Your SlideShare is downloading. ×
Biotechnology GT survey 2011 Australia
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Biotechnology GT survey 2011 Australia

299

Published on

Published in: Business, News & Politics
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
299
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
1
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. BiotechnologyIndustry Position Survey April 2011
  • 2. Welcome Contents Key findings of the survey 3 Demographics 9 Background 4 Survey participants 10 Survey findings - Sentiment 5 About AusBiotech 11 Survey findings - Financing 6 About Grant Thornton 11 Survey findings - Government policy 7It’s vital we formally seek views from the industry’sleaders based on experience, knowledge and politicalinsight to gain a comprehensive picture of theAustralian biotechnology industry.Dr Anna LavelleChief Executive OfficerAusBiotech Ltd For the Australian biotechnology industry to be supported it must first be understood. This survey is an important step in gaining that understanding and laying a foundation to secure greater support. Michael Cunningham Head of Life Sciences Grant Thornton Australia2
  • 3. Key findings of the surveyWelcome to the annual Biotechnology Industry Position Survey.This research has been conducted as part of both AusBiotech andGrant Thornton’s ongoing commitment to the industry.• Business sentiment is optimistic with 2010 characterised as either a good or excellent year by 56% of respondents, 75% expecting their business to grow and 67% confident to extremely confident that the Australian industry will grow during 2011.• Expansionary employment strategies were indicated by the majority of respondents, with 52% of companies intending to hire more staff this year.• Despite an optimistic assessment of their business and the industry, only 13% of respondents indicated that the Australian operating (economic and public policy) environment was conducive to growing a biotechnology company, while 52% indicated that the operating environment was working against the industry.• 23% of respondents indicated that they had less than 12 month’s funding available and 58% indicated that they are considering or will raise capital during the current year.• The overwhelming majority of listed respondents indicated their current share price undervalues their company.• The significant delay associated with the Research and Development Tax Credit legislation announced in the 2009/2010 Federal Budget was identified by 61% of respondents as an area of frustration and the most concerning public policy issue at a Federal level. 60% said that the passing of the legislation will help their business and that they want access to it as soon as possible.• 76% of respondents identified support from state governments as an issue of concern. Biotechnology Industry Position Survey 3
  • 4. BackgroundThe annual Biotechnology Industry Position Surveyasks the industry’s CEOs to provide views andinformation to identify trends, issues and build metrics.At a glance Industry snap shotAusBiotech’s representation and promotion of the biotechnology Australia continues to be the leading location for biotechnologyindustry continues on impactful and critical issues. While input companies in the Asia-Pacific region with almost 400on public policy is a year-round and core part of AusBiotech’s biotechnology companies and 600 medical technology companies.work, it is vital to formally seek views from the industry to get The industry is characterised by many small to mediuma comprehensive picture of the Australian industry from its leaders. private and public companies. There are currently more than The annual biotechnology industry position survey, proudly 100 ASX-listed life sciences companies.supported by Grant Thornton, sought the views of CEOs onthe operating environment within the industry. The survey The results enable evidence-based statements about the The survey results provide an independent perspective of themagnitude of issues and trends and what would be likely to impact of the current economic and regulatory environment on theaddress them. biotechnology industry. At any given time there are a raft of biotech-related issues and Issues investigated include:developments, where policy is vital to the industry’s progression • Sentiment and constraintsand future. • Funding and market capitalisation • Government policy AusBiotech and Grant Thornton would like to express appreciation to those who participated in the survey.4
