Australia's Life Science Innovation Rating |
Australia is a Life Sciences 'Innovator Country'
Only 40-or-so countries create most of the world's stock of new Life Sciences know-how - Australia is one of them. We analysed patent filings from around the globe where the filing related to a proposed healthcare patent. This analysis suggested that there are only around 40 countries that could be considered Life Science 'Innovator Countries' where there is a noticeable amount of activity in the economy related to Life Sciences. When adjusted for population size, Australia sits in the middle of this list, as the 21st most innovative Life Sciences country on the planet. We argue that Australia has strong potential to move up the table in the years ahead.
Patent filings provide a great proxy for innovation in Australia and around the world. Every year in excess of 200,000 patent applications originate from Universities, companies and individuals around the world, with the number rising around 6% pa. While not all of the these patent applications will translate into granted patents in specific jurisdictions, the statistics related to such patent applications provide an interesting insight into a country's level of innovation. Under the Patent Cooperation Treaty (PCT), which these days has in excess of 150 contracting states, inventors or their sponsors are able to file a single 'international' patent application before taking it to individual jurisdictions asking for a patent. This application publishes 18 months after the original ‘priority date’ and has a prefix of 'WO' followed by the year of publication. In order to be 'patentable', the patent application has to describe something that is 1) novel, in that, the world would not have known about it before the patent was applied for 2) an invention, and not merely a discovery and 3) something that has utility, that is, a non-trivial use. Pursuing patent protection for an invention can be an expensive proposition, so if a PCT patent application publishes, it is clearly the view of the applicant that a new piece of knowledge has been created, with that knowledge having commercial or industrial potential that is worth pursuing. Looked at this way, patent filings provide a useful way of measuring a country's level of innovation.
Every day there are around 35 medical research advances around the world, if the patent literature is any guide. Australia contributes one such advance every two or three days. We estimate that around 14,000 PCT applications per year, or 6% of all PCT patent applications, will be wholly or partly related to healthcare of some kind, based on the patent having the international class of 'A61K' (covering 'Preparations for medical, dental, or toilet purposes'). That translates to around 35 new PCT applications a day. We looked at the level of A61K applications coming out of 217 different jurisdictions and found that only 39 of those jurisdictions generated a noticeable number of applications in any one year. Australia and New Zealand are two of these 39. We list Australia's and New Zealand's contribution for the three years to the end of 2016 in the Intellectual Property section of this web site (click here). We took the recent level of PCT applications for the 39 Life Science Innovator Countries and ranked them by the ratio of population to patent filings. The smaller the number, the higher the notional level of innovation in the country, since it took less people to generate a certain number of patent applications. On this measure, Switzerland is the most innovative Life Sciences country in the world, while the seemingly all-powerful US is only No. 6 behind Luxembourg, Israel, Denmark and the Netherlands. Australia and New Zealand sit at No. 20 and 21 on the list. Our Life Sciences Innovation League Table is laid out below.
Patent filings provide a great proxy for innovation in Australia and around the world. Every year in excess of 200,000 patent applications originate from Universities, companies and individuals around the world, with the number rising around 6% pa. While not all of the these patent applications will translate into granted patents in specific jurisdictions, the statistics related to such patent applications provide an interesting insight into a country's level of innovation. Under the Patent Cooperation Treaty (PCT), which these days has in excess of 150 contracting states, inventors or their sponsors are able to file a single 'international' patent application before taking it to individual jurisdictions asking for a patent. This application publishes 18 months after the original ‘priority date’ and has a prefix of 'WO' followed by the year of publication. In order to be 'patentable', the patent application has to describe something that is 1) novel, in that, the world would not have known about it before the patent was applied for 2) an invention, and not merely a discovery and 3) something that has utility, that is, a non-trivial use. Pursuing patent protection for an invention can be an expensive proposition, so if a PCT patent application publishes, it is clearly the view of the applicant that a new piece of knowledge has been created, with that knowledge having commercial or industrial potential that is worth pursuing. Looked at this way, patent filings provide a useful way of measuring a country's level of innovation.
