Australia could generate over US$10 billion in exports to the United States and create 34,000 high-skilled jobs by accelerating US-Australia biotechnology collaboration, finds a new report by KPMG Australia and the American Chamber of Commerce in Australia (AmCham).
A Prosperous Future: Biotech reveals the economic opportunity for Australia to leverage its strengths and tap into the rapid growth of the US biotechnology sector, with total industry revenue expected to increase from US$491 billion in 2022 to US$1,250 billion in 2030.
As the United States sets ambitious targets over the next two decades in key biotech applications, KPMG modelling predicts human health biotechnology will continue to grow over the coming years due to a global increase in the prevalence of chronic disease and cancer, with R&D in the biopharmaceutical industry also seeing an uptick.
These goals canvas well onto Australia’s current US$812m biotech industry. The nation currently ranks 5th in the world in terms of research and translation and 3rd in market share for Antisera and other bloods.
The report identifies Australia’s research and clinical trial capabilities as key pillars of its comparative advantage, along with its flexible regulatory landscape, increasing investment in manufacturing, and established trade agreements in the Asia-Pacific region. Combined, these factors can make Australia a haven for biotech innovation.
The report notes that health and medical research remains one of Australia’s strongest research areas, with over 60 percent of research outputs ranked as ‘above’ or ‘well above’ world standard.
This has contributed to the number of Australia biotechnology enterprises rising by 66 percent from 487 in 2008 to 810 in 2022, with the workforce increasing by 51 percent.
US Ambassador to Australia and AmCham Patron Caroline Kennedy said: “It has been a privilege to meet people across Australia who are working with Americans on these cutting-edge technologies. I am excited to see the results of their collaborations which will build a global bioeconomy and benefit people around the world. I salute AmCham and KPMG for their recognition of the centrality of biotechnology to our future and congratulate all AmCham members for their work to strengthen this important relationship and increase the bonds of friendship between our countries.”
Report co-author Dr Brendan Rynne, KPMG Australia’s Chief Economist, said “The US biotech market is anticipated to grow significantly, and our modelling suggests Australia has an opportunity to generate up to US$10 billion in incremental biotech exports by 2030, largely in our leading areas of human health as well as food and agricultural biotechnology. Increasing Australia’s capacity to commercialise new biotech innovations is key to achieving the accelerated growth outcomes we modelled. There is no lack of opportunity to increase market share in the United States, but Australian businesses must identify their market early, differentiate their products in a very competitive market, and then build partnerships and networks in the US.”
Report co-author Doug Ferguson, KPMG Australia’s Head of Asia & International Markets and NSW Chairman, said: “To achieve this US export growth opportunity, KPMG estimates a potential inflow of US$11 billion in new US investment and the creation of 34,000 new highly skilled jobs in Australia. Getting this right could be a game changer for our biotech industry but it requires our industries and governments working cooperatively together.”
AmCham Chief Executive Officer April Palmerlee said: “The US-Australia alliance is indispensable to both nations, both strategically and economically. We have an opportunity to harness our complementary strengths, research institutions, and trusted partnership to create valuable exports, investment and jobs in a sector that will have an incredible impact on the health and wellbeing of our societies.”
To further unlock the economic opportunities in the sector and boost Australia’s global market share, the report recommends that fragmented and inconsistent incentives and an uncompetitive corporate tax structure be addressed.
Key findings
KPMG modelled three scenarios for biotechnology trade between the two countries until 2030:
- Scenario one – ‘business as usual’ based on average annual growth rate estimates trade to be worth US$2 billion, requiring 6,900 skilled jobs and US$2.3 billion of investment.
- Scenario two – assumes value of exports grows at a historical rate after COVID-19, estimating trade to be worth US$4.5 billion, requiring 15,100 skilled jobs and US$5 billion of investment.
- Scenario three – assumes Australia can increase its share of trade to the United States by maintaining strong historical growth before COVID-19, estimating trade to be worth US$10 billion, requiring 34,000 skill jobs and US$11.2 billion of investment.
Learnings for success
Firsthand consultation with successful Australian biotech firms, combined with the report’s analytical research resulted in several learnings for businesses looking to expand in the United States:
Market validation and product differentiation are critical
Companies need to determine their market early during the development of their products or services to avoid wasting resources when commercialising. Before expanding into the United States, they also need to ensure there is a market in the United States.
Deep understanding of the reimbursement landscape
Reimbursement opportunities help de-risk the development of a new technology – if a technology or product is not eligible for reimbursement, it will be challenging to find investors or secure funding for R&D or commercialisation. Therefore, early in the development phase, it is crucial for biotech start-ups to identify different forms of reimbursement, which vary across markets, so that executives can plan financials with more precision and clarity of the end product.
Building relationships with US multinationals
Researching the strategies and market segments of United States companies, their gaps, as well as areas they invest in or under-invest in, will help Australian businesses bring solutions to the right problems. Focusing on and promoting areas of interest to the US multinationals where Australian businesses have strengths – such as oncology and neurology – can increase the perception of a substantial scale in the Australian biotechnology industry.
Leveraging strengths in R&D and early product development
Australia provides a favourable launchpad for R&D, clinical stage, and early product development. The nation has a strong health and university system, great medical research, highly skilled labour, a high functioning hospital system, and access to a large patient sample. In addition, the regulatory environment in Australia also accelerates the clinical trial stage for pharmaceutical companies, assisting them to get an FDA approval faster than if they did it in the United States.
Foster collaboration between research and industry
Greater synergy between the research sector and businesses will enable sharing of expertise and resources, leading to innovative ideas and products. Through collaboration with university and research institutes, small biotech companies can gain access to research, training, and expertise beyond their employee pool, as well as receive investment-grade funding. For the research sector, collaboration with the industry leads to commercialisation of their research output, and helps scholars ensure their work is relevant to the industry.
About AmCham
The American Chamber of Commerce in Australia (AmCham) was founded in 1961 and now has offices in Sydney, Melbourne, Perth, Brisbane, Adelaide, and Canberra. AmCham aids US and Australian companies by promoting trade, commerce and investment to and from Australia.
For further information
Hayden Jewell
Corporate Communications
+61 423 868 454
hjewell@kpmg.com.au
