Proposed Reforms Spark Industry Concerns
AusBiotech’s recent survey shows that 76% of Australia’s biotech, medtech, and health tech companies expect negative impacts from the proposed R&D Tax Incentive changes. Many are contemplating relocating their operations or moving lifesaving clinical trials overseas in response to these reforms.
Limiting the refundable tax offset for companies less than ten years old is a key aspect of the reforms. Critics argue that the measure fails to address the sector’s needs, especially since developing new medicines or vaccines often takes over a decade and requires consistent investment.
Out of 59 survey respondents, 30 companies foresee significant impacts. These firms are considering relocating operations or shifting clinical trials outside Australia. All companies aged six to fifteen years anticipate severe effects, highlighting widespread concern.
Sector’s Vital Role in the Economy
Historically, the R&D Tax Incentive has been crucial for the sector, supporting research, investment, and job creation. The survey reveals that every company aged six years and older anticipates reduced investment and job losses due to the proposed policy changes.
AusBiotech CEO Rebekah Cassidy stated, “The results send a clear message – companies already know they will be worse off under these changes, and if implemented as proposed, many will choose to leave.”
The industry warns that these reforms could jeopardise Australia’s competitive edge in the global biotech, medtech, and health tech markets. AusBiotech is urging the government to reconsider the policy to safeguard the sector’s future.
61% of companies believe that proposed changes to capital gains tax could add to their challenges, increasing the sector’s concerns.
Discussions about the reforms are already happening in boardrooms and among investment committees and development teams. Decisions about the location of clinical programmes are being reconsidered, potentially leading Australian companies to move critical projects abroad.
The biotech, medtech, and health tech sectors face numerous commercial ‘valleys of death’ as they transition from research to pre-clinical development, clinical trials, regulatory approval, and manufacturing scale-up before generating revenue through market access.
