In 2022, the healthcare sector shows real promise in the areas of medical research, clinical trials, telehealth, and the unlocking of patient data. Growth in all of these sectors can be enhanced by judicious government decision making in an election year, writes Ben McLaughlin.
Health and healthcare have been on every Australian’s mind, every day, for the past two years. Although currently, we are going through a tough period, we can feel optimistic that the healthcare sector will increasingly contribute to the Australian economy in 2022 and beyond. In an election year, we can also expect the federal government to step up its support.
Medical research
Australians can be proud of our innovative medical research, for example, developing penicillin as an antibiotic, the bionic ear, the cervical cancer vaccine, and many others. However, Australia’s expenditure on R&D healthcare as a percentage of GDP is below the OECD average and well below leading nations such as South Korea, Israel, Taiwan, and Japan.
Thankfully, successive governments have introduced financial incentives to encourage medical research from both local and international companies. While originally piecemeal, these are coming together as a cohesive platform.
Existing government incentives include the R&D tax incentive (RDTI), the Medical Research Commercialisation Fund (MRCF), the $20 billion Medical Research Future Fund, and the $1.3 billion Modern Manufacturing Initiative (MMI), which nominated medical products as one of six manufacturing priorities. With $700 million under management and both private and governmental investors, the MRCF is Australia’s largest life sciences investment fund.
Following beneficial reforms to the R&D tax incentives (RDTI), which took effect on 1 July 2021, small companies are eligible for a rebate, allowing them to claim up to 43.5 per cent of the costs relating to research and development. The rebate may exceed the tax they pay. Larger companies may claim a tax refund of up to 38.5 per cent of R&D costs.
Patent box
The latest piece of the puzzle is the patent box proposal, which provides for a lower tax rate for income derived from medical patents. The bill is currently before Parliament.
Source: Lawyers Weekly
