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Commercial development of biomedical technology

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Minister for Productivity

Media Release

Date 4 July 1979



Opening address by the Minister for Productivity, Mr Ian Macphee, at the Symposium on the Commercial Development of Australian Biomedical Technology, at Clunies Ross House, Melbourne.

Biomedical technology provides the basis for a large and rapidly growing world-wide industry. It seems certain to be one of the growth . industries of the last quarter of the twentieth century. It is an industry that is already reaping benefits for the companies and the countries which develop and market these new, high-technology products. Not the least, it is also an industry capable of extending the benefits of technology to all . mankind. In overcoming disease and disability, this technology can make a

dramatic contribution to the quality of many millions of lives.

Why then,, this symposium? In recent years in Australia there have ' been a number of studies and inquiries addressing the viability of our manufacturing industry. They have all shown the need.for manufacturing industry to both compete better against imports, and to increase its exports

of manufactured goods. Australia's prospects for long-term economic growth will be greatly improved when and if we expand our tiny share of the world market for high-technology products. These are products with a high value-added component. Their manufacture is a positive way of making the best possible use of the skills of our highly-educated workforce.

In recent times, our industries have been under pressure from overseas competition to adapt and change to improve their competitiveness. Recognising these developments, the Government has introduced a number of measures to encourage exports and to assist the development of new and

competitive products. These have included a range of export and industrial research and development incentives, and I am pleased to say that industry is responding in a very positive way to such initiatives.

But this re-development of existing industries cannot be a sole or a sound basis for growth: we must also create new industries. An essential element of a healthy private sector is the constant establishment of businesses that are really new. Ordinary market mechanisms are important in maintaining an aggressive, competitive outlook by business leaders, but it is

competition from new products, new processes and new organisations that injects real stimulus to a successful, expanding and prosperous manufacturing industry. .

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Australia has seen a continuing process of small business creation by people who believe that they can exploit the market place with their individual talent and initiative. But our small businesses too often fail because of inexperience, the lack of appropriate business acumen, and because

they are under-capitalised. The relative number of small businesses in Australia is not much different from other developed countries. Yet, we do not have many examples of the backyard enterprise developing into a multi-million dollar company over a relatively short period. We should ask

ourselves why. .

America is the world's best example of an environment where small, innovative businesses have flourished to become large international enterprises which are household names: Xerox, Polaroid and Texas Instruments, ■just to name a few. It might be argued that this success was due to special features of the U.S. business environment, but our standards of education are high. Pro-rata, we certainly have a comparable number of people with the potential to achieve such success. We have access to markets. We have a

significant domestic investment capability. Why hasn't it happened to the same extent in Australia?

The White Paper on Manufacturing Industry expressed the Government's view that innovation can play an important role in the development of internationally competitive and export-oriented industries. Most of us are well aware of our range of natural resources which can, and frequently do, provide us with a comparative advantage in the market place. Most of us

equally overlook Australia's other enormous resource base - ourselves. Our technological institutions produce well-educated, skilled and creative people. These institutions include the universities and the colleges of advanced education, as well as institutes of technology and the many Government

laboratories and research centres.

In working closely with many of these institutions, my own Department of Productivity has seen a number of inventions and developments with the potential to form the basis of new Australian industries. The fact that such inventions exist has been known for a long time. Over the years

some people have ascribed to Australia the characteristic that we are good at invention but not particularly good at commercially exploiting our inventions. In many ways it is fair comment.

These are the reasons why my Department has provided support for the commercial development of InterScan and is undertaking a new pilot program. It will establish and test methods of taking Australian invention and development more*successfully into the market place. This program, which we call the Pilot Enterprise Development Program, is an important new component of our overall innovation program which will develop a number of approaches to deal with different aspects of Australia's innovation barrier. The Pilot Enterprise Development Program will tackle the constraints encountered by practising technologists - people with potentially viable inventions or developments, but who are unable to take them into the market place for lack of the right combination of skills and resources. A further component of our overall innovation program - now under development - will focus on the difficulties in the way of up-and-coming technological developers and entrepreneurs, as represented by the young people about to enter the workforce.

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Today's symposium is about accelerating the commercial exploitation of existing inventions and developments. It is especially concerned with involving the business community in the development of methods by which new industries, based on Australian invention and initiative, can be developed. The Pilot Enterprise Development Program will address the problems associated with the creation and growth of new technology-based firms: firstly, through

the initial, high-risk, small-business phase and, hopefully, then developing their potential as export orientated, Australian-based, international companies. We have some excellent examples, but quite bluntly, not enough.

If deficiencies in Australia's business environment have constrained development of new companies based on our technological capabilities, how can the Government help develop the environment which will encourage the ' establishment and growth of these new companies? One answer - itself an innovative response to the problem - is to act as a catalyst to enlist the assistance of existing business resources and know-how - the private sector skills of bankers, stockbrokers, experts in marketing and promotion, management consultants - and to concentrate those resources for a limited, but

critical, period of time on the solution of the problems facing the inexperienced, technically capable, would-be-entrepreneur.

