Australian biotech is weathering the global economic storm

Times are generally tough for new biotech companies. However, the strong Australian market, together with recent legal and patent and tax policy decisions, has provided some measure of stability and support, when compared to developments in the global economic arena.

For instance, the R&D tax credit has recently been passed into law and offers a 45% refundable tax credit to eligible entities that have a turnover of less than $20 million a year, and that are not more than 50% owned or controlled by tax-exempt entity. So if you are carrying out intensive research as a small biotech company with low profitable returns, it is worth bearing in mind that you may be eligible for this tax credit.

In other developments, the Raising the Bar Bill is intended to amend Australia’s intellectual property laws and bring them more in line with those of the United States and Europe. If you are carrying out biotech research activities or manufacturing of registered goods such as medical devices in Australia, you need to know that the Bill intends to introduce a research exemption provision. While pharmaceutical Manufacturers can already make use of a limited experimental use exemption to patent infringement in order to obtain regulatory approval of pharmaceuticals, manufacturers of other registered goods such as medical devices cannot. Under the proposed changes, acts for ‘experimental purposes’ and the experimental use of medical devices in order to obtain regulatory approval would be exempt from patent infringement.

In contrast to overseas jurisdictions, gene patent reform in Australia has been put to rest. The Senate Legal & Constitutional Affairs Legislation Committee conclusively recommended that the controversial Patent Amendments (Human Genes and Biological Materials) Bill 2010 should not be passed into law. The Bill unsuccessfully sought to restrict patentable subject matter relating to genes and other biological materials found in nature and modified from their natural form. This comes as a welcome relief to patent applicants of gene patents.

On the funding front, the Australian Government has been visibly supporting both commercially-focussed and academic researchers in the country. Recent developments include a planned $65 million facility for the manufacture of biologics in Brisbane, established as a result of collaboration between the Netherlands-based biologics manufacturer DSM biologics and the University of Queensland’s Australian Institute for bio engineering and nanotechnology brackets (AIBM). In Sydney, the new $25 million National Imaging Facility (NIF) Research Cyclotron combines a 18 MeV cyclotron for the production of radioisotopes with an advanced radiolabelling and biomedical imaging facility. Australia is investing in building research facilities.

Research funding, however, has been a contentious issue in Australia this year. Although the anticipated $400 million cut to National Health and Medical Research Council (NHMRC) funding did not eventuate, the Federal Budget has cut funding to various research centres and programs by $601 million. Nonetheless, an estimated $9.4 billion remains earmarked for research in the 2011/12 financial year. The Australian government is also set to go ahead with its clean energy future plan which includes a $1.2 billion Clean Technology Program for manufacturers, providing incentives for businesses to reduce emissions and invest in clean energy. If you are a business investing in R&D and activities relating to proof of concept and early-stage commercialisation of clean technologies, you may wish to consider applying for funding from the $200 million Clean Technology Innovation grant program.

Therefore, on the face of it, despite tough economic times and a strong Australian dollar, the Australian biotech sector remains on its feet. Funding for biotech research activities remains available and legislative decisions on the proposed ban on gene patents have been welcomed by many patent applicants. While we have yet to see how the changes will affect inventors in the field, biotech in Australia looks to be weathering the global storm.

Contact Vicky Longshaw ( for further information.

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