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Monthly Archives: September 2012

September 15, 2012

Mark Metherell is health correspondent

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 Australia’s knowledge economy is flexing its muscles in a host of highly successful biomedical industries, writes Mark Metherell.

textGaining perspective … blind woman Dianne Ashworth received an implant last month.

Amid the gloom surrounding Australia’s struggle to sell its manufactures overseas, who can name our top manufactured exports? The winning merchandise tends not just to be made in Australia, but invented here, too. The products come from a clean, smart industry. Its leading players are barely household names and there are many other smaller enterprises whose output sells around the world.

We are talking about the biomedical industry, which in recent years has risen to top place among Australia’s elaborately transformed manufactured exports, leaving cars and wine far behind.

Whether it be an underarm gel to treat grumpy old men, a device to correct sleep disorders, a transforming treatment for head lice or a product to reverse dental decay, this country’s biomedical inventions are earning a significant slice of the $4 billion Australia earns in exports from pharmaceutical and medical gadget exports.

textVisionary … Bionic Vision Australia’s bionic eye. Photo: AFP/Bionics Institute/Bionic Vis

This week’s announcement of a significant advance towards a bionic eye follows the international success of the Melbourne-developed bionic ear, the centrepiece of the hugely successful multinational Cochlear company, now generating $1 billion in sales.

It used to be argued that Australia was strong on medical ideas – thus six Nobel prizes for medicine – but weak on taking the idea from the laboratory to the bedside. But in the past two decades, a sea change has come. Besides Cochlear there are CSL and Resmed and they all ride significantly on local expertise. CSL is the plasma and vaccine conglomerate which in recent years mass produced the cervical cancer vaccine Gardasil, created by Australian Ian Frazer and his team.

ResMed, which is now based in San Diego but was born of the pioneering design of Sydney University’s Professor Colin Sullivan of a device to beat obstructive sleep apnoea, still drives much of its research and development in Australia.

But who knows that the worth of Australia’s publicly listed biomedical companies is actually higher on a per capita basis than is the case for such companies in the US? Australia’s higher input is despite a much lower level of venture capital investment compared with the US.

The paradox is that despite Australia’s relatively golden performance, the nation appears to display scant interest in its home-grown smart performers glowing in the sophisticated arena of medical research and development.

The biotech industry blooms, while the heavily-protected car manufacturers struggle to survive and the winemakers prosper behind a defensive tax regime.

Little-known Australian companies such as Pharmaxis are scoring international approvals and sales for its medications for lung disease, and opening factories in Australia too. Its products include Bronchitol, developed in Australia and offering a new treatment for cystic fibrosis, one of the world’s most common life-shortening genetic diseases.

Another rising star is Acrux, which has gained a world reputation for its products, developed by Monash University scientists. These are fast-drying sprays and liquids including an underarm testosterone treatment for men.

The small company Mesoblast describes itself as a world leader in ”regenerative medicine” for treatments of rheumatoid arthritis. It is linking with global businesses to develop adult stem cell therapeutics for conditions including cardiovascular and central nervous system diseases.

Australia’s medical research and development is the subject of a review which is expected to urge fundamental changes to ensure research is ”embedded” into the health and hospital system and to call for more funding to match the soaring research effort overseas.

The federal government has commissioned Simon McKeon, the chairman of the CSIRO, to report later this year on findings of a wide-ranging inquiry into the strategic direction of medical research.

A recent review in NSW by Peter Wills has prompted a state overhaul to foster stronger ”translation” of research, aimed at speeding the transfer of proven results from the laboratory to the patient care.

The Federal Health Minister, Tanya Plibersek, who ensured her portfolio included medical research when she took on the job, says she cannot get over the breadth and quality of research work she sees.

Plibersek is not signalling her likely response, but the funding of medical research, now running at $800 million a year, is the subject of intense debate.

The National Health and Medical Research Council funds a mind-numbing range of areas. The McKeon review is finding sharp criticism of the way funding gets shared around at present; that regulatory hoops keep scientists from their laboratories for weeks at a time meeting bureaucratic requirements; and that too little money is spared to finance promising discoveries in the crucial time between invention and commercial development.

In talks to other scientists, McKeon is said to have pressed for greater ”embedding” of medical research in everyday healthcare.

The retiring chief executive of CSL, Brian McNamee, says Australia needs ”to keep nurturing our world-class research base, but we should think about how we can better help institutes take their ideas from the lab through to initial human trials”.

