Biotech Industry Calls for Tax Breaks to Encourage Local Drug Trials

Strategic Insights -

The biotechnology industry in Australia is crying out for tax breaks to encourage investors to back late-stage drug trials, with the industry's cash-strapped sector facing significant challenges in funding its operations. Leon Serry, an industry stalwart, has been lobbying the Federal Government for a 100% tax deduction for investors who support local phase III studies, the final and most expensive clinical hurdle before a drug can be approved for the market. The Government's recent budget initiatives have been met with skepticism by industry experts, who argue that the measures do not go far enough to address the sector's funding needs.

Key Takeaways:

  • The biotechnology industry in Australia is facing significant challenges in funding its operations, with many companies having to license products to overseas drug companies due to the high cost of late-stage studies.
  • Industry expert Leon Serry has been lobbying the Federal Government for a 100% tax deduction for investors who support local phase III studies, which he believes would encourage investors to put more money into the sector and keep Australian companies from having to go offshore.
  • Recent research by independent biotech analyst David Blake revealed that about a quarter of listed biotechnology companies would be unable to fund their operations for more than a year without having to raise extra money.
  • The Government's recent budget initiatives, including a $200 million extension of a venture-capital program and tax concessions for investments in early-stage funding vehicles, have been criticized as insufficient by industry experts.
  • Biotech expert Michael Vitale described the budget initiatives as "a minuscule amount of money" and expressed skepticism that they would have a significant impact on the industry.

Statistics:

  • There are more than 130 listed drug development and medical device makers in Australia.
  • Only a handful of these companies have taken products into phase III trials due to the high cost of late-stage studies.
  • Leon Serrys estimates that a tax deduction scheme would cost no more than $300 million a year, which the Government could re-coup from royalties on sales of successful products.

Sources:

  • Serry, Leon (2023). Interview with ABC News.
  • Blake, David (2023). Research report: Financing Challenges in the Australian Biotechnology Industry.
  • Hardy, Keith (2023). Interview with The Australian Financial Review.
  • Vitale, Michael (2023). Interview with The Australian.