Crucial research and thousands of jobs are at risk because the Australian biotech industry has been largely locked out of the federal government’s COVID-19 support efforts, according to AusBiotech.
In a submission to the senate committee investigating the government’s response to the COVID-19 pandemic, the biotech industry group said the eligibility criteria for the wage subsidy scheme JobKeeper effectively prevents most life sciences and biotech firms from accessing it.
With clinical trials put on hold and venture capital funds drying up, this has been many jobs in the sector at risk.
According to AusBiotech, there are about 1000 biotech and MedTech companies currently engaging in research and development, with about 87,000 people employed in the sector. Of these firms, more than 85 per cent are in the startup or SME category, with more than 65,000 people employed.
The JobKeeper scheme is aimed at companies that have lost a significant amount of revenue due to the global pandemic, but most biotech firms are in a pre-revenue phase for up to 15 years, the submission said.
This means that with no revenue to show, biotech firms are unable to access the $1500 a fortnight payments for each employee, despite being hit hard by the crisis.
“These companies have a unique business model that enables them to translate research into lifesaving and enhancing products for patients but leaves them in a pre-revenue phase for typically up to 15 years,” AusBiotech said in the submission.
“Therefore, they do not have revenue to show, nor revenue to reduce by 30 percent, regardless of their fierce need for cashflow and rely on venture capital, which is drying up during the COVID-19 crisis.”
This is despite these firms working to develop a vaccine and treatments for COVID-19, and other crucial tasks.
“It is disappointing that the JobKeeper requirements did not take into account the unique business model of the life sciences sector, given it is the very sector underpinning the essential research and development of vaccines, repurposed and emerging therapies, as well as test kits and ventilators, to combat COVID-19,” AusBiotech said in the submission.
The eligibility criteria for JobKeeper “unintentionally excluded” the biotech sector, damaging nearly 2000 companies’ ability to keep their full team and continue their valuable research, it said.
“This omission has the potential to set back the progress of an entire industry – companies will be ‘moth-balled’, innovative research parked, and staff let go. The skills needed for this industry are very difficult to source and this will become harder during the road to recovery. These impacts are the exact opposite of the policy’s intent,” AusBiotech said.
AusBiotech applied for a class ruling from the Tax Commissioner to allow companies to access JobKeeper based on their eligibility for the refundable component of the research
and development tax incentive, but this was rejected.
The Coalition does not appear willing to expand eligibility for the JobKeeper scheme, which is set to come to an end in September.
“The intention of the JobKeeper scheme is to retain staff, and to support businesses to recommence quickly without needing to rehire when the downturn is over,” it said. “However, this substantial sector has been unintentionally marginalised due to their absence of revenue and their unique business model.
“This is the same sector working to develop protection from COVID-19 through tests, cures and equipment.”.
Australian biotech companies have still been hit hard by the ongoing COVID-19 pandemic, AusBiotech said.
“Companies who are not working on COVID-19-related technology are having their clinical trials interrupted due to no fault of their own,” it said.
“AusBiotech surveyed its membership and found 62 per cent of respondents indicated that their clinical trials are being delayed or that recruitment has been paused. The necessity and ability to keep staff on will be vastly impacted by JobKeeper payments.
“As the trajectory for clinical trials has been disrupted, and in combination with a lack of venture capital available, there is a high danger that companies will be unable to retain their staff. Keeping staff will be contingent on the JobKeeper scheme.”
If support is not expanded to the sector, many biotech companies may be forced to make job cuts, the submission said.
“The high-value jobs required to research and develop complex science are difficult to obtain and retain, even pre-pandemic. Access to the JobKeeper scheme will enable staff to remain connected to the company and will support businesses to recommence quickly without needing to rehire when the downturn is over,” it said.
“Australia’s pre-revenue biotech and MedTech companies house priceless talent and intellectual property that could be permanently lost to Australia if they are not able to access the JobKeeper payment and therefore weather the COVID-19 storm.”
Do you know more? Contact James Riley via Email.