. 1 ATSE advocates for a future in which technological sciences, engineering and innovation contribute significantly to Australia s social, economic and environmental wellbeing. The Academy is empowered in its mission by some 800 Fellows drawn from industry, academia, research institutes and government, who represent the brightest and the best in technological sciences and engineering in Australia. The Academy provides robust, independent and trusted evidence-based advice on technological issues of national importance. ATSE fosters national and international collaboration and encourages technology transfer for economic, social and environmental benefit. www.atse.org.au
Vision Question 2: Does the vision statement reflect a challenging but achievable vision for the industry in Queensland? If not, what is a realistic ambition given the nature of the industry? ATSE does not believe that the vision statement is realistic. ATSE does not believe that it is realistic that Queensland s biomedical and life sciences sector could be globally competitive in 10 years. In 10 years, the sector may have parts which are globally competitive, such as manufacturing or device development, but it is unrealistic that the entire sector as a whole will be globally competitive. It is important that the vision is achievable. ATSE suggests that the vision statement could be changed to: By 2026, Queensland will be home to vibrant integrated and globally competitive institutions and companies within the biomedical and life sciences sector. The sector will be recognised for its strong skills base, supporting infrastructure, advanced manufacturing capabilities, and world leading research and development, delivering sustained economic growth to create the knowledge-based jobs of the future. Most of Queensland s institutions are already globally competitive and there is a real commitment from the sector s companies. ATSE therefore suggests that insertion of the word vibrant, to indicate that there is change, growth and excitement in the sector. Industry overview Question 3: Barriers to accessing emerging global markets include access to finance and skills and industry regulation. Do you agree? What other barriers do you see for the biomedical industry in Queensland? At a state level, what can be done to assist companies to participate in the global marketplace? ATSE agrees that access to finance and skills and industry regulation are the key barriers and believes that finance is the main barrier, above all others. Advance Queensland programs have been exemplary in trying to mitigate these key barriers. However, a further initiative that the Queensland Government could implement is to provide advice to companies on how they can access Federal money. Many companies appear to be unaware of many Federal funding opportunities. The Queensland Government could therefore provide an information desk and/or website. Companies could then contact the Government to obtain useful information about State and Federal programs and tax concession opportunities. Additionally, the Advance Queensland website should include a link to the Federal government website about funding programs available to businesses. Comparative advantages and opportunities Question 6: Does the expertise identified in this paper accurately reflect the state s strengths? Are there other strengths that can be developed or ways existing strengths can be further exploited? The Academy agrees that the identified expertise reflects Queensland s strengths. One strength that needs development is collaboration. ATSE is pleased that a large number of Advance Queensland programs require collaboration. This is a real strength of Advance Queensland and it should be 2
continued. It is important to realise that unless the requirement of collaboration is tied to funding, there is little incentive for organisations to engage. Thus, any activity which supports collaboration would be developing an additional source of strength for the industry. Question 7: Does the existing infrastructure meet the needs of industry? If not, what additional infrastructure is required to support the growth of the biomedical industry? The Academy does not believe that the existing infrastructure is meeting all the needs of the industry. While some needs are met, there is room for improvement. However, it is unrealistic to expect Queensland to provide all the necessary infrastructure support. Instead, Queensland would benefit from collaborating with other states, such as Victoria, to combine resources and jointly improve infrastructure accessibility. This would also give a basis for further collaboration. An excellent example that Advance Queensland could learn from is Therapeutic Innovation Australia (TIA)2. Through collaboration, TIA is bringing together all components of infrastructure that are needed for drug development. Question 8: What lessons can be learnt from the past experiences of startups in the sector in Queensland? One of the most important lessons to learn from the past is that grant funding needs to be secured and consistent over the long-term. Access to seed funding is still the largest problem that Queensland biomedical companies face. Inadequate access to capital is also the major reason universities do not support spin-outs, as they are not profitable enough. Too often, funding schemes would be introduced for helping to grow companies and then the schemes would abruptly be abolished with a change of government. The funding that the companies were reliant on would be cut, which resulted in many companies falling over. One example is the Innovation Voucher program3, which was introduced in June 2010, but no longer exists. The industry needs consistency and bipartisan support of funding schemes, to prevent future sudden stops in funding. Government policies and programs Question 9: How important is the R&D Tax Incentive in attracting and retaining companies in Australia? How would industry be affected by a change to the R&D Tax Incentive? The R&D Tax Incentive is vitally important in attracting and retaining companies in Australia. ATSE is opposed to any further rate decreases in the tax incentive. A reduction of the level of payment or removal of program would be disastrous. Companies need to be supported at the earlier stage, to ensure their viability. There are companies in Australia that would not have survived if it were not for the R&D tax incentive. Not only is the incentive keeping Australian start-ups alive, but it is also attracting US investment and use of our infrastructure (employment). 2 http://www.therapeuticinnovation.com.au/ 3 http://statements.qld.gov.au/statement/id/70088 3
