In a tough global marketplace, focus on competitiveness is key
As the mining boom sputters out, Australia is taking a long-overdue look at ways to improve its competitiveness in a cut-throat global marketplace.
The global business environment is changing rapidly. The economic rise and technological advances of many Asian nations may open up new markets for Australia, but it is also introducing new competitors.
That’s why the Government’s Industry Innovation and Competitiveness Agenda, released this week by the Prime Minister, is a welcome step in the right direction. It shows we’re willing to step up to the plate and make Australia a more attractive investment destination, when that money could just as easily go to Singapore, China, India, or Korea.
Nowhere is this competition more evident than in the development and manufacture of medicines. The global pharmaceutical market, which is currently worth over $1 trillion, is expected to nearly double in size by 2020, and around 20% of this sum will be invested in R&D and new manufacturing facilities somewhere around the world.
With its growing population, rising living standards and an increasing burden of chronic disease, the Asia-Pacific region will be one of the main drivers of this growth. It is estimated that the middle class in the Asia-Pacific region will explode from around 500 million to 3.2 billion by 2030.
Researching, developing and manufacturing medicines is a global industry. The major companies operate seamlessly across the world, many with the balance sheets of small nations. The decision on where to invest the $200 billion a year is made at the corporate headquarters. Australia needs to stand out to attract this opportunity.
Australia has some hard-won advantages in vying for this investment. We are already home to subsidiaries of 50 leading research-based pharmaceutical companies, along with around 400 locally-owned medical biotechnology firms, employing 40,000 highly-skilled Australians. Medicines also lead in advanced manufacturing exports for Australia with over $3.3 billion last year, more than cars or wine. Australia boasts some of the world’s best research universities and manufacturing infrastructure, medical scientists and healthcare professionals, and a relatively stable intellectual property regime and regulatory system.
Our National Medicines Policy compels government, industry, the broader healthcare sector and the general community, to work together to ensure the greatest possible alignment between national health and industry policies. This strengthens Australia’s ability to provide a stable and investor-friendly business environment.
In the past three years alone, global and locally-based pharmaceutical and biotechnology companies have invested close to $4 billion in high-tech manufacturing, public-private partnerships, venture capital funds and research and development in Australia.
Australia’s prominence as an international medical technologies and pharmaceutical centre is also reflected in the partnerships between global research-based pharmaceutical companies and smaller Australian biotechnology companies and academic research institutes. Already, such collaborations have enabled the development and world-wide distribution of ground-breaking Australian discoveries such as the HPV vaccine, which is helping protect women around the world from cervical cancer.
This investment not only benefits Australians, but consumers in countries around the world. Patients in more than 50 countries rely on medicines and vaccines manufactured in Australia.
Despite these successes, we are at risk of resting on our laurels and seeing opportunities slip us by. And like it or not, Government policies are amongst the strongest influencers of investment decisions. ‘Open for business’ and a stable, predictable environment for the listing and commercialisation of new medicines with no unexpected reforms and strong intellectual property is a prerequisite if Australia is going to be an investment worthy destination. The industry has gone through tsunamis of reform over the last ten years. Now is the time for stability.
Supportive policies, such as the R&D Tax Incentive program, have made Australia one of the world’s most competitive destinations for R&D investment.
But one-off or isolated measures are no longer enough. A comprehensive investment and competitiveness framework is essential to counter Asia’s research and manufacturing attractions, while capitalising on its growth opportunities.
With the right policies in place, like some of those announced by the Government this week, Australia could double research spending, clinical trials and exports of biopharmaceutical products over the next decade.
Australia’s reputation as one of strongest and more resilient economies in the world could become even stronger. For research-based pharmaceutical companies looking for growth, few other countries can provide as many reasons for rapid direct foreign investment as Australia can.
And the ultimate beneficiaries? It will be Australians who will be amongst the first in the world to access the latest life-saving medicines. That’s definitely something we would all want to invest in.