Dr Tom Schneider: Wake up and smell the apple pie: we need the US
Barely a week goes by when an overseas business expert isn't out here telling Australian companies how it should be done.
One visitor this week is Dr Tom Schneider, chairman and chief executive officer of Corrs Schneider, who, in fairness, has quite a few nice things to say about the Aussie biotech scene.
Schneider, who assisted Dr Craig Venter in setting up Celera Genomics in the United States, set up a consultancy business in Melbourne and Sydney in 1996 and spends about eight weeks a year in Australia.
The rest of his time is spent either lecturing around the world or running his North American consultancy Restructuring Associates.
While Schneider's paid work in Australia does not involve biotechnology companies, he has plenty to say about biotech's strengths and weaknesses, particularly in relation to the United States.
He says this country has some of the world's best thinkers and scientists.
"There's really an abundance of great research and great ideas that are being pursued here and coming out of here and that puts Australia in the top league when it comes to biotechnology potential worldwide," he said.
"Also, when you overlay the health system with that, it allows opportunities for human related clinical research, trials and population genetic type work, which is at a level here you can only do in a few places in the world.
"It is a fertile ground for research."
At the same time, Schneider says this expertise is not enough to help the nation stand alone as a major player in the biotechnology industry.
He praises the Federal Government for its support of the sector, although he says it has been misdirected, "I would take the view that they would do better to spend more on research and less on commercialisation and that way it would build Australia's knowledge capital.
"The private capital market tends not to invest very much in the development of basic knowledge but that is an appropriate role for the public sector.
"Industry then takes that knowledge and finds commercial uses for it."
Schneider says while Australia's investment community might have the money to spend on local biotech, it is not sophisticated enough to do it properly - at least, not as sophisticated as the US.
"The private sector in the US is very well developed; investors know how to find ideas and make money from them," he says.
"Investors don't just bring a cheque book. They bring networks, general management and evaluation skills, expertise as well as an understanding of the market."
While there are certainly Australian venture capitalists who had done a decent number of deals and have cash to spend, the investment community here is simply "a lot smaller and narrower than in the US," Schneider says.
"I think there has to be a tremendous realism in Australia about where you fit in, basically you are a small player in a big world."
But instead of beating ourselves up about our lack of clout and wasting resources in a fruitless effort to line up with the big players, Schneider says we should ask the US for helping hand.
Strategic partnerships would expose Australian businesses to world-class networks and capital, while exposing American investors to world-class science.
"This is a field where if you are not the best you are not going to survive," he says.
"You have got to put together a team of the best, and if you want access to the best capital in the biggest capital market, there is none larger than the US."
Schneider says that apart from the US, it would do Australian biotechs well to seek expertise globally.
"Partner with people from all over the world who have the skills you need to create a comprehensive organisation that is world class in everything it does," he says.
"You are not exporting business but in fact, by reaching out to network and to partnering, you will keep the business in Australia."
He pointed to CSL as one Australian biotech successfully playing in the world's sandpit, but says many start-ups tend to be based dangerously around a single good idea.
Schneider says three key areas in which the Federal Government could help to improve biotech in this country were in building an education system to ensure a solid pipeline of future scientists, funding basic research rather than commercial opportunities and attempting to align the local capital markets with North America to create a more open flow.
"If these three areas come together it would really energise and ensure the biotechnology industry became a major strength in this country."
But can we impress the rest of the world?
We'll just have to take up the challenge.
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