Why Australian medical research needs an injection

Has Australia lost it's medical mojo? How can the medical technologies and pharmaceuticals industry be recharged?

Australia has been a world leader in medical innovation, but the development momentum has stalled. What’s going on?

By Beverley Head

Australia is the birthplace of the pacemaker, the bionic ear, spray-on skin and a cervical cancer vaccine – but right now it’s struggling with its medical mojo.

In April 2017, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) released its Medical Technologies and Pharmaceuticals Roadmap. The report revealed a sector in decline. The contribution of medical technologies and pharmaceuticals (MTPs) to Australia’s GDP dropped 2.6 per cent a year in the five years to 2015, from A$5 billion in 2010 to A$4.4 billion. 
Deloitte Access Economics has also identified a 16 per cent reduction in the number of full-time medical researchers in Australia – the first drop since 2000.

Between 2015 and 2030 the proportion of the world population aged 60 and over will rise 56 per cent, according to the United Nations. As Australia faces this disruptive megatrend, it needs to get back in the game and recharge its high-tech medical industry.

The economics are compelling; in 2013-14 Australia spent 9.8 per cent of GDP on healthcare. That is tipped by CSIRO to rise to 15.7 per cent by 2040. Unless Australia is able to successfully translate MTP research into commercial solutions, we will be paying more than we should for healthcare, and sending a lot of that money offshore.

MTPConnect is one initiative that may help turn the tide. Set up in late 2015 as part of the Australian Government’s industry growth centre initiative, the not-for-profit aims to establish Australia as a regional hub for MTP companies. Its 10-year Medtech, Biotechnology and Pharmaceutical Sector Competitiveness Plan, completed in December 2016, sets out how Australia can maximise competitiveness and productivity in the MTP sector, address barriers and encourage growth. 

“There are a lot of grants for translation and innovation. What’s missing is the step afterwards.” 

To spur progress, MTPConnect seeks regulatory reform, so start-ups can access more skills, and easily test and commercialise products and services. It is also pushing for the continued digitisation of the nation’s health records; Australia’s 2017 federal budget allocated almost A$375 million to give this a hurry-on. 

The organisation’s 10-year plan identifies four areas where Australia’s MTP sector could make the greatest impact:
  • Smart devices, implants, bionics 
  • Accelerated pharmaceutical development
  • Manufacturing high-value pharmaceuticals
  • Diagnostics and information products and services

The greatest challenge, according to CSIRO, is “while Australia holds a strong reputation regarding the discovery research that feeds the MTP sector ... there are sub-optimal rates of translation of this research into commercial success”. According to IP Australia, just three companies – Cochlear, Cook Medical Australia and ResMed – are responsible for more than 20 per cent of Australian inventions in the medical devices field.

Entrepreneurs are the missing link

Professor Dietmar Hutmacher, who holds Queensland University of Technology’s chair in regenerative medicine, came to Australia a decade ago from Singapore. He believes Australia has good infrastructure, reasonable funding and a critical mass of scientists, researchers and clinicians (although he acknowledges more STEM – science, technology, engineering and maths – skills and money would be a bonus).

What’s missing is a national vision and “people able to start and run businesses”. He says Australia would benefit from importing successful global entrepreneurs, who would infect local researchers and start-ups with their expertise and business creativity.

“There are a lot of grants for translation and innovation. What’s missing is the step afterwards. There are a lot of academics with PhDs but they don’t have the training or mindset to take to a start-up company.

“When you go to Munich or Boston, students are really highly motivated – not to become academics, but successful entrepreneurs.”

Australia needs to move fast, according to Dr Rob Grenfell, who was appointed CSIRO director of health and biosecurity in 2016. He’s also been a specialist general practitioner, a government adviser on population health, involved with the Heart Foundation, and a director of private health insurance firm Bupa. He gets the scale of the challenge and acknowledges the A$400 million that CSIRO and the Australian Government are investing in MTP is significant “but a drop in the ocean” compared to global investment in the sector.

The Medical Research Future Fund, which is intended to yield an annual A$800 million in government grants by 2021, is an “admirable and exciting investment in this area”, says Grenfell. 

“But there was A$62.5 million in the first tranche. We really need to look for larger amounts. A$150 million is expected in next year’s release.”

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Make commerce and research close neighbours

Access to funds for start-ups (CSIRO estimates 54 per cent of MTP companies are start-ups) is one challenge, but so are regulatory issues. Grenfell advocates a portfolio approach, where organisations perform pure scientific research to spawn genuine breakthroughs, but also seek out more easily accessible commercial opportunities. 

“We need to do this in the next 12-24 months,” he says. “It is not going to be easy but the rewards will be great.”

Professor Nigel Lovell is acting head of the Graduate School of Biomedical Engineering at the University of NSW (UNSW) and leads the university’s high-resolution bionic eye project. He understands the need to match moonshot research with pragmatic commercial solutions.

“If we had the funding we could have human trials [of the bionic eye] in a year-and-a-half.” 

However, he knows he needs to play a long game. Besides his work on the bionic eye, Lovell is involved in a project to detect falls in the elderly. There are no costly clinical trials, fewer regulatory hoops and the solution can be commercialised quicker.

But there’s an edge of lament when he says: “When you are trying to keep an elderly person out of hospital it’s never as sexy as making the blind see.” 

