We argue that Australia and New Zealand are well-placed to develop future billion-dollar Life Science companies, for five main reasons:
- The unique nature of Australia, its people and its economy - click here for a discussion of Australia and what makes it one of the greatest countries in the world;
- The special qualities of the Australian Life Sciences sector (click here) and the people who work in it (click here);
- The fact that Australia is globally important player in Life Sciences - indeed, one of only 17 genuine Life Sciences 'Powers' in world (click here);
- The competitive advantage which has allowed New Zealand to bootstrap its nascent Life Sciences sector (click here)
- The nature of the Life Sciences 'support system' in Australia and New Zealand - click here for the names of some key players.
The Big Three - ASX-listed Life Science companies that are global High Flyers
Australia has created three outstandingly successful Life Science companies in the last two decades. We argue that they provide a taste of what's to come:
- CSL Ltd (Melbourne, ASX: CSL, www.csl.com.au). This company, which originated as an entity owned by the Australian government called the Commonwealth Serum Laboratories, is today the world's 31st largest pharma company, with a franchise based on plasma products. FY15 revenue was US$5.5bn.
- ResMed (San Diego, Ca., ASX: RMD, www.resmed.com). This company may be located in San Diego these days but it started here in Sydney. ResMed was the pioneer of the CPAP machines that treat Obstructive Sleep Apnea. FY15 revenue was US$1.7bn.
- Cochlear (Sydney, ASX: COH, www.cochlear.com). This company pioneered the cochlear implant which is routinely used these days to treat sensorineural hearing loss. FY15 sales revenue was US$0.8bn.
ASX-listed Life Science companies just hitting the Big Leagues
Following on behind CSL, ResMed and Cochlear are five other companies - three from Australia, two from New Zealand, that have recently made it into the Big Leagues:
- Sirtex Medical (Sydney, ASX: SRX, www.sirtex.com). This company is moving brachytherapy - the use of radioactive beads to supply localised radiation treatment - into the mainstream with its Sir-Spheres product, FDA approved in August 2000 for the treatment of liver cancer. FY15 revenue was A$176.1m.
- Fisher & Paykel Healthcare (Auckland, NZ, ASX: FPH, www.fphcare.com). This company, a flagship for what the New Zealand Life Sciences sector is capable of, was a spin-out from the iconic whitegoods maker Fisher & Paykel. That company had been manufacturing refrigerators and other whitegoods in New Zealand since the 1930s, but when the company's researchers figured out how to properly humidify the air coming out of CPAP machines they had a whole new business on their hands as a competitor to ResMed. In the year to March 2016 Fisher & Paykel Healthcare enjoyed operating revenue of NZ$816m and NPAT of NZ$143m.
- Mayne Pharma (Adelaide, ASX: MYX, www.maynepharma.com) This company in its present incarnation - it's been around in one form or another since 1845 - got started in 2009 when America's Hospira sold the oral pharmaceutical division of the former Mayne Pharma to an ASX-listed drug reformulator called Halcygen. The 'new' Mayne Pharma has since hustled itself via numerous acquisitions into a significant player in generic drugs.
- Nanosonics (Sydney, ASX: NAN, www.nanosonics.com.au). This company's trophon EPR product disinfects ultrasound probes at low temperatures using ‘nanonebulant’ technology. Trophon EPR gained FDA approval in February 2011. FY15 revenue was A$22.2m.
- Orion Healthcare (Auckland, NZ, ASX: OHE, www.orionhealth.com). This developer of healthcare information technology enjoyed NZ$207m in operating revenue in the year to March 2016. Orion's software now manages over 100 million patient health records globally.
The Next Wave - Companies with first revenues, now growing rapidly
- AFT Pharmaceuticals (Auckland, NZ, ASX: AFP, www.aftpharm.com) manufactures various Rx and OTC products.
- Cogstate (Melbourne, ASX: CGS, www.cogstate.com) is a brain function company.
- Compumedics (Melbourne, Australia, ASX: CMP, www.compumedics.com) is a developer of devices to measure brain function.
- Cyclopharm (Sydney, ASX: CYC, www.cyclopharm.com.au) is a supplier of radiopharmaceuticals.
- Ellex Medical Lasers (Adelaide, ASX: ELX, www.ellex.com). This supplier of medical lasers for ophthalmology enjoyed sales revenue of $62.7m in FY15.
- Osprey Medical (Eden Prairie, Mn., ASX: OSP, www.ospreymed.com) has developed a device to treat contract-induced nephropathy.
- SomnoMed (Sydney, ASX: SOM, www.somnomed.com) is a supplier of oral devices for the treatment of sleep apnea.
The coming success stories - ASX-listed Life Science companies getting ready for Take-Off
The ASX plays host to an unusually higher number of Life Sciences companies still at the development stage. Click here for the 110-or-so companies that we keep track of, which represents about 4% of all ASX-listed companies.
Not all of the Life Sciences companies traded on ASX are based in Australia or New Zealand. Seven are effectively American (Atcor Medical, Avita Medical, GI Dynamics, Impedimed, Osprey Medical, pSivida and REVA Medical). You'll notice, looking over the list, that Australia seems to be a particularly good market for medical device ventures, a reflection of the fact that our early success happened with Cochlear and ResMed. The US companies HeartWare (Nasdaq: HTWR) and Sunshine Heart (Nasdaq: SSH) both incubated on ASX before heading back to their home market to trade on Nasdaq.
A heartening aspect of Australia's Life Science sector is the degree to which it is global in terms of its organisation. Take Prima BioMed (ASX: PRR, Nasdaq: PBMD) as a good example. While its headquarters are in Sydney, CEO Marc Voigt runs the company from the Berlin office while CSO Professor Frédéric Triebel has a lab in Paris.
Not all of the Life Sciences companies traded on ASX are based in Australia or New Zealand. Seven are effectively American (Atcor Medical, Avita Medical, GI Dynamics, Impedimed, Osprey Medical, pSivida and REVA Medical). You'll notice, looking over the list, that Australia seems to be a particularly good market for medical device ventures, a reflection of the fact that our early success happened with Cochlear and ResMed. The US companies HeartWare (Nasdaq: HTWR) and Sunshine Heart (Nasdaq: SSH) both incubated on ASX before heading back to their home market to trade on Nasdaq.
A heartening aspect of Australia's Life Science sector is the degree to which it is global in terms of its organisation. Take Prima BioMed (ASX: PRR, Nasdaq: PBMD) as a good example. While its headquarters are in Sydney, CEO Marc Voigt runs the company from the Berlin office while CSO Professor Frédéric Triebel has a lab in Paris.
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