Last week’s National Innovation and Science Statement committed over $1 billion to improve Australia’s innovation performance.
It included a commitment from the Federal Government to establish a Biomedical Translation Fund in 2016. A new $250 million body will independently invest in promising biomedical discoveries and assist their commercialisation in the global market place.
The Fund is based on a recommendation of the 2013 McKeon Review. It will be managed by an external manager and is designed to be self-sustaining in the long term.
NAVIGATING THE “VALLEY OF DEATH”
The McKeon Review identified a gap in support for research from the endpoint of the ARC Linkage Projects scheme (or the NHMRC Matching Development Grants program) through to the early clinical stages of biomedical research.
This period of development, known in industry as the “valley of death”, will be better managed by the Fund through average investments of $10 million per project or portfolio company.
It is common for many potentially valuable projects to fail at these early stages when the necessary funding is not obtained. These “invisible ideas” are not developed and the health and economic benefits are never realised.
Although the details have not been released, the Fund is intended to encourage private sector investment during these early stages of commercialisation. The ultimate aim is to accelerate the commercialisation of Australia’s cutting edge medical research, retain the intellectual property in Australia, and stop the flow of talented Australian researchers(and their research) going overseas to find funding.
MEDICAL TECHNOLOGIES AND PHARMACEUTICALS GROWTH CENTRE
It has also been suggested that the Fund will contribute to the newly-established Medical Technologies and Pharmaceuticals Growth Centre.
The Centre is expected to establish a national presence through additional “nodes” located within key universities across Australia. It will play an important role in connecting the country’s best researchers with businesses working on the development of medical technologies and pharmaceuticals.
In the long run, the Centre will try to pull research through to market development by improving coordination between industry, public and private research organisations as well as state and federal government initiatives.
The Centre will also accelerate industry initiatives which have a strong impact on supporting SMEs.
The McKeon Review proposed that the Federal Government would provide half of the contributions for the Fund with the other half contributed by institutional investors on terms designed to recognise the high risks involved in early-stage investing.
The Federal Government has instead elected to reserve the $250 million from the landmark Medical Research Future Fund (MRFF) which is expected to reach $20 billion by 2019-20.
The Fund will receive its funding by reducing the capital contributions to the MRFF by $125 million in 2015-16 and 2016-17. The MRFF will still be fully capitalised in 2019-20 meaning that investment will be available for medical innovation almost immediately rather than waiting for the MRFF to be fully capitalised.
The Federal Government intends the Fund to operate alongside the MRFF to expedite investments in biomedical innovations to promote the progress of commercialisation.
Industry associations, such as the Association of Australian Medical Research Institutes, have responded positively to the Fund’s announcement.
The value of Australian publicly listed life-sciences companies was $31.4 billion in 2012. With over 2000 companies, Australia’s health and biomedical hub is the largest in the Asia Pacific.
With a small number of significant commercialisation success stories (including CSL Limited, Resmed and Cochlear), the Biomedical Translation Fund has the potential to improve Australia’s track record. The Fund has also been welcomed by CSL which, theAustralian Financial Review reports, is trying to understand how it can participate in the Fund.