Or helping people to walk again. Professor Melissa Knothe Tate is a leader in orthopaedic mechanobiology and holds the Paul Trainor chair of biomedical engineering at UNSW. After a stellar career in the US focusing on cell biology and regenerative medicine, she was headhunted to Australia in 2013, and believes the nation has “enormous untapped potential”, adding “the cost of the workforce is high but it is very well educated”.

If Australia is to achieve its potential, she says, there needs to be regulatory reform to speed translation of research into commercial clinical solutions. Researchers, too, need to think more entrepreneurially. It’s also important that universities and researchers properly protect important medical intellectual property, or the economic benefits of research could slip through the nation’s fingers, she warns.

The biggest hurdle 

Australia’s MTP potential has not gone unnoticed by global giants, either. IBM runs 12 research labs globally, including one in Australia where half of the focus is on life sciences and healthcare, says IBM Research Australia vice president and lab director Dr Joanna Batstone.

IBM Research Australia is collaborating on a system to quickly identify skin cancersOne of the lab’s current research projects uses IBM’s cognitive platform, Watson, and medical know-how from Memorial Sloan Kettering in the US, MoleMap and the Melanoma Institute of Australia to speed identification of skin cancer. The technology – which is still in the research and development phase – was demonstrated in March 2017 at an Outthink Melanoma event, with free skin checks at the Bondi Surf Bathers Life Saving Club in Sydney.

Batstone, who arrived in Australia in 2014, says it is that commercialisation stage – taking a brilliant idea and bringing it to clinical application – that remains the biggest hurdle for the local MTP sector. Could that hurdle be overcome if more of Australia’s entrepreneurs and investors shifted their focus from property and finance to look at the medtech sector? The returns may be less immediate, but the opportunity to add to the world’s knowledge is as big as a scientist’s imagination. 

Battle for the brains

Accessing skills is a major challenge for the medical technologies and pharmaceuticals (MTP) sector, and the Australian Government’s planned changes to its visa scheme won’t help. 

The new Temporary Skill Shortage visa system, to begin in March 2018, will offer either two- or four-year work visas for highly skilled individuals. The new visa demands at least two years of relevant work experience before people can apply – something that isn’t required under the existing 457 work visa scheme. For scientists and researchers just starting their careers, that could be a problem. 

Professor Melissa Knothe Tate at the University of New South Wales (UNSW) came to Australia with permanent residency, and warns that the work visa clampdown is shortsighted if the nation really wants to bring “the best and brightest here at an early stage in their career”.

The MTP industry is less concerned about where the talent is coming from and more worried about not getting the people it desperately needs. 

What about local talent? Knothe Tate’s UNSW colleague Professor Nigel Lovell notes that attracting students to even take up a degree in the MTP sector is difficult because pay scales in other industries are “reasonable and the starting salaries are good”. 

“We have tried to attract international students with scholarships,” he continues. “That’s not the way it should be.”

On the flip side, CSIRO’s Rob Grenfell says specialised local talent will inevitably be offered jobs offshore, “with really attractive packages because there are only four or five of you in the world”.

At first glance this appears to presage a problematic brain drain for Australia. Not so, according to Genome.One's Dr Russell Howard, who returned to Australia after 34 years working in the US, including 12 years as CEO of biopharmaceutical company Maxygen.

“I’m a different person coming back. Young Australians who go overseas are doing exactly what they should do. The US or UK, France or Germany are the places to cut your business teeth,” he says. If only 20 per cent return to Australia, the net benefit would still be very significant to the sector as a whole.

Snapshot of Australian Medtech inventions (click to enlarge).

Looking for investors

In 2012, 34 years after leaving, Dr Russell Howard returned to Australia from the US. He brought with him decades of research and commercial experience in the medical technology field – and a unique vantage point from which to survey Australia’s medtech sector.

Today he leads commercial strategy at the Garvan Institute of Medical Research’s spin-off Genome.One; is executive chairman of NeuClone; and a non-executive director of Prima Biomed

Each has a different place in the medtech firmament. Genome.One is a genomics pioneer, one of only a handful of organisations worldwide accredited to perform whole genome sequencing for diagnostic purposes. NeuClone develops biosimilars, essentially better antibody drugs at lower prices. Prima Biomed is a pharmaceutical innovator working on new drugs for cancer treatment.

The three companies have very different remits, but face similar challenges and opportunities. Based in Australia, each needs to serve a global market in order to grow and reach its potential. As well, each faces the challenge of being remote from the rest of the world, despite digital advances. Howard says it is important to travel in order to develop trusted relationships, as well as the skills and networks necessary for success at scale.

The flip side is that their remoteness means Australian medtechs are “not contaminated by the swirling fashions that surround any industry” and, consequently, are free to follow their own path and propagate new ideas.

Howard is optimistic about the future. Funding from Australia’s federal government may be “trivial” compared to that available in the US, but he welcomes the fact that there is more public money to prime the pump. Private investors are also more interested in the sector – NeuClone’s recent multimillion dollar private funding round was filled swiftly.

“There is a lot of money and untapped wisdom in the CBD,” he says, noting it’s not only in the banks or venture capital firms, but also “in the CPAs who read your magazine”. 

Howard believes that instead of investing in hobby farms, apartments and superannuation, accountants and actuaries “who never thought about a monoclonal antibody or a genome sequence”, but were prepared to learn more about the sector, could become the sort of angel investors medtechs need to help them grow and build value.

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August 2017
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