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Healthy Skepticism Library item: 498

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

 

Publication type: news

Roberts P.
Biota votes Australia best for research
Australian Financial Review 2004 Aug 23


Full text:

One biotechnology company has found it’s cheaper doing business here.

The idea that Australia is a cheap location to perform research and development received a strong endorsement last week from anti-viral research company Biota Holdings.

Biota, well known for the breakthrough science behind its anti-influenza drug, Relenza, is well placed to judge the relative costs of R&D here and in the heartland of biotechnology, the United States.

Biota owes its success with Relenza to a close relationship between the company and researchers in institutions such as the CSIRO and the Victorian College of Pharmacy. Biota has long split its R&D operations between company laboratories in Melbourne and Carlsbad, California, employing 15 scientists here and 10 in the US.

R&D expenditure last year was about $11 million in Australia and $8 million in the US.

According to Biota’s chief financial officer, Andrew Macdonald, R&D costs in the Californian operation are between 1.5 and two times higher than in Melbourne. Wages and rents are the biggest differentials.

Not surprisingly, Biota has decided to close its US operation and transfer its research programs to a new, 2500 square metre building it is constructing near Monash University in Melbourne’s south-east. The chief executive and the business development functions will stay in the US. “We should be able to achieve very significant savings off our overall research expenditure,” Macdonald says.

A group of US staff will be in Melbourne soon, for a fixed period, to transfer the technologies. Biota is hoping that some of the US staff will be so enamoured with Melbourne that they will want to stay on.

Part of Biota’s savings will come from consolidating its R&D teams, which, over the company’s 19-year corporate history, have been spread across metropolitan Melbourne.

For example, teams of scientists will move from the nearby Monash University campus and from the St Vincent’s Institute to the new corporate centre in October.

The company’s research priorities are therapies for HIV and hepatitis C, as well as partnerships with companies Thermo Electron in influenza diagnostics and Sankyo in second-generation flu therapies.

Having a ready supply of willing public research partners and having a low cost base may be enough to attract an Australian drug development operation, but the same cannot be said for multinational corporations
(MNCs) that dominate pharmaceuticals and whose presence in Australia is a critical success factor for the burgeoning biotechnology sector.

While MNCs typically spend the equivalent of 15 per cent of turnover on R&D, those operating in Australia are more likely to spend about 3 per cent. The gap is a serious concern, one that previous governments attempted to bridge through the so-called Factor (f) program.

How it worked was that MNCs that increased their R&D spending were paid higher prices for the drugs they sold through the pharmaceutical benefits scheme.

With the future of the PBS now agreed between the main political parties in the context of the free-trade agreement with the US, perhaps it is time to revisit Factor (f), which showed promise in building critical mass in the pharmaceutical sector in its all too short life.

 

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