Strong research results, he says, can attract investment from industry ”for the most expensive and risky phases of development”.

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by: Jessica Irvine National Economics Editor
  • From: News Limited Network
  • September 16, 2012 12:00AM

Jessica irvine

News Limited economics reporter Jessica Irvine. Picture: Sam Ruttyn Source: The Sunday Telegraph 

TWICE a year on a Sunday, my local council arranges a “hard rubbish” collection day. For nosy-parkers like me, it’s a wonderful opportunity to legitimately rifle through neighbours’ rubbish as they leave it on the curb for collection.

A few years back, hard rubbish day saw footpaths transformed into makeshift, outdoor lounge rooms as new-looking lounge suites, televisions, lamps, throw rugs and cushions – unwanted, but in pristine working order – were relegated to the street.

This year’s Spring clean out was different.

This year the stuff people put on the streets really was just trash; bits of old wood, broken garden chairs, busted suitcases and soiled mattresses. And there seemed to be less of it.

What changed?
During the property boom of the early 2000s, Australians embarked on a debt-fuelled spending binge. A halving in interest rates since the mid 1990s meant families could afford to borrow twice as much. Banks were more willing to lend.

Supported by rising incomes and low unemployment, we went on a spending splurge. House prices boomed – more than doubling in a decade. Australia’s debt to household income ratio soared above 150 per cent – one of the highest in the world.

During the height of the property frenzy in the early 2000s, one in 12 Australian homes changed home each year (it has since dropped back to one in 25). As we moved, we treated ourselves to a few housewarming presents: new furniture and appliances – all on the plastic, of course.

At the same time, the rise of China meant the price of imported appliances, furnishing and gadgets plummet. We stuffed our homes with them and we kicked our old – but still perfectly good – possessions to the curb.

That was then.

Today, it’s an entirely different story.

The GFC was an almighty wake up call for Australian households. Our love affair with debt had already turned sour in 2006 and 2007 as the Reserve Bank lifted interest rates to eye wateringly high levels to cool the inflation created by all this spending.

When the US investment bank Lehman Brothers collapsed in late 2008, sending shockwaves through the global financial system, households really battened down the hatches. Interestingly, the crisis gave households both the motive – uncertainty – and the means –lower interest rates and stimulus money – to start saving again. We took that first stimulus cheque and have been squirreling away as much savings as possible ever since.

It’s a double whammy for industries like retail and tourism who are also struggling against a high Australian dollar created by the mining boom.

Retailers’ annual revenues grew by about 8 per cent or more during the early 2000s. Spending is now down to around 4 per cent growth a year – more in line with annual wages growth.

But is it only a matter of time before we return to our big spending ways?

I suspect not. All the signs suggest the Australian consumer mindset has changed fundamentally. We have turned our back on debt. More of us are ahead on our mortgage payments. Our credit card balances are shrinking. New loans are down. We are treasuring our possessions once more.

We have become more conservative with our finances. When asked to nominate the safest place for our savings, the proportion of us saying “in the bank” is at a 38 year high. The proportion saying “in shares” is at a record low. National accounts figures suggest households are saving about 12 cents in every dollar they earn, reversing the trend of the early 2000s when we spent more than we earned.

Economists call the trend “deleveraging”. It’s what makes the downturns that follow credit crises so protracted. We want to pay down our debts before we can start spending again.

That is bad new for jobs in the retail and property sectors of the economy, which are likely to remain on the ropes for some time to come.

But it is good for the long term stability of our economy, helping us to build a buffer against uncertain times.

Even if it does make trawling through your neighbours’ trash less rewarding.

Average credit card balance in July, down 2 per cent (or $69) on the previous month – the biggest percentage fall in 18 years.

15 million
Number of credit card accounts in Australia – up 1 per cent over the year

35 million
Number of debit card accounts in Australia – up 6 per cent over the year.

Annual growth in retail spending in 2003.

Annual growth in retail spending over the year to July.

Increase in the value of outstanding home loans over the year ended March 2004 – the peak of new home borrowing.

Increase in the value of home loans last financial year.

Per cent of Australians who say the wisest place for savings is in the bank – the highest reading in 38 years.

Per cent of Australians who think shares are the wisest place to put savings – the lowest reading on record.

Jessica Irvine is News Ltd’s national economics editor.