Decades of quiet and heavy lifting provided the critical foundation for a global health and economic response fast-tracked by political will and seemingly unlimited government spending. Science, in particular life sciences, created the path through the pandemic. Disappointingly the product-to-person end stage distribution proved more challenging for governments, with delays in the national vaccine ‘stroll-out’ and a shortage of rapid antigen tests taking the shine off what had been an unprecedented integrated national effort.
While COVID-19 appears to have been overtaken by other national and world crises, new variants remain a risk for all world economies and this uncertainty has the potential to impact business confidence and investment decision-making. These and a multitude of other issues will be weighing on the Australian Government as it fine-tunes the 2022-23 Federal Budget for release on 29 March.
Last year’s budget heavily focused on four initiatives in the context of life sciences:
- Funding into the Modern Manufacturing Initiative (MMI) for eligible companies to scale up;
- the revised Research and Development (R&D) Tax Incentive scale back;
- the review of the Venture Capital Tax Concessions; and
- the Patent Box targeting Australian medical and biotech patents
Further funding into these initiatives will be crucial, as Biotech companies struggle to raise fresh funds and face a new challenge, with pandemic investors having begun to pulling their funds from the sector and seek safer assets. Coupled with inflation, high interest rates and a dip in valuations, the sector is set to continue feeling the impacts of the pandemic.
Federal Treasurer Josh Frydenberg has already flagged that the 2022-23 Federal Budget will focus on jobs growth and building national capability and sovereignty in critical industry areas, one of which is life sciences. The Treasurer has also called on the private sector to step up and drive confidence and economic growth by stepping up its investment.
As a result, further MMI funding would be a welcome investment. With pharmaceutical innovation at the centre of the pandemic, increased funding would support the sector, local manufacturing, create much-needed jobs, attract global talent, and – as a result – drive the sector’s domestic growth.
Patent Box:
The promised patent box tax regime to encourage further innovation in the medical and biotechnology sectors has made greater progress. The regime and its new concessional effective corporate tax rate of 17 percent, which is due to apply from 1 July 2022, has been incorporated into draft legislation which was introduced into the House of Representatives in February 2022.
Assistant Treasurer Michael Sukkar told Parliament during his first reading speech that the government had incorporated feedback into the Bill that recognised ‘the long lead times between application and granting of patents as well as commercial decisions around which jurisdictions to patent in’. If passed, Australia will join more than 20 countries that already have patent boxes that encourage the development and ownership of homegrown intellectual property.