  • 5. Survey findings - SentimentDespite some operating environmentconcerns, companies entered 2011 expectingboth their business and the industry to grow.The biotechnology industry has grown Optimistic outlook for 2011 Economic and public policy environmentsignificantly in recent years, despite thechallenges of the global financial crisis. 100%During 2010 the Australian biotechnology 6% 80% conducive to growingindustry saw some stunning results and 19% grow working against growth2011 is looking promising. remain stable 60% neutral Standout companies in 2010 were Acrux contract other other 40%Limited (‘Acrux’) and Mesoblast Limited.They provided show-stopping news in 75% 20% 52% 33%2010 with both achieving landmark deals 13% 2%worth hundreds of millions of dollars. 0%Acrux also achieved FDA approval for its Figure 1: Expectations for the business in 2011 Figure 3: Operating environment sentimentAxiron treatment making it one of only a The improving investment sentiment is reflected Despite an optimistic assessment of their businesshandful of Australian companies to achieve in the survey findings with 75% of respondents and the industry, only 13% of respondents expecting their business to grow and 67% confident indicated that the Australian operating (economicthis milestone and one of only 21 drug to extremely confident that the Australian industry and public policy) environment was conduciveapprovals for the US regulatory body for will grow during the current year. to growing a biotechnology company, whilethe year. Undoubtedly these standout The optimistic outlook for the current year 52% indicated that economic conditions and/orperformances have helped to contribute continues the positive sentiment of respondents public policy were working against the industry. when reflecting on 2010. 56% of respondents The negative sentiment appears to stem from ato the improved investment sentiment. At identified 2010 as a good or excellent year. combination of access to capital and governmentthe end of 2010 the BioShares Index was policy issues, each of which have been discussedshowing a 3.1% gain for the year. [Source: in this report. Expansionary employment strategiesBioShares, 6 January 2011, Edition 391] 100% 52% 30% 44% 80% hold staff 60% levels steady 4% decrease staff levels 40% hire more staff 20% 48% 70% 52% 0% 2009 2010 2011 Figure 2: Employment outlook The positive sentiment extends to expansionary employment strategies for 2011, with only 4% (0%:2010) of companies expecting to reduce staff numbers. This result can be contrasted with the 2009 survey by AusBiotech of members where 48% of those surveyed expected to reduce staff numbers and no company indicated they expected to hire. Biotechnology Industry Position Survey 5
  • 6. Survey findings - FinancingSources of funding Funding requirements Market capitalisation & ASX listingThe economic and financial crisis hasdramatically affected the ability of businesses 6% 15% 4%across all industries to raise capital. IPO up to 3 19% months yes 14%markets have remained all but closed to new 3-6 months no, the price 6%deals except the highest-profile offerings. 6-12 months overvalues the companyVenture Capital (VC) funding has become 1-2 years no, the price more than undervaluesincreasingly scarce and private equity has 42% 19% 2 years 75% the companybeen unable to put together the kind of no responseleveraged deals that were in vogue in the mid-part of the last decade. Figure 4: Cash on hand Figure 5: Does the company’s share price Few industries have been more Based on current cash burn, 24% of companies accurately reflect the value of the company?challenged by this environment than the surveyed were holding less than 12 months’ cash Of the survey respondents, 38% are listed on and a further 19% were holding between one and the ASX. In evidence of the global nature ofbiotechnology industry. With a unique two years’ cash. Consequently, it was no surprise biotechnology, 11% are listed on both the ASXbusiness model, high investment needs and that 58% of respondents planned to raise capital as well as overseas markets and a further 11%lengthy development and approval cycles during 2011. For listed respondents a rights issue are only listed on overseas markets despiteto revenue, access to capital is paramount. was the preferred current funding strategy. Private identifying as part of the Australian industry. companies identified VC funding as the primary Despite an overwhelming majority (75%) of listed Delays to the Research and Development funding solution. The majority of respondents respondents identifying their company’s currentTax Credit legislation, on top of the indicated either research and development or share price as undervaluing the business, onlyabolishment of the Federal Government’s further funding of commercialisation strategies as 8% of listed companies identified the prospect of the primary use of any funds raised. delisting from the ASX.Commercial Ready and CommercialReady Plus programs in the 2008 Budget,have further complicated funding strategies R&D spend planned for 2011for biotechnology companies. The forecast combined spend for the 52 Fortunately, historical sources of responding companies is $631.4 million thisfunding from equity markets have shown year on research and development. Notsome significant signs of improvement in surprisingly, the small group of companiesrecent times. The December 2010 quarter with a market capitalisation of over $1recorded the highest quarterly performance billion accounts for the bulk of this within BioShare’s five-year data collection $436 million.period in terms of capital raisings. Capital However, the notable result is the group ofraisings for the year totalled $554 million, 36 companies with a market capitalisation ofwhich was lower than 2009 ($672 million), up to $20 million, which have plans to spendbut significantly higher than the $183 a combined $82 million.million raised in 2008. [Source: BioShares,6 January 2011, Edition 391]6
