Growing Pains: Why Australia’s life sciences sector needs patience and capital to scale

• Australia is globally recognised for world-class life sciences but needs more funding to support companies at scale-up stage
• Experts speak ahead of AusBiotech Invest 2025, connecting investors with ~25 presenting companies
• Takeaway: investors need patience when investing in life sciences companies and should think long term beyond next catalyst

Australia is globally recognised for world-class research in the life sciences sector but remains small on a global scale and in need of greater capital investment to help companies scale up, according to experts speaking ahead of AusBiotech Invest 2025.

The one-day forum in Melbourne today (Tuesday, October 21) focuses on connecting investors with ~25 presenting companies and precedes AusBiotech’s flagship International Conference starting the following day.

Sarah Meibusch is a partner at OneVentures, one of Australia’s largest venture capital firms, where she leads the life sciences investment team, backing private companies in the space.

Meibusch will be a presenter on the event’s Building Australia’s Future Life Sciences Capital panel, which explores how Australia can address structural funding gaps to help local companies grow and compete globally.

“Life sciences and biotech is nation-building and the kind of industry that drives not just health impacts globally but also advanced manufacturing and sovereign capability,” Meibusch told Stockhead.

Strong growth across Aussie sector but still small global player

AusBiotech figures show strong growth in Australia’s life sciences sector. However, despite the growth Meibusch said Australia was still a relatively small player globally.

She said 50% of health dollars spent globally was done in the US, which remains the world’s largest healthcare market.

“The US dominates the health and biotech market internationally,” she said.

“If you think where Australia sits relative to the US then we represent about 3% of the global health market so we’re tiny but are part of a globally connected space.”

Meibiusch likens the Australia sector to a barbell with great science at our institutions on one end and established companies at the other end like CSL (ASX:CSL), Cochlear (ASX:COH) and ResMed (ASX:RMD).

“We have some other companies sitting towards the established end but in the middle is the capital stack that is somewhat lacking, which is what we are focusing on in our panel,”  she said.

Essentially, the “capital stack” refers to the funding gap between early-stage ideas emerging from research institutes and companies that are already profitable and established.

Meibiusch said 10 or 15 years ago there was limited capital to spin science out of universities but that was changing.

“Australia has put funding into grant programs, incubators, accelerators and early start-up capital so we’re starting to grow a pipeline of opportunities getting out of universities and into little companies,” she said.

“That whole part of the capital stack didn’t exist 15 years ago but now they’d probably be more than $500 million going into the space.”

Scale-up-stage companies need local support

Meibusch said the scale-up stage – when a company is ready to enter human trials but needs significant capital – is often the hardest to fund.

Her view is shared by long-term portfolio manager for Platinum Asset Management’s global health sciences fund Dr Bianca Ogden and Steve Burnell, managing director of health tech fund Tenmile – an arm of Andrew ‘Twiggy’ and Nicola Forrest’s private Tattarang.

“The really problem is where are companies going to go when they need that $200 to $300 million required to really get later stage development moving?” Ogden asks.

Initiatives like the National Reconstruction Fund and R&D tax incentives, along with support from local biotech funds and venture capitalists, can only assist up to a point.

Syndication – where multiple investors pool their capital to jointly back a company – is often required.

Unfortunately, Ogden said in Australia there weren’t enough dedicated biotech-focused funds or venture capitalists to write the bigger cheques, with the likes of Europe becoming attractive propositions for funding.

“The European ecosystem has evolved over the years, and dedicated funds have had success and can channel the money back into new companies,” she said.

Burnell said that despite Australia’s exceptional university research output and world‑class scientific talent (ranked in the top 10 globally for life sciences), many promising Australian ventures were moving offshore, drawn by greater availability of private investment capital in markets such as the US and Europe.

“Venture and other higher risk private capital is definitely constrained in Australia and as companies move beyond seed and proof-of-concept funding, they require larger financings to support human clinical trials,” he said.

He added it was difficult to secure leads or even Australian syndicate partners for these later rounds that require deeper pockets.

“The solution is building more bridges and better syndicate relationships overseas to attract international investors to support Australian companies as well as unlocking some of the larger private and government capital pools that already exist in Australia to help meet this specific need,” Burnell said.

“Tenmile is explicitly focused on both.”

Patience is a lesson to learn from Europe

Another option for Australian life sciences companies at the scale-up stage is an ASX listing.

However, Ogden and Meibusch warn listing too early can be a struggle requiring patience from investors often focused on a quick win from the next catalyst.

“In Europe, for example, there is more capital available, and it is really patient capital not just waiting for the next catalyst or data point,” Ogden said.

“Instead, they tend to use that catalyst to ultimately invest more money in the company and commit.

“Here there is lot of thinking from investors about what is the next catalyst or even going into a pre-IPO they’re wondering how to get out, which is the wrong approach and can generate volatility.”

Ogden said leading up to a catalyst a stock can rise substantially on the ASX but then quickly sell off.

“It’s like, why couldn’t investors just further support the company?” she asks.

“You see it in the US as well, but not to the same extent and it’s frustrating for long-term investors.”

Furthermore, she said local investors can be put off by regulatory or clinical delays, causing a stock to sell off unnecessarily.

“To me it is another signal the maturity is not here,” she said.

Choosing to stay at home

However, there are signs the tide is turning for clinical stage companies. Meibusch said five years ago all our best clinical stage companies tended to go offshore for funding but now have options.

“One of our companies, Vaxxas, which is developing microarray delivery for vaccines, has raised $90 million this year,” she said.

“We also have a company we’re supporting called BiVACOR, which is developing a total artificial heart, and are keep part of it here in Australia.”

Australia’s clinical trial setup presents opportunities

One area the experts believe is of great opportunity for Australia is bringing in companies from overseas to undertake early stage clinical trials.

“We offer a 30% to 40% cost advantage to run early clinical work, and you can do it in a fast way,” Meibusch said.

“Two thirds of my deal flow is now companies coming into Australia to access our R&D and clinical trial facilities so there’s another opportunity to grow the middle part of that barbell.”

Ogden said she sees a lot of companies come to do their clinical trials in Australia.

“They get really excited about our set up here because it is fast, relatively cheap compared to the US,” she said.

“Someone even told me it’s faster than China so Australia should really capitalise on the clinical trial space.”

Burnell noted Australia had established a world-class ecosystem for early-stage clinical trials.

“With an extensive network of high quality clinical sites and investigators, cost-effective CRO/CDMO networks and a