NZ will lose to Australia: bioentrepreneur

A prominent New Zealand entrepreneur has warned that financial institutions needed to take a punt on the emerging sector or risk losing business to Australia.

But some Australian industry experts said New Zealand already had little chance of competing with their trans-Tasman neighbours.

Dr Garth Cooper - who has had to look to the United States for financial backing of his own company, Protemix - told a networking dinner in Auckland overseas that investors did not believe New Zealand could run large, technologically sophisticated businesses.

"No matter how good your science and technology, basically the admission that you come from New Zealand is virtually the kiss of death," he said.

"They think that if you think you can do it here from a business perspective, then you are deluded, and if you don't admit to that at the beginning of the discussion then they think you are incompetent.

"What that means for your business development is that the perceived value of your company is immediately divided by two, four or five."

Cooper said New Zealand companies needed to "get some runs on the board" by using local capital. But this would require a change of attitude among financial institutions and investors.

He said that while major financial institutions claimed to not have the appropriate skills and resources to deal with the sector locally, their Australian branches did.

"So what you have to do is go across to Australia and talk to people there who do have the skills and expertise and understand that it's a very important area, and Australia is ploughing billions into it," Cooper said.

"But oh, by the way, if you do come from New Zealand you are going to have to take Australian money, and oh, by the way, your company is now an Australian company.

"So the financial structure here has basically created a tilt that will tend to tip most things out of New Zealand to Australia."

Northington Partners investment banker Claire McGowan said she had noted strong interest in New Zealand among US investors.

"They are looking at investing in a later-stage company," McGowan said. "Where we are lacking is not having the big pharmaceutical players actively in New Zealand."

But Australian biotechnology analysts claimed New Zealand does not have the critical mass to support the industry.

"We can fund investment and I don't think the kiwis can," one finance industry source said.

"They don't have enough size to support the industry unless they create some sort of miracle like a 20-year tax break.

"They have got to accept they can't afford that sort of industry."

The source said that while high-level research was cheaper in New Zealand because salaries were lower, there simply was not enough money available locally to fund the sector.

Cooper, however, said he was adamant his own company at least would do its best to build its business in New Zealand.

"Where it winds up, I'm not clear at this point in time," he said.

"But if there is an attempt to develop a real biopharmaceutical industry in New Zealand with a number of success stories, then I think a number of these structural issues that are business and economic, rather than scientific and technical, are going to have to be addressed by a combination of government and financial institutions."