The life sciences sector in Australia has always been strong – with state-of-the-art research facilities and expert capabilities, we’ve punched above our weight on the global stage.
Spanning across biotechnology, pharmaceuticals, medical devices and medical technology, the sector remains highly regulated, highly capital intensive and highly reliant on funding to nurture its growth.
Being under the spotlight in recent years has only strengthened the sector’s importance. Opportunities are abundant for innovative businesses looking to grow and commercialise in a mature industry, harness the power of a thriving digital economy to push the boundaries of innovation, and develop solutions for in-demand areas supported by investments in R&D.
Between increasing vaccine production capacity, growing capabilities in medical products and technologies, and the sector’s ability to commercialise and manufacture – it’s an industry with huge potential in a market demanding agile solutions. With sustainability high on the agenda, there are ample opportunities for performance improvement to reduce energy use. These range from finding efficiencies in medical technology to using synthetic biology across agribusiness, manufacturing and healthcare.
To grow the life sciences sector, it’s crucial to enhance collaboration with Government, researchers and other industry players. This will help derive value for clients through innovation and investment, empowering organisations to be on the front foot with finding operational efficiencies.
Top trends in Life Sciences
Issues impacting businesses in Life Sciences
Technology driving efficiencies and innovation
Life science companies are no strangers to investment in R&D and innovation. The sector made a giant digitisation leap during the pandemic, implementing changes that might otherwise have taken a decade to achieve – ranging from telehealth to artificial intelligence application, integration of diagnostics and operational efficiency. Investment in technology is seen as key to increasing efficiency in processes, production and supply chains, helping offset inflationary pressures. R&D investment trends are key to support investment in technology to find efficiencies.
Investment and funding remain competitive
Despite the public race for a COVID-19 vaccine, most medical products, and pharmaceuticals undergo many years in development before hitting the market. While funding is available, it remains competitive. To encourage life sciences innovation and scientific progress, the Government has established a National Reconstruction Fund (NRF), with a key priority investment area on medical science. We’ve already seen grants around developing medical devices and MedTech commercialisation domestically – with an intent to boost capabilities to diagnose, prevent, monitor, treat or alleviate a disease or injury. These policies, along with industry collaboration and incentives, aim to support scale-up of capabilities and translate into commercialisation. The NRF and other Government incentives such as the Patent Box can be a tax effective tool to invest in additional R&D while also adding an extra layer of certainty for investors.
Quality beyond compliance
The life sciences sector is one of the most regulated in the world – and one of the most vulnerable to cyber crime, security issues and fraud. The systems and compliance in place can help mitigate risk and identify vulnerabilities before they become problems. We can help ensure you establish effective quality standards that evolve as your business grows. Whether it’s tax, audit or risk, we cut through the compliance and complexity.
Supporting your growth ambitions
Depending on where you are in your business growth cycle, you will no doubt be considering and scoping the next opportunity for your business. A merger or acquisition (M&A) can be a stream of new income, diversification, funding, market access and cash flow. Alternatively, you might want an IPO and look at options for listing both here and abroad. These transactions can be the cause of many questions around opportunities and challenges – particularly when operating under the threat of a COVID-induced recession. From deal strategy, due diligence, understanding your value and navigating complex tax in M&A implications, to agreeing terms, integrating successfully or selling a business – we’re here to advise you on the next best steps.
Attracting and retaining talent remains front of mind
The life sciences sector is highly specialised and skilled; many of these skills are sourced from all over the world. With a global shortage of people who have the expertise needed by life sciences, competition for talent is intense. Coupled with rising labour costs, employers need to look beyond remuneration and consider alternative employee incentives. From non-cash remuneration to employee share schemes, these flexible forms of compensation can be a competitive advantage to attract and retain talent, but also to protect intellectual property. In addition, the Government has put in place initiatives to address these shortages and attract more global talent, including increases to the migration cap, investment into fee-free TAFE courses, parental leave and return to work support.
International opportunities – understanding trade, tariff and custom protocols
There are untapped markets for Australian life sciences companies – the ASEAN, US and European markets already play host to many life sciences companies with opportunity for growth. It’s important to be across new and emerging trade deals, tariffs, and customs protocols to streamline your logistics and help capture new markets. In addition to programs like the Australian Trusted Trader program, you’ll benefit from having an international growth strategy that also focuses on global trade compliance.
Increased focus on ESG transparency
Environmental, social and governance (ESG) issues are high on the agenda. While life sciences manufacturing, pharmaceuticals, bio-engineering and medical research organisations could be viewed as exempt by working hard to find medical advancements and saving lives, reporting will soon become a must. Stakeholders are demanding the adoption of ESG practice with the regulatory environment changing rapidly. Domestically, there remains little guidance on reporting requirements and data points required, but legislative guidance from overseas governments offer illustrative examples. For now, ESG reporting is heavily reliant on pledge targets put in place, disclosure of business activities, potential risks and performance against sustainable finance and social impact benchmarks.
Collaboration with AusBiotech
For years, we’ve partnered with AusBiotech on the Biotechnology Industry Position report – an important piece of research exploring industry performance and trends for the future. The 2022 report highlighted how the pandemic has shone a light on the sector’s capabilities and opportunities, and cemented the industry’s importance in the eyes of the Australian Government and investors alike. Despite the sector’s growth, a shortage of capital and skills remains as the industry feeds its need for commercialisation and clinical development.
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