Why more needs to be done to support home-grown innovations

It’s a brave person that gets involved in the medical technology, biotechnology and pharmaceutical sector.

Commercialising new medical devices or drugs is highly risky, extremely expensive and returns can take decades to be realised.

Getting a new medicine from the research lab to the patient can take 15 years or more and well over $1 billion. The Australian-invented Gardasil cervical cancer vaccine for example was a 17-year overnight sensation that earned US$8.9 billion in global sales last year.

Intellectual property protection, strict regulatory safety requirements which vary from country to country and opaque reimbursement frameworks complicate matters even further.

Global connections are also critical for medical science SME success, with access to new markets and global supply chains central to positioning them to compete internationally, while maintaining their operations in Australia.

And that’s not to mention the early-stage valleys of death, territory (mostly) vacated by risk-averse investors which can be impossibly challenging to bridge, even for the most committed and resilient innovator with the best new idea.

With the medical product translation and commercialisation journey so challenging, it’s easy to get into trouble.

Perhaps that’s why Australia has traditionally underperformed when it comes to commercialisation of new products. While we are recognised as a global leader in research, ranking in the top 10 of the Global Innovation Index, we slip down to 30^th for outputs from that research.

While we count Gardasil, cochlear implants and the pacemaker among our commercialisation successes, we can do better.

Strategies for backing life sciences innovation and supporting startups and SMEs through the difficult early years of innovation are critical and this is where government has a major role to play, and where Australia has historically underperformed.

Australia's investment in R&D is around 1.8% of GDP at the moment, well below the OECD average of 3%. As Industry and Science Minister, Ed Husic MP, recently highlighted, “we’re going to have to do better.”

It is worth noting that we have done better in the past, sitting at 2.24% of GDP back in 2008, so we know it can be done again.

When the funding starts flowing, the $15 billion National Reconstruction Fund, with $1.5 billion earmarked for medical science, and the $400 million Industry Growth Program are set to turbo-charge levels of investment in startups and SMEs and support their scale-up. The $20 billion Medical Research Future Fund endowment is already playing a role, including through accelerator programs operated by MTPConnect.

Access to funding remains the biggest challenge for startups and innovators. The capital markets, especially when you’re at an early stage with your innovation, are particularly tough.

But there are other powerful options for boosting spending on R&D more in line with competitor countries that should be discussed, like investment mandates for superannuation funds.

With their requirement to generate good returns for members, super funds generally steer away from inherently risky life science investments. But it is happening — the health care super fund HESTA invested in Inventia Life Science in 2022.

It’s through superannuation, with its $3.5 trillion in total assets under management that the millions of mum and dad investors who power the super system can potentially have transformational impact on the scaling-up of startups and SMEs.

But it’s not all about the money. There are other considerations.

An often overlooked and underappreciated ingredient for commercialisation success is the link between the product and the end user — the patient.

It is critical that new innovations meet community and consumer-identified unmet health needs to ensure that there will be uptake of the end product, and that tangible health and wellbeing impacts are realised.

To ensure that innovators are developing products and solutions that meet community needs, community voice and perspective needs to be embedded in the research and development from the start.

Co-designing the innovation will result in true innovation pull, and not technology push. And it is these patient-centric innovations that will be of most interest to investors and have the strongest likelihood of making it to the market.

A shout-out too to Australia’s clinical entrepreneurs; the nurses, doctors and allied health professionals working at the coalface of health care who are uniquely placed to both understand unmet need and identify commercial opportunity. Unfortunately, there is a significant skills gap for clinicians working on product development and commercialisation and we risk missing out on their potential to contribute to the sector’s growth.

Initiatives like MTPConnect’s Australian Clinical Entrepreneur Program, running in Victoria and NSW, play an important role in equipping healthcare professionals with the skills they need to translate and commercialise their ideas into products and solutions that will be used by patients and healthcare providers. These initiatives also help with retention of talented clinical staff who might otherwise leave the health system to pursue their entrepreneurial ambitions.

So, while getting involved in inventing and commercialising new medical technology, biotechnology and pharmaceutical products may be crazy brave, it can also deliver the greatest of rewards — saving lives and improving health and wellbeing. It’s the motivation behind so many of Australia’s passionate life science innovators.

And by supporting founders and backing Australian start-ups and SMEs we’re maximising chances for increased commercialisation success, creating more jobs, building resilient companies, increasing sovereign capability and more secure supply chains for vital medicines, and all the while moving Australia up the global innovation league table.

*Stuart Dignam is the chief executive officer of MTPConnect, an independent, not-for-profit organisation working to accelerate the growth of Australia’s life sciences sector. With corporate executive experience across operations, finance, policy in the public and private sectors, media, communications and issues management, he was posted to Los Angeles as the Queensland Deputy Trade & Investment Commissioner for the Americas.

Dignam has worked as a broadcaster for ABC Radio and as a government media and policy advisor, and created MTPConnect’s popular podcast series, one of the first in Australia to showcase the people and issues shaping the medical technology, biotechnology and pharmaceuticals sector in Australia and globally.

Top image credit: iStock.com/Tippapatt