PERTH, Australia – During the COVID-19 pandemic, 90% of Australia’s clinical trials were put on hold, and the market cap of biotech and medical device companies on the Australian Securities Exchange dropped 5% to AU$11 billion (US$7.78 billion), according to a recent report by Australia’s Medical Technologies and Pharmaceuticals Industry Growth Centre (MTPConnect).

The closing of international borders also cost the country dearly, putting enormous pressure on universities, which lost roughly AU$2 billion in revenue from foreign students. This loss of revenue has resulted in sharp cuts to research funding.

The device and pharma sectors were seeing growth of 16% to 26% per year in 2019; and AU$653 million of capital was raised by device and pharma companies in the first half of 2020. These companies were able to continue raising funds due to the positive sentiment toward these sectors during the COVID-19 pandemic.

As Victoria experienced a second wave of the pandemic, and borders were once again put in place, elective surgeries were suspended and clinical trials were disrupted, while some trials were able to go virtual. Research capacity dropped about 20% as workplace restrictions affected facilities.

Private, early stage companies are in a more difficult position compared to larger companies, and these smaller companies have continued to struggle to raise capital as Australia’s geographic isolation has limited access to the broader, international investor network. Several of these early stage companies were not eligible for government funding programs because they weren’t yet producing revenue.

Even so, Australia’s med-tech and pharma sector played a key role in the country’s response to the pandemic, with companies working closely with government to develop local manufacturing capabilities for essential supplies.

For example, more than 3,000 ventilators and 33 million face masks were manufactured locally and delivered to the government, and more than 6 million diagnostic tests were conducted between January and August.

There are roughly 200 COVID-19-related studies being conducted in Australia. Vaxine Pty Ltd.’s COVAX-19 vaccine recently entered phase II trials at Flinders University in Adelaide, and the University of Queensland’s and CSL Ltd.’s molecular clamp vaccine are also in the clinic.

MTPConnect consulted with industry partners on next steps the industry should take to protect against future pandemics, and the industry group offers three key recommendations:

  1. Codify lessons learned, embed and enhance what worked well during COVID-19;
  2. Improve supply chain resilience and enhance domestic supply and manufacturing capabilities;
  3. Invest in R&D and next-generation technologies related to pandemics.

Although industry and government eventually did collaborate, it took a fair amount of time for a model of collaboration to materialize, the report said, noting that better processes and mechanisms, along with clearer articulation of roles and responsibilities should be developed to respond better in future pandemics.

Industry praised the Therapeutic Goods Administration’s (TGA) ability to develop flexible regulatory pathways to allow for rapid innovation, and these processes should be “codified so that they are easier to roll out in a future pandemic scenario,” the report says. A more comprehensive framework for recovery should be built in that would include trigger points for restarting the economy and enabling technologies to safely restart the economy.

Building up R&D and domestic manufacturing

Australia has an opportunity to build strategic advanced manufacturing capabilities in areas such as novel therapies and vaccines, medical devices and diagnostics and digital technologies, the report said.

Enhanced domestic manufacturing capabilities would help guard against trade, freight and supply chain restrictions from future pandemics and could be facilitated through strategic government procurements.

When it comes to R&D investment, there “needs to be greater, sustained long-term investment into areas such as infectious diseases, platform technologies such as messenger RNA platforms for vaccine development and novel diagnostic testing approaches. This is critical because of the long and complex development pathways for developing medicines and medical devices,” the report says.

The government has already made moves to support many of these measures, announcing it would roll back proposed cuts to the R&D tax incentive (RDTI) program. The government had previously warned it would cut back the much-loved R&D tax incentive by AU$1.8 billion, but it backed down from that after an outcry from the industry. The RDTI allows companies to claim back close to 45% of the money they spend on R&D, essentially doubling their clinical trial dollars.

The budget included measures to increase manufacturing in Australia as well as digital incentives to boost the Australian economy following months of lockdown due to the pandemic.

The government’s proposed budget “demonstrates the government understands how Australia’s post-COVID-19 recovery will be supported by business expenditure for research and development and has provided a welcome change of position on the RDTI that will support and incentivize growth in R&D and manufacturing as we recover from the pandemic,” AusBiotech CEO Lorraine Chiroiu said.

For manufacturing, the government has earmarked AU$1.5 billion over four years for the Modern Manufacturing Strategy, which will see it strategically invest in projects that help manufacturers to scale up and create jobs.

Digital health a bright spot

On a positive note, the COVID-19 pandemic has “driven innovation, the adoption of new technologies and behavioral changes at an unprecedented rate,” and many of these changes will persist and present opportunities for post-pandemic growth for the med-tech and biopharma sectors, MTPConnect said.

For example, virtual consultations and remote monitoring have been adopted rapidly by policymakers, care providers and patients during the pandemic. There is an opportunity for the med-tech sector to “leverage this step change and continue developing new telehealth and remote monitoring products and services to provide benefits for patients in remote areas and to those who have accessibility challenges.”

Australia has emerging capabilities in next-generation technologies such as digital health, artificial intelligence, robotics and automation “that have proved to be useful in enabling an effective response to COVID-19. Encouraging greater R&D in these areas will enable Australia to be better positioned to deploy these technologies in a future pandemic scenario,” the report said.

The pandemic response has resulted in accelerated use of artificial intelligence (AI) to detect cases and support R&D. Globally, AI has detected outbreaks, traced infected or at-risk contacts and mapped the pandemic spread using natural language processing to scan the news, social media and government reports.

AI and deep learning algorithms have been used to detect COVID-19 on swabs and with lung-focused medical imaging from computed tomography (CT) and X-rays. DetectED-X, from the University of Sydney, has also used AI to analyze CT scans for COVID-19 markers, and University of Queensland vaccine researchers have fast-tracked compound testing to predict which compounds have the best potential to interact with SARS-CoV-2.

According to ANDHealth, Australia’s digital health incubator, only 14% of digital health companies currently leverage AI as their primary technology set. The Australian government recently committed $19 million to invest in AI health research projects, which could be a catalyst to drive more investment and activity in the future, the group said.

The Australian government’s AU$220 million investment in CSIRO’s Australian Centre for Disease Preparedness “is a good example of the type of investment required,” the report stressed. The facility played an important role in the development pathway of two of the world’s leading COVID-19 vaccine candidates – the Oxford and University of Queensland technologies.

“However, prior to the government’s investment, the facility was limited in its capacity to play a greater role in the development of these and other technologies. Expanding investment in such R&D capabilities outside of pandemic periods will help ensure that Australia can mobilize and develop appropriate solutions to future pandemics more rapidly.”

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