In this way, the Government can help launch developments of considerable long-term community benefit. New companies so established will be in the nature of demonstration projects. Their successes, and their setbacks, will show the way to others and contribute to the further

development of our industrial development policies. The business people who have been involved in this program can use their unusual experience in establishing more new companies, but with less need for Government involvement.

Today's small beginning could become self-sustaining.. Expanding our business opportunities like this offers more than the financial return to those who put up the venture capital. It encourages the brightest talent in our. universities and laboratories. It offers the prospect of creating new and

satisfying jobs when we need them most. It is a way for Australia to participate in the growing world trade in high-technology products.

During this Pilot Enterprise Development Program, we plan to identify 10 to 12 inventions or developments which could be the basis of new technology-based firms. With support from senior and experienced members of our business community, a committee will be established to guide the development of each invention. In each case this Guidance Committee, as we have called it, will have private sector members with financial, legal, management and technical expertise. On the advice of this Guidance Committee, professional management resources will be provided to work up a corporate

development strategy for each prospective new firm. We see the Guidance Committee as an informal board of directors and the corporate development strategy developed in each case as the blueprint to develop each new firm.

We must not forget that technology is a perishable commodity. There is little point in taking five years to develop a particular new product if competing technologies are going to by-pass it by then. We will, therefore, aim to develop techniques by which Australia's new technology can be brought into the market'place quickly, and continually advanced.

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We intend to explore various development approaches. We will look at ways of establishing new companies. But we will also look at ways of establishing new product lines for existing companies and at the transfer of existing business resources into new and independent, off-spring companies. These initiatives share one vital feature - they will be based on the exploitation of promising invention'or research - and the common elements of each potential innovation will be that:

. It is technically viable.

. It would merit an industrial research and development project grant.

. ‘ It has some measure of market advantage through patent protection or development timing.

. It has a significant market potential.

. It could lead to internationally competitive and export-orientated products or services.

. It has the potential to be further developed and to stay a market leader.

. It has the potential to justify the establishment of an organisation which can be developed into a company of significant size, with consequent employment and economic benefits to the community.

Another important feature of the program will be the opportunity to optimise the organisation in terns of constructive human relationships and effective inter-personal communications. There will also be an opportunity for the development of appropriate organisational structures and management systems and for the utilisation of effective technology and operational practices. Each new company should develop into an example of flexibility and

adaptiveness, able to respond to a continually changing world market situation. .

These opportunities to train Australians in the management of innovation will be a major benefit. To give one example, we intend to involve business students in the program activities for first-hand, practical experience of the problems and potential of new technology-based firms.

My Department has other programs related to technology development and transfer, productivity improvement and human relations at the workplace which will enhance and support the program.

I am aware that the program will raise important new issues for our various technological institutions, in regard to the participation of their staff in new business ventures and the subsequent development of on-going relationships we hope to see between the Institutions and the new companies. Through close involvement with this program, educational institutions should be far better placed in future to judge their own performance in preparing

graduates for the technological, business and social challenges ahead of them.

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For financial institutions, this program will raise issues of investment criteria and the availability of venture capital. But the chance to develop skills and techniques appropriate to the business world of the 80s and 90s will reward their participation. .


Let me.explain now why the commercial development of Australian biomedical technology is an example of what I have been saying.

First, a survey conducted less than three years ago for the U.S. Department of Commerce estimated the market for medical equipment in Australia to be approaching $70 million in 1977/78. Moreover, the study indicated that over 70 per cent of this market was supplied from overseas. Clearly, we have

our own substantial market with great opportunities for Australian products to replace imports. For Australian manufacturers capable of penetrating the world market - which represents some $24 billion - the potential has no limits.

Second, there are Australian/inventions/innovations in this field with the potential for commercial development. And while you know there are such projects capable of being commercially developed, you also know that few if any of these projects will be commercially exploited unless the appropriate

circumstances and environment are created, and relevant and specialised assistance or encouragement is given to the inventor/innovator. The Pilot Enterprise Development Program is intended to meet this obvious need and provide that assistance and encouragement.

My Department has identified a substantial number of such inventions/innovations, and a sample is to be presented briefly to this symposium as examples of projects that might be included in the Pilot Enterprise Development Program.

I should like to suggest that you also consider how technologists in related fields might keep informed of developments of mutual interest, how we might bring the technological and scientific community you represent closer to the business community. We may well see this symposium as the first stage of

new industry creation, seeking out the potentially viable .inventions/innovations in biomedical technology and creating the circumstances and environment for their commercial development.

People involved in this program so far find it is an exciting and rewarding experience. Indeed, programs like this can introduce a new sense of spirit, challenge and adventure to Australia, and help to influence our long-term economic health and social well-being. One journalist suggested we call this initiative "the Adventure Corporation Program". I cannot think of a title that better describes this joint industry, institution and Government

initiative. ’

I declare this proceeding open and wish you all a stimulating and successful day.