Australasian Science: Australia's authority on science since 1938

Our Niche Pharming Future

By Simon Grose

Australia’s biggest exporter of value-added products, the pharmaceuticals industry, is struggling to remain competitive.

Australia’s consistent high achievement in medical research is common knowledge, but less commonly known is the high achievement of our pharmaceutical manufacturing sector.

“Big Pharma” generally cops bad news, usually over the costs or availability of drugs and its marketing methods. The good news is that with annual exports worth around $4 billion per year it is our largest manufacturing exporter, beating our car and wine makers. By spending around $1 billion each year on R&D it is also our largest single investor in research.

But maybe it has peaked already. The annual value of its exports and research expenditure has remained static since the middle of the last decade. And the level of clinical trial activity – a key barometer of drug development – is trending downwards.

The number of clinical trials conducted in Australia almost doubled between 1988–99 and 2006–07, from 1597 to 3182, but has since fallen at an annual rate of 13% to 2820 in 2010–11.

Medicines Australia, the sector’s peak body, identified our advantages and disadvantages as a host for clinical trials in a paper issued in November. Among the advantages are high-quality infrastructure and clinicians, an ethnically diverse population, high volunteer rate, fast-track approvals for Phase I trials, and effective intellectual property governance.

Among the disadvantages is our relatively small and geographically dispersed population. This raises costs because trials have to be undertaken at more sites than in densely populated countries. It also increases the administrative burden because each institution involved in a trial undertakes its own approval process and is subject to differing state or territory approval regimes.

In 2009 the federal government appointed a Clinical Trial Action Group whose report was released in March last year. Its recommendations included speeding up ethics and governance reviews of trials, and moving to a national system of approvals, but little or no progress has been made.

Meanwhile, global pharma is shifting investment to countries that can start trials faster, recruit large numbers of patients quicker, and increasingly have the infrastructure and trained staff to conduct high quality and cost-competitive trials.

This is part of a larger challenge facing the sector. Speaking at the National Press Club last year, Medicines Australia’s CEO, Brendan Shaw, acknowledged that the high Australian dollar and industrialisation of emerging economies puts our pharmaceutical sector in the same difficult position faced by our steel and car manufacturers.

“I don't think we're ever going to be able to compete against China and India for the cheap, mass-produced stuff,” he said. “But in those areas where there's niche manufacturing required that has high skill, quick turnaround times, specialised production, I think there's some real opportunities for Australia if we want them.”

It seems that smaller and smarter is our pharming future.

Simon Grose is a Director of Science Media (