2023-11-06| Asia-PacificPolicy

Federal R&D Tax Incentive Spurs Booming Growth in Australian Biotech

by Sinead Huang
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A recent report titled “Economic impact of the Research & Development Tax Incentive for the biotech industry” sheds light on the substantial economic impact of the Australian Federal Government’s R&D Tax Incentive (RDTI) program within the biotech sector. The study, developed in collaboration with Deloitte Access Economics, reveals that for every dollar of forgone tax revenue spent in 2021, the RDTI generated a noteworthy return of $3.14, underscoring its far-reaching influence.

Related article: Australia’s Biggest Week in Life Sciences For Biotechnology Advancement

Robust Growth Over a Decade

The economic impact of the RDTI has grown significantly over the decade from 2011 to 2021, increasing over fivefold during this period, from $308 million in 2011 to a staggering $1.6 billion in 2021. This remarkable expansion is attributed to the growing number of companies within the biotech industry, compounding productivity gains, and the expanding research and development base. The report estimates that during this decade, the RDTI contributed to a $9.1 billion boost to Australia’s Gross Domestic Product (GDP).

The per annum additional GDP generated by the biotech sector has increased more than five times over the period 2011-2021, from $308 million in 2011 to more than $1.6 billion in 2021. (Source: Deloitte Access Economics)

Biotech Benefits and Social Impact

Australia’s biotech landscape comprises over 1,400 companies employing more than 260,000 individuals, with a substantial market capitalization of $255 billion, including 178 companies listed on the ASX (Australian Securities Exchange). Despite this, over 80% of these enterprises are small and medium-sized companies, with the majority still in pre-revenue and pre-market stages. The RDTI has played a crucial role in enabling smaller companies in these early stages to engage in high-value research and development activities.

Additionally, the report acknowledges that the benefits of the RDTI extend beyond economic gains, as innovations stemming from the biotech industry have contributed to improving the quality of life for many Australians. These innovations encompass areas such as cancer detection, diagnosis, and treatment, as well as advancements in hearing loss and antibiotic resistance.

Biotech Industry Catalyst

The biotech sector’s positive impact isn’t limited to Australia’s shores; it serves as a magnet for both domestic and foreign investment. Over the period from 2011 to 2021, the industry attracted a substantial $7 billion in additional investments. 

AusBiotech, a prominent advocate for the RDTI, has actively championed the program’s importance within the biotech sector since 2012. The report aligns with AusBiotech’s Biotechnology Blueprint strategy, which emphasizes the industry’s return on investment, a vital metric that highlights the value the biotech sector adds to the Australian economy. This insightful report was launched during the AusBiotech 2023 national conference, further highlighting the significance of the RDTI in propelling the Australian biotech industry into a realm of remarkable growth and innovation.

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