Human therapeutics industry fit to double revenue

The Review of the Human Therapeutics Industry’s Economic Value to New Zealand - jointly commissioned by New Zealand Trade and Enterprise (NZTE) and the Foundation for Research Science and Technology (FRST) – examined local companies operating in research and drug discovery, diagnostics, manufacturing and distribution of biopharmaceuticals.

The report shows that the industry earned $200 million in 2009 – four times as much as it did in 2000 - and almost tripled employment over that period to 900 people in 2009.

Not an insignificant contribution, it seems, for an industry that is not only young, but small: just 18 companies were studied in the report, over half of which were formed after 1998.

The industry’s success in terms of revenue from sales should not be oversold though: revenue growth is largely due to a combination of investment funding and the performance of the industry’s two biggest players - Douglas Pharmaceuticals and New Zealand Pharmaceuticals.

That said, the report estimates that if just one in 10 potential human therapeutics products and / or firms are commercialised, the industry could potentially earn $300-$450 million annually in revenues, in as early as five year’s time.

While the report concedes that it is difficult to forecast the industry’s future value with certainty, the industry’s potential for 'breakthroughs' means that the estimated flow of cash into the economy could be far greater than this estimate.

The offshore pull

The nature of the industry’s long lead times, significant regulatory hurdles, and need for specialised staff and infrastructure, brings with it a dependence on a large and regular flow of cash.

Currently, around 10 percent of the industry’s funds are sourced from Government agencies like NZTE and FRST; about 40 percent from local investors; and nearly 50 percent from foreign investors.

With almost half of the industry’s funds coming from offshore, NZTE Sector Manger for biotechnology, Emma Lewis, says the challenge is keeping the money percolating in New Zealand’s economy, rather than heading offshore with investors.

“We really have to find those companies that are anchored well in New Zealand….There are lots of different anchors - a manufacturing facility is the best - and a lot of them will always keep their R&D here,” she says.