Every day there are around 35 medical research advances around the world, if the patent literature is any guide. Australia contributes one such advance every two or three days. We estimate that around 14,000 PCT applications per year, or 6% of all PCT patent applications, will be wholly or partly related to healthcare of some kind, based on the patent having the international class of 'A61K' (covering 'Preparations for medical, dental, or toilet purposes'). That translates to around 35 new PCT applications a day. We looked at the level of A61K applications coming out of 217 different jurisdictions and found that only 39 of those jurisdictions generated a noticeable number of applications in any one year. Australia and New Zealand are two of these 39. We list Australia's and New Zealand's contribution for the three years to the end of 2016 in the Intellectual Property section of this web site (click here). We took the recent level of PCT applications for the 39 Life Science Innovator Countries and ranked them by the ratio of population to patent filings. The smaller the number, the higher the notional level of innovation in the country, since it took less people to generate a certain number of patent applications. On this measure, Switzerland is the most innovative Life Sciences country in the world, while the seemingly all-powerful US is only No. 6 behind Luxembourg, Israel, Denmark and the Netherlands. Australia and New Zealand sit at No. 20 and 21 on the list. Our Life Sciences Innovation League Table is laid out below.
If Australia is so good at Life Sciences, how come it's only No. 21 on our League Table?
Let's face it, there seems to be more innovative places on the planet than Australia. Elsewhere on this web site we argue that Australia is a smart country that demonstrated how smart it was by freeing up its economy in the 1980s in order to stay globally competitive. As we put it in our essay entitled 'About Australia and Australians', 'We got smart and we stayed smart - we couldn't have made it through the 1990s when commodity prices were lousy without the smarts to build a truly modern and innovative information-based economy. Sure, there are more innovative places than Australia - at the moment we only rank about 17th in the world on the Global Innovation Index - but we're a contender'. Those words were written in June 2016 and reflect Australia's 2015 ranking in the Global Innovation Index, an annual innovation league table published by Cornell University, INSEAD, and the World Intellectual Property Organization. In the 2016 Global Innovation Index, published in August 2016, Australia dropped to 19th place, while in the 2017 Index, published in June, we had fallen again, to 23rd place (click here). We think this shift is more a case of Japan, France, Israel, Norway, Austria and China getting better rather than Australia getting worse. In the global innovation stakes, it's a Red Queen's Race.
Why Australia is generally only considered a middle-ranking innovator. There are various reasons why Australia tends to sit only in the middle of the pack when people are talking about which countries are good at innovation across the economy, not just Life Sciences. We may have a world-class University system, but we tend to spend a lot less than many countries on secondary education for our students, and for students at the tertiary level we graduate much fewer scientists and engineers. We are one of the best countries in the world when it comes to business people accessing credit, but we among the worst at using that credit on importing state-of the-art Information Technology. We have one of the best environmental records in the world, but some of the most inefficient energy practices. And so on. In other words, for every apparent strength we have a relative weakness (click here). It's also apparent that we lag behind on the transition to the digital economy, that we could do with some more local venture capital and that we don't have enough government incentives for the innovation sectors of the economy, among other challenges (click here). It hasn't helped that the trend towards increased economic freedom has stalled since around 2012 (click here).
We argue, the pundits notwithstanding, that Australia is one of the best countries in the world to do Life Sciences, and contend that as a Life Science 'Power' it ranks it the Top 10 globally (click here). We take the view that success in Life Sciences involves a combination of factors, including the level of economic freedom in the country, the entrepreneurial culture of its people, the quality of its bio-entrepreneurs, the global standing of its Universities and research institutions, the livability of its cities and, especially, the attitude of its local capital market to Life Science ventures. Australia may rank only 21st on our League Table, but it has more economic freedom than all the countries above it except Switzerland, Singapore and New Zealand. It has a public capital market much more receptive to biotech and medical device start-ups than just about every market except those to be found in the US. Only the US, the UK and Germany have a more powerful University system. And so on. Add up all these factors, and the fact that we seem to patent biotech and medical device inventions with less frequency than Switzerland, Israel, Denmark and so on becomes less of an issue.
How Australia is likely to move up our League Table in the years ahead. We argue that Australia is more likely to move up than down compared to other countries on our League Table. For a start, our Universities are still in the early stages of learning how to do really good tech transfer. Once they get stronger on this competency, we expect there will be a greater level of innovation within academia. For another, our equity market is getting better over time at capitalising and properly valuing new Life Science ventures, so there is greater incentive than ever for Life Science knowledge makers and their collaborating bio-entrepreneurs to commercialise what they are creating. Thirdly, we're now some years past from the great mining boom in Australia that dominated our economy from 2003 to 2011. Public policy makers therefore have much more incentive to focus on measures to promote Life Sciences than they formerly did.