  • 7. Survey findings – Government policy60% of biotechnology companies said the passing ofthe R&D Tax Credit legislation will help their businessand they want to access it as soon as possible.Federal concerns 4% 14% 13% The passage of the tax 22% credit legislation will help R&D Tax Credit and I want to access it ASAP . Gene Patent Bill 15% The tax credit will not help my business. Access to Grants I’m not sure how or if the 60% tax credit will impact Other 11% my biotech business Other or no view 61%Figure 6: Concerning public policy issues Figure 7: Impact of the R&D Tax Credit legislationThe significant delay associated with the Research andDevelopment Tax Credit legislation announced in the 2009/2010 Employee remunerationFederal Budget was identified by 61% of respondents as the In addition to cash remuneration, companies are utilising non-cashmost concerning issue at a federal level for the industry. 60% of based remuneration strategies such as shares (23%) and sharerespondents identified they would like to access the tax credit options (52%). This again reiterates the importance of publicimmediately. Interestingly 15% were not sure how or if the tax policy in assisting companies to stretch their available cash.credit legislation would impact them. The Federal Government’s recent amendments to The Research and Development Tax Credit legislation has employee share schemes were identified as negative by 32%been stalled in Parliament since early 2010, and is still awaiting of respondents. This is particularly significant when youdebate in the Senate – despite a vocal and urgent need from the consider that 85% of respondents utilise non-cash basedbiotechnology industry. The 45% refundable component for payment remuneration strategies including shares, options andcompanies with turnover under $20 million is still a much- performance rights.needed addition to the flow of capital into the industry. Continuing the theme of access to capital to fund research anddevelopment programs, 22% said that access to funding, especiallygrants such as those offered via Commercialisation Australia, was amajor issue of concern and rated at number two. Only one respondent identified the proposed changes in thePatent Amendment Bill 2010 as having a positive impact, while23% said the impact was likely to be seriously adverse or negative.A number remained unsure of what the impact might be. Biotechnology Industry Position Survey 7
  • 8. Survey findings – Government policy76% of respondents said support for biotechnologyfrom state governments was the most concerning andimportant state-based issue.State concerns What you said to usIn terms of state-based issues, the survey asked an open ended Respondents said they were most concerned by:question requesting respondents detail the issue which is mostconcerning at a state level in the coming year and why. There was praise for Victoria’s track record in biotechnology, ‘The lack of interest and awareness of biotech byand concern that it should continue under the newly elected state government, which limits the potentialgovernment (November 2010) to maintain Victoria as the of initiatives at all levels.’leading state for biotechnology companies overall. ‘The lack of policy and financial incentives Conversely, respondents from New South Wales (19) were within all state governments.’highly critical of the New South Wales State government, despite ‘Little or no apparent support for biotech companiesthe state being home to the majority of the country’s large in my state.’pharmaceutical companies and the largest and fastest-growing hubof medtech companies (note that data was collected prior to the ‘The absence of resources, schemes, policiesNew South Wales state election in March 2011). and programs for innovation and its Continuing on the theme in New South Wales, 12% of commercialisation by small industry.’respondents said their primary concern was the January New ‘Just having biotechnology remainSouth Wales Health directive doubling the requirement for clinical a key platform for government andtrial indemnity insurance cover from $10 million to $20 million. not losing it in all other issues.’ This move puts the state out of line with other states andraised the cost of conducting trials in New South Wales in ‘Continuing support for biotech.’contrast to the rest of the country. Respondents said the move ‘Victoria has done a great job pushingwould make them reconsider using clinical trial sites in NSW. the biotech barrow’8
  • 9. DemographicsAbout the survey Analysis of respondentsThis is the inaugural joint Biotechnology Industry Position Survey by Companies were asked to submit information regarding theirAusBiotech and Grant Thornton. The survey was conducted via mail financial status, issues impacting their business, the currentand email during February and March 2011. It was open to all ASX- outlook and expected plans for the future.listed life sciences companies and AusBiotech member companies, Responses were received from 37 ASX listed and 15 unlistedincluding unlisted companies. This survey draws on similar surveys companies.conducted by AusBiotech over recent years. More than 70% of respondents were CEOs, Managing Issues explored by the Biotechnology Industry Position Survey Directors, or Executive Directors of the company, and thewere identified by AusBiotech and Grant