Highlights from the 2021-22 Federal Budget
- New Patent Box targeting Australian medical and biotech patents will mean income generated by these patents will be taxed at a concessional rate of 17%
- Funding from Medical Research Future Fund to support development of mRNA vaccine production capacity in Australia
- From July 2021, the Government will deliver grants to businesses that produce essential and critical products (starting with common medicines, PPE and agricultural chemicals) to build capabilities that address and identify critical supply chain vulnerability
- $11.6m towards delivering a significant expansion of our bilateral tax treaty network
We have a highly-skilled workforce and proximity to emerging markets. Some of the stats are saying, and it's articulated in modern manufacturing roadmap, that 65% of the aging population will be in Asia and Southeast Asia, and we are well-positioned to support those markets.
The modern manufacturing initiative – and particularly the medical products roadmap – covers off a number of priorities that are positive for Australia. It's too often that medical product ideas are shipped offshore to businesses with greater capacity to commercialise and manufacture. The focus in the roadmap on collaboration and co-investments will be essential to not only keep more of the manufacturing and jobs in Australia, but to also capture more economic value locally as part of domestic and international supply chains.
We have many small companies in the sector that will benefit from this refocus. In fact, most of the sector is made up of smaller companies and organisations and it's important that those smaller companies have a clear focus and plans in place to take their product from development through to commercialisation.
A number of barriers to scale have been articulated in the modern manufacturing roadmap – and we should remember this has been put together by Government and industry leaders so is reflective of both the private and public barriers we have in Australia. For instance, while we have strong skills and capability in Australia, to grow the sector we need to continue to attract and retain talent – difficult with borders closed.
We also need to bring talent up through our schools and universities – requiring a greater focus on STEAM subjects and ensuring young people see life sciences as a viable and interesting career path.
Regulation must be easier to navigate. Obviously, it's important that we have strong regulation to make sure our products are up to global best practice standards – but how can we simplify processes?
Another area is energy costs – and this is about making energy affordable for manufacturing companies across the board, not just in the medical products space. Manufacturing is energy intensive, and while energy is a focus for the Government, we cannot escape the imbalance in energy costs and vast array of energy generation options in different parts of the country.
And then there is competition for capital. The sector can be capital intensive. Manufacturing in particular requires multiple rounds of fundraising along the way. The sector is truly global – it’s one funding pot that can go to different countries. It’s imperative then that we create the optimal economic conditions to attract that capital and investment into Australia and Australian companies.
I am very optimistic for the future of the sector. COVID will leave behind a lasting legacy: recognition and a new understanding of the value our life sciences companies can provide to the community and the economy. Australian companies in particular have an opportunity to harness this legacy to become a life sciences hub for South East Asia and grow our position as a significant global player.