Australia's new PM looks to biotech for a boom as mining-led growth wanes, WSJ says

R&D tax incentives combined with a former investment banker as the country's new prime minister could see steady growth in biotech in Australia gain momentum, the Wall Street Journal reports.

Australia Prime Minister Malcolm Turnbull

The newspaper said Australia was ranked fourth globally for biotechnology innovation last year, climbing from seventh the year earlier, citing a Scientific American review that looked at government policy, intellectual property protection and education.

The buzz around Australia and biotech got a boost earlier this year when a top life sciences venture fund in Australia launched an A$200 million Medical Research Commercialisation Fund. The fund--which was designed to take good ideas to the market that will bring in massive pension funds earlier in the game and at the least identify hot candidates in Australia that could generate wider interest in Asian biotech--is the largest of its kind.

Chris Nave, managing director of Brandon Capital Partners

Chris Nave, managing director of Brandon Capital Partners, said in an interview in April with FiercePharmaAsia that the timing of the fund's launch does coincide with a U.S. biotech boom that has raised staggering sums for many early stage ventures in biotech from hotspots like Boston and Silicon Valley--but that is not the driving idea.

To be sure, Australia lags top player in biotech the U.S. by a wide margin. But the Wall Street Journal says the advent this week of former Goldman Sachs ($GS) banker Malcolm Turnbull as premier after defeating Tony Abbott in a Liberal Party challenge portends a new push in the sector.

"Mr. Turnbull's business acumen along with his knowledge of and well-known support for the Australian technology sector will provide him with unique insights into the barriers facing Australian startups, particularly in terms of accessing venture capital and talent," Peter Bradd, chief executive of nonprofit organization StartupAUS, told the newspaper.

The newspaper cited Starpharma Holdings, which last week signed up with AstraZeneca ($AZN) in a licensing deal that could yield the Australian company up to $126 million from the development and commercialization of one of the Big Pharma's oncology candidates--and up to $93.3 million for each subsequent product.

Such deals, however, would need to gather pace rapidly to stem the economic hit from a sharp drop in commodity exports to main trading partner China and need to move from academic research to patents and products, the Wall Street Journal said.

Merck CEO Ken Frazier

That issue was highlighted in June when Merck ($MRK) CEO Ken Frazier gave his two cents on why Australians miss out on new drugs--and then entered a wider debate about the bang the country gets for the bucks it spends on research.

"Australia is a great generator of intellectual property," Frazier said, according to the Australian Financial Review. "It isn't a country that is taking advantage of all the great science that's done here. One has to ask oneself why it is you have so many patents being generated by fundamental scientific work being done in Australia, but not necessarily robust industry to capitalize on and commercialize those products. I would say a great part of that comes down to the policy environment. Tremendous basic scientific research is being done in Australia."

The Wall Street Journal, however, noted that federal lawmakers last month approved the creation of a medical-research fund pledged to reach A$20 billion by 2020, paying out A$10 million in its first year and at its peak about A$1 billion a year, lagging the U.S. by billions of dollars.

Still, hopes are that the industry will transform Australia's economy into technology-led growth.

"I can see biotech and medical tech really transforming Australia," Michelle Gallaher, who has spent the past two decades working with biotech startups and pharmaceutical companies, told the newspaper. "If we can survive in our own pond with very little money, we come out quite strong."

- here's the story from the Wall Street Journal (sub. req.)