Why Australia is generally only considered a middle-ranking innovator. There are various reasons why Australia tends to sit only in the middle of the pack when people are talking about which countries are good at innovation across the economy, not just Life Sciences. We may have a world-class University system, but we tend to spend a lot less than many countries on secondary education for our students, and for students at the tertiary level we graduate much fewer scientists and engineers. We are one of the best countries in the world when it comes to business people accessing credit, but we among the worst at using that credit on importing state-of the-art Information Technology. We have one of the best environmental records in the world, but some of the most inefficient energy practices. And so on. In other words, for every apparent strength we have a relative weakness (click here). It's also apparent that we lag behind on the transition to the digital economy, that we could do with some more local venture capital and that we don't have enough government incentives for the innovation sectors of the economy, among other challenges (click here). It hasn't helped that the trend towards increased economic freedom has stalled since around 2012 (click here).
We argue, the pundits notwithstanding, that Australia is one of the best countries in the world to do Life Sciences, and contend that as a Life Science 'Power' it ranks it the Top 10 globally (click here). We take the view that success in Life Sciences involves a combination of factors, including the level of economic freedom in the country, the entrepreneurial culture of its people, the quality of its bio-entrepreneurs, the global standing of its Universities and research institutions, the livability of its cities and, especially, the attitude of its local capital market to Life Science ventures. Australia may rank only 21st on our League Table, but it has more economic freedom than all the countries above it except Switzerland, Singapore and New Zealand. It has a public capital market much more receptive to biotech and medical device start-ups than just about every market except those to be found in the US. Only the US, the UK and Germany have a more powerful University system. And so on. Add up all these factors, and the fact that we seem to patent biotech and medical device inventions with less frequency than Switzerland, Israel, Denmark and so on becomes less of an issue.
How Australia is likely to move up our League Table in the years ahead. We argue that Australia is more likely to move up than down compared to other countries on our League Table. For a start, our Universities are still in the early stages of learning how to do really good tech transfer. Once they get stronger on this competency, we expect there will be a greater level of innovation within academia. For another, our equity market is getting better over time at capitalising and properly valuing new Life Science ventures, so there is greater incentive than ever for Life Science knowledge makers and their collaborating bio-entrepreneurs to commercialise what they are creating. Thirdly, we're now some years past from the great mining boom in Australia that dominated our economy from 2003 to 2011. Public policy makers therefore have much more incentive to focus on measures to promote Life Sciences than they formerly did.
The Life Sciences Innovation League Table
Rank |
Country |
Typical Life Science PCT patent applications p.a. |
Population per application |
1 |
Switzerland |
580 |
14,100 |
2 |
Luxembourg |
20 |
29,100 |
3 |
Israel |
180 |
45,400 |
4 |
Denmark |
120 |
46,600 |
5 |
Netherlands |
280 |
60,800 |
6 |
United States |
5,300 |
61,100 |
7 |
Singapore |
90 |
64,200 |
8 |
Belgium |
170 |
67,100 |
9 |
Ireland |
70 |
70,700 |
10 |
Korea |
680 |
74,900 |
11 |
France |
780 |
85,700 |
12 |
Sweden |
110 |
89,800 |
13 |
Japan |
1,290 |
98,200 |
14 |
Germany |
770 |
104,800 |
15 |
Norway |
50 |
105,300 |
16 |
United Kingdom |
570 |
113,000 |
17 |
Cyprus |
10 |
120,600 |
18 |
Canada |
270 |
131,000 |
19 |
Finland |
40 |
137,500 |
20 |
New Zealand |
30 |
149,200 |
21 |
Australia |
150 |
153,300 |
22 |
Austria |
50 |
174,200 |
23 |
Slovenia |
10 |
197,800 |
24 |
Czechia |
40 |
266,100 |
25 |
Italy |
220 |
281,900 |
26 |
Spain |
150 |
323,800 |
27 |
Greece |
20 |
538,700 |
28 |
Portugal |
20 |
541,700 |
29 |
Taiwan |
40 |
586,600 |
30 |
Chile |
20 |
882,500 |
31 |
Poland |
40 |
963,100 |
32 |
Turkey |
70 |
1,146,800 |
33 |
China |
980 |
1,401,600 |
34 |
Malaysia |
20 |
1,547,500 |
35 |
Russia |
90 |
1,581,700 |
36 |
South Africa |
20 |
2,715,000 |
37 |
Mexico |
40 |
3,079,200 |
38 |
India |
390 |
3,248,400 |
39 |
Brazil |
60 |
3,430,400 |
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