In recent roundtable discussions we held in partnership with AusBiotech, we welcomed over 90 Biotech CEOs to discuss the industry’s opportunities, challenges and where policy can better support innovation. The complexities of raising capital were a central theme, reflecting the need for strategic solutions in a challenging funding landscape across the life sciences sector.
Funding, innovation, and creating efficient capital raise strategies
Biotech companies aim for stability and certainty in funding to support projects throughout their life cycle. However, funding remains a significant obstacle despite its fundamental role in innovation.
The drive for financial security shapes decision-making at all stages, from initial research and clinical trials to scaling up capabilities and manufacturing. While initiatives like the R&D Tax Incentive and Industry Growth Program provide initial support, Biotech leaders seek more proactive engagement from Government and clearer incentives to attract investors and continue the cycle of innovation in Australia. Relying on tax incentives and grants can often create too much uncertainty. More transparency in the funding process would not only enable better use of grant funding, but also help prevent promising projects from being slowed down by red tape.
Alongside this, navigating regulatory demands domestically and overseas can be daunting – especially for startups striving for global competitiveness. Simplifying processes that form part of the R&D Tax Incentive and streamlining administrative requirements offer the opportunity to create a more supportive environment for businesses to access government incentives, pursue vital innovation and R&D, and attract investment.
To secure much-needed funding, successful capital raising requires a compelling strategic approach. Companies must effectively articulate their value proposition, showcasing both the scientific innovation and commercial viability of their project. Early engagement with investors, nurturing relationships, and presenting a robust business plan are imperative. Diversifying funding sources – including venture capital, grants, and partnerships – are key to help mitigate risks and ensures financial resilience.
The need for global talent
A skilled workforce is the backbone of biotech innovation, yet talent acquisition remains a challenge – particularly at a domestic level. Recognising the specialised skill set required and the effort involved in attracting and retaining global talent are imperative to fill the roles required by the industry.
However, developing and implementing tax-efficient global employment solutions and strategies can be tricky. Therefore, businesses must carefully consider their corporate and employment tax obligations. Engaging specialist advisors where needed can be an essential tool to navigate a complex tax system that may not respond quickly to global changes and trends.
Competition and commercialisation
Australia faces international competition in critical areas such as clinical trials and commercialisation, as other jurisdictions like the USA offer lower cost solutions, a simpler regulatory landscape, and remuneration gaps. However, by embracing international collaboration and leveraging Australia's research strengths, biotech companies can enhance global competitiveness.
Strategic partnerships facilitate knowledge exchange and access to resources. Australia's biotech industry holds significant growth potential through collaboration, innovation-driven policies, and leveraging its strengths, contributing to addressing global challenges in healthcare and beyond. Fostering a supportive regulatory environment and incentivising innovation can help address these disparities.
Embracing ESG stakeholder demands
Environmental, Social, and Governance (ESG) considerations are increasingly influential in investor decisions. Given the increasing expectations for businesses to adopt ESG practices, companies that implement and report on their ESG principles not only improve their relationships with stakeholders but also attract increasingly socially conscious investors.
ESG is becoming a pillar of business strategy and reshaping the fiscal landscape. From a governance perspective, it's increasingly important that ESG pillars are embedded into companies’ tax practices and form part of any necessary global Tax Transparency Reports. The mandatory climate reporting landscape is also moving quickly with various jurisdictions set to adopt climate reporting legislation soon. Whilst many life science companies, including ASX-listed entities, don’t currently meet the reporting thresholds of the draft Australian legislation, dual listed entities may be caught by the US reporting requirements. Equally, companies may face supply chain reporting at a later stage.
By addressing capital raising challenges while seizing growth opportunities, Australia's Biotech sector can realise its full potential on the global stage. Through collaborative efforts between industry, government, and academia, setting the industry up for sustainable success will become more achievable. For tailored support around capital raise, taxation challenges, ESG reporting and assurance or to drive your innovation forward, please don’t hesitate to reach out to our expert advisors.
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