General Facts
Industry Contribution
What does the Australian Pharmaceutical Industry contribute
to the economy?
The industry has a turnover of nearly $7 billion and exports more than $2.4
billion per year to markets all over the world, making it the country's largest
exporter of high technology manufactured goods. Exports by the industry grew
threefold between 1995 and 2002. The industry employs more than 15,000 people,
many of them highly skilled and tertiary trained.1
Why is the Australian pharmaceutical industry important
for health research and the biotechnology industry?
The industry plays an integral role in the growth of the biotechnology and
medical research sectors by investing over $300 million annually in health
and medical research. This includes collaborations with local research institutions,
allowing more of our world-class medical scientists to remain in Australia.
Furthermore, Australia's growing biotechnology industry does not have the
finances or the expertise to bring a medicine to the global market. Pharmaceutical
firms with a local research facility are an essential "doorway" to commercialising
Australian scientific research worldwide.
For these reasons, a strong industry presence in Australia is necessary to
capitalise on the substantial funding commitments by Federal and State Governments
to biotechnology and medical research.
What does a viable pharmaceutical industry do for the health
of Australians?
A viable local pharmaceutical industry delivers funding to Australian researchers
and doctors to develop improved treatments for patients. The industry also
provides Australians with access to many of the latest and best medicines.
In 2001 alone, the industry introduced 43 new medicines to treat 25 different
diseases affecting more than six million people.2 The
industry is an active supporter of medical education and the appropriate use
of medicines in the community.
What does the pharmaceutical industry need to deliver
future benefits to Australians?
The worldwide pharmaceutical industry continues to grow in response to the
need for new medical treatments, but also faces global rationalisation as companies
strive to deliver breakthroughs at an affordable price.
In Australia, companies receive very low prices for their products compared
to many industrialised countries.3 The Industry
Commission estimated that artificially lower prices reduced industry revenue
by $860 million in 1996.4
This reduces the capacity of local pharmaceutical operations to compete for
investment within their global organisations.
The Federal Government has worked with industry to develop a blueprint to
double Australia's share of global pharmaceutical value-added activity by 2012.
This would allow Australia to capitalise on the continued growth of the industry
worldwide in the coming decade.
What contribution have industry investment schemes
made to industry growth?
Industry investment schemes since 1987 have significantly reversed the industry's
disinvestment from Australia since the mid-1980s. Since then, the industry
has invested around $6 for every $1 provided by the Government, and has generated
significant growth in exports and R&D. As a result of its participation in
the Factor (f) investment scheme from 1993, Pfizer Australia retained its manufacturing
plant and became a regional exporter to Asia and New Zealand. Pfizer Australia
now exports products with an Australian market value of $600 million annually
to these and other markets. Under the current Pharmaceutical Industry Investment
Scheme, Pfizer Australia's investment in R&D has nearly tripled to over $40
million annually (see chart). We are now one of Australia's leading private
investors in innovation with a strong commitment to basic science and drug
discovery.
Pfizer Australia Annual R&D Expenditure
Has a new industry investment scheme been developed?
In the 2003-04 Budget, the Federal Government announced a new scheme to promote
research and development by the industry in Australia. The proposed Pharmaceuticals
Partnerships Program (P3) will provide subsidies of $150 million over 5 years
to rebate selected pharmaceutical companies for additional R&D above existing
levels. The industry has welcomed this commitment to industry activity, while
noting that the absence of incentives for manufacturing may have a longer-term
impact on investment.
The Pfizer Australia View
- Australia can play a more significant role in the discovery, development
and manufacture of new medicines
- The Pharmaceutical Industry Action Agenda, endorsed by the Federal Government,
provides a world class blueprint for the industry in Australia.
- Industry investment schemes deliver significant economic and health benefits
to Australia.
- The recently announced P3 scheme is welcome recognition by the Federal
Government of the importance of pharmaceutical industry R&D.
- Pfizer Australia recommends that the Government consider policy options
to promote industry investment in manufacturing and exports.
1. IBISWorld, C2543 - Medicinal and Pharmaceutical Product
Manufacturing in Australia, February 2004. Figures are for 2001-02. Figures
include veterinary products and some over the counter products. High technology
industry classification based on classifications in OECD Science, Technology
and Industry Scoreboard 2001. Historical figures taken from Commonwealth of
Australia 2002, Pharmaceutical Industry Action Agenda. Local Priority - Global
Partner.
2. Calculations by Medicines Australia 2002
3. Victoria University 2003, A Comparison of International Pharmaceutical Prices.
Progress Report.
4. The Pharmaceutical Industry, 1996