Thornton’s Life Sciences remaining respondents were senior executives, including COOsteam. Enquiries regarding this survey may be directed to: and VPs. The combined market capitalisation (for listed companies) andAusBiotech estimated company value (for unlisted companies) of those whoDr Anna Lavelle answered this survey was $112,301.2 billion, of which 59% wereT + 61 3 9828 1404 under $50 million each and 12% over $1 billion.E alavelle@ausbiotech.org The major (52%) identified area of business was therapeutics followed by medical technology (devices and diagnostics) (27%).Lorraine Chiroiu We also noted that 57% of companies confirmed they areT + 61 3 9828 1414 manufacturing in Australia.E lchiroiu@ausbiotech.orgGrant ThorntonMichael CunninghamT + 61 3 8663 6007E michael.cunningham@au.gt.comBrock MackenzieT + 61 3 8663 6273E brock.mackenzie@au.gt.comFor additional copies of the survey, please contactAusBiotech www.ausbiotech.org orGrant Thornton at www.grantthornton.com.au Biotechnology Industry Position Survey 9
  • 10. Survey participantsThe following participants agreed to disclose their names:Acrux Genetic TechnologiesAdvent Pharmaceuticals Genzyme AustraliaAMEC-Zektin Grey InnovationAmgen Australia Ground Zero PharmaceuticalsAnteo Diagnostics IDEANU Connect Ventures IDT AustraliaATP Innovations InvetechAvita Medical KendleBenitec NanosonicsBiodiem Neural DiagnosticsBiogen Idec Australia Pharmaxis(affiliate of Biogen Idec Inc.) Planet InnovationBioplatforms Australia Progen PharmaceuticalsBiota Holdings Proteomics InternationalBiotron ResMedBroadvector Reproductive Health ServicesCellestis SDIClinical network Services Sigma AldrichCryosite SypharmaCSL Spinifex PharmaceuticalsEpichem UCB AustraliaGenera Biosystems*AusBiotech and Grant Thornton wish to thank the remaining respondents,who did not wish to be named here.10
  • 11. About AusBiotechAusBiotech is Australia’s biotechnology industry organisation, which represents over3,000 members, covering the human health, agricultural, medical devices and diagnostics,functional foods, environmental and industrial sectors in biotechnology.AusBiotech is dedicated to the development, growth and AusBiotech’s membership base includes biotechnology companies,prosperity of the Australian biotechnology industry, by providing ranging from start-ups to mature multinationals, research institutesinitiatives to drive sustainability and growth, outreach and access and universities, specialist service professionals, corporate,to markets, and representation and support for members nationally institutional, individual and student members from Australiaand around the world. and overseas. AusBiotech is a not-for-profit organisation, which hasrepresentation in each Australian state and in various specialinterest sectors. Active state committees and advisory groupsprovide a national network to support members and promote thecommercialisation of Australian bioscience in the global marketplace. AusBiotech has been working on behalf of members since itsinception 25 years ago as the Australian Biotechnology Association,which 15 years later changed its name to AusBiotech.About Grant ThorntonGrant Thornton Australia is a member firm of Grant Thornton International – one ofthe world’s leading networks of independently owned accounting and consulting firms.We work with dynamic businesses, irrespective of their size, to We can provide the guidance, coordination and advice that canhelp them achieve their goals with our range of audit, tax and only be obtained by being part of a world wide network.business consulting services. We offer advice on all aspects of your business from merger Grant Thornton member firms share a commitment to and acquisition advisory, capital raising, valuation services, auditprovide high quality services to all our clients. With over 30,000 and assurance, Sarbanes Oxley compliance, tax compliancepeople working in more than 100 countries worldwide, our and research and development tax credits and businessclients have access to specialist local knowledge wherever their transformation and integration services.business takes them. In Australia, we have offices in Adelaide,Brisbane, Melbourne, Perth and Sydney. Grant Thornton has significant experience in the LifeSciences industry. Biotechnology Industry Position Survey 11
  • 12. Grant ThorntonAdelaideSimon GrayT + 61 8 8372 6666E simon.gray@au.gt.comBrisbaneCameron SmithT + 61 7 3222 0200E cameron.smith@au.gt.comMathew BellT + 61 7 3222 0266E matthew.bell@au.gt.comMelbourneMichael CunninghamT +61 3 8663 6007 AusBiotechE michael.cunningham@au.gt.com National Office 1/322 Glenferrie Road,Brock Mackenzie Malvern, VIC 3144T +61 3 8663 6273 T +61 3 9828 1400E brock.mackenzie@au.gt.com E admin@ausbiotech.org W www.ausbiotech.orgPerthPatrick WarrT +61 8 9480 2000 Dr Anna LavelleE patrick.warr@au.gt.com T + 61 3 9828 1404 E alavelle@ausbiotech.orgSydneyNicole Bradley Lorraine ChiroiuT +61 2 8297 2400 T + 61 3 9828 1414E nicole.bradley@au.gt.com E lchiroiu@ausbiotech.orgwww.grantthornton.com.auGrant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and themember firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities,delivers its services independently in Australia. Liability limited by a scheme approved under Professional Standards legislation.

×