One potential change to the R&D Tax Incentive that would benefit companies would be to provide the funds quarterly or bi-annually. Currently, companies have to borrow money on the basis that they will receive the money back at the end of the year. This borrowing process is financially impeding companies and slowing down development. The Queensland government could lobby the federal government to reconsider the previous method of quarterly payments Another positive change to the R&D Tax Incentive would be if was adjusted to encourage businesses to collaborate with research organisation. Creating a tax incentive in Australia that requires collaboration has the potential to readily and substantially improve business-research collaboration. Six OECD countries already offer R&D tax incentives to businesses that collaborate. Those countries are Belgium, France, Iceland, Italy, Hungary and Japan. Australia could learn from these established incentives to adapt the current R&D Tax Incentive and include a collaboration component, which suits the type, scale and size of Australia s industries. Question 10: How would the AIM patent-box incentive benefit industry? ATSE believes that the AIM patent-box incentive would provide some benefit to industry, as it would provide a tax concession to companies that are developing IP locally. Question 11: Are there any regulatory changes needed at a national, state or local level to enable industry growth? One area that governments should look into is insolvency. Currently the bankruptcy regulations in Australia force companies to stop R&D if funds are running low. This is in great contrast to the US, where companies are protected and they can keep developing their innovations. The regulations also inhibit companies from being able to attract and hire the best people, as many are wary of companies that have limited funds. Challenges Question 12: In your experience, are the barriers set out in figure 4 the main impediments to business performance? What initiatives have been effective in assisting your business overcome barriers and why have they been successful? Of the listed barriers in Figure 4, the Academy believes that finance should be listed at the top, as it is the largest barrier that biomedical businesses face. Capability should also be included in the list. Owing to financial constraints, biomedical companies find it especially difficult to find and attract appropriately skilled directors and executives. Often biomedical companies are not capable of providing an appropriate salary rate to attract the most capable leaders. In general, the salaries of CEOs within the life sciences sector are less compared with other sectors, such as accounting or financial services and retails, sales and marketing4. More initiatives such as the Entrepreneurs program5, which provides funding for half an executive s salary over 2 years, are needed. Strategies like this would be useful for assisting in the salaries of key people and enabling start-ups to finance effective secretarial support. 4 https://associations.net.au/resources/event-presentations/mark-werman.pdf 5 https://www.business.gov.au/assistance/entrepreneurs-programme-summary 4
Question 13: What are your experiences in accessing skilled workers? Where are the skills gaps? What can be done by industry and by government to improve access to skilled labour? ATSE believes that the most significant skills gap within the biomedical industry is access to medicinal chemists who have industry experience. The Queensland government recently supported the Queensland Emory Drug Discovery Initiative (QEDDI) initiative6. QEDDI is a 10-year partnership between The University of Queensland, the QIMR Berghofer Medical Research Institute and Emory University in Atlanta, USA to collaborate on new drugs and vaccines for treating cancer and infectious diseases. This initiative is enabling the translation of world class academic drug discovery, by bringing in industry expertise during the early stage drug and design development work for free. It is a fantastic initiative which is overcoming the skills issue. The initiative facilitates skilled workers to spread their skills across a number of opportunities. Programs such as this should be supported and enhanced, to counter the skills shortage of medicinal chemists. Question 14: What are your experiences in accessing capital? How could access to capital be improved? What are the lessons learnt? Accessing capital and it is the largest problem within the biomedical and life sciences industry. It is particularly important at the very early stage of a business but it is often extremely difficult. A number of Queensland funding schemes, such as Advance Queensland s Business Development Fund7, are providing much-needed assistance to Queensland businesses in gaining access to capital. However, state programs are often constrained by their small scale and small funding amounts, which limits their impact. Additionally, some of the schemes within Queensland overlap federal schemes. ATSE therefore suggests that similar state and federal programs could be linked, to improve effectiveness. The Queensland government should consider leveraging off the Commonwealth Government granting schemes, to avoid duplication of government granting infrastructure and increase accessibility of capital to Queensland businesses. Question 15: How do you see a culture of collaboration between research and industry being fostered within Queensland? ATSE is very pleased and impressed that the Advance Queensland grants are focussed on collaboration. Industry-research collaboration is proven to be hugely beneficial to sectors and the economy. Thus, ATSE encourages the Queensland Government to continue on this trajectory by ensuring that all current and future granting programs encourage collaboration. Question 16: How can Queensland build the scale of the biomedical and life sciences sector? The scale of the biomedical and life sciences sector can only grow if it is supported. The most important element for advancing the sector is consistent and bipartisan funding support from the Queensland Government. 6 https://www.uq.edu.au/news/article/2015/11/queensland-initiative-find-new-drug-treatments-secures-state-funding 7 http://advance.qld.gov.au/entrepreneurs-startups/business-development-fund.aspx 5
Question 17: What are the attributes of a successful health and knowledge precinct? A major flaw of health and knowledge precincts in Queensland is that they are usually competing with each other for sponsorship and support from companies. There are only a small number of large-scale companies that are willing to act as anchors for these precincts. This means that most of the time precincts are competing for same companies. There is currently a large demand of the precincts compared with a limited supply in companies. ATSE believes that precincts would benefit from differentiation, to reduce competition. If precincts focused on different industry sectors, such as agriculture, tourism, life sciences, or medical, this would reduce competition and it may even create an environment which fosters greater collaboration. Differentiation has already been done successfully through university colleges within the education sector. The Queensland Academies are state schools for students in years 10 to 12, specialising in specific fields and located across three campuses, next to a Queensland university8. The fields include creative arts (within the Queensland University of Technology), health sciences (linked with Griffith University) and science, mathematics and technology (collaboration with the University of Queensland). This type of initiative provides an excellent platform for health and knowledge precincts to learn from in harnessing their specific strengths and creating more identifiable and unique precincts. ATSE would be pleased to recommend members of the Academy s Health Technology Forum to provide Advance Queensland with further information. For further assistance, please contact Dr Milla Mihailova, ATSE Research and Policy Officer, at milla.mihailova@atse.org.au or 03 9864 0920. 8 https://qa.eq.edu.au/ 6