News Story

The biggest hole in Australia’s health and medical research effort

Australians like to think we punch above our weight on the world stage, and our sports stars and Hollywood success stories certainly suggest we do. In reality, however, Australian culture has another face; that of innovation and initiative stymied by fear of failure. Nowhere is such risk aversion more evident than in the field of medical entrepreneurship.

Despite the high quality of Australia’s medical research and health care practices and systems, we cannot claim a single world-class, home grown pharmaceutical company. And, this isn’t a matter of size; Denmark, Sweden and Switzerland all boast pharmaceutical companies which rank in the top 20 in the world. NovoNordisk, for instance, is Denmark’s most profitable company, employing 27,000 people and about one in five of Denmark’s biomedical researchers.

Our lacklustre performance in pharmaceuticals represents a very large hole in an otherwise vibrant health and medical research effort; a hole which must be filled if we are to realise our potential in improving the health and wellbeing of Australians.

A strong local pharmaceutical industry makes a very big difference to any country’s capacity to deliver health care. These companies discover, develop and deliver new therapies while employing thousands of medical research scientists and other health care professionals. CSL is our best performing health-sector company, ranking in the mid-30s internationally in terms of total revenues. However, CSL’s core business is vaccines and plasma protein biotherapies, not pharmaceutical drug development.

Are we not as good at discovery research as we are at sport? Not necessarily. Our pharamaceutical research publications and patents, the usual indicators of research strength, always rank among the best in the world. The reason for our failure to turn world-class research into better outcomes for patients lies back at the beginning of the pharmaceutical development chain. Australia fails to support the early clinical development of the new therapeutics its researchers discover, which means many potential therapies never leave the lab or are sold overseas.

An example is the commercialisation of Gardasil, the Australian-developed cervical cancer vaccine. Commercial rights lie with Merck, although CSL and University of Queensland have an equity stake. This vaccine is an example of a winner that might have formed the basis of a local pharmaceutical company, but instead was lost offshore.

The success or otherwise of new treatments depends largely on achieving promising results in initial clinical tests, a process usually supported by venture capital. But, the venture capital available in Australia for pharmaceutical development is woefully inadequate; the entire national total of available venture capital funds is comparable to the capacity of just one mid-size venture capital firm in the US.

My own team at UNSW has developed a new class of anti-cancer drugs, the first of which is being trialled in cancer patients in the UK because we could not secure financial support to trial the compound here, despite its potential to change cancer treatment and improve the survival chances of patients. Our second generation compound will be trialled in Sydney but only because of the generous support of the Cancer Institute of NSW. We must secure venture capital funding for the next phase of clinical testing if these potentially life-saving drugs are ever to see the light of day.

Turning laboratory discoveries into new and effective therapies for patients is largely a numbers game. Many new treatments fail in early testing either because of unwanted side-effects or poor efficacy, so the more treatments that are tested the higher the likelihood of finding a winner. To do this, we need more venture capital. One source is superannuation funds. Another is tax breaks for high-wealth individuals or companies investing in early clinical testing of new pharmaceuticals. Either would make a huge difference

Most successful pharmaceutical companies were founded on one winner. Australia desperately needs that winner and the entrepreneurship to capitalise on it. This will only happen if we can find a way – and the conviction – to fund the development of our discoveries.

Professor Philip Hogg, the recipient of the 2009 Cancer Institute NSW Premier's Award for Outstanding Cancer Researcher, will participate in a debate on this topic this evening (Monday31 August) at the University of New South Wales.

Media Contact: Steve Offner | 9385 8107 | | Media & Communications Unit

Also see article from the Australian Financial Review, 1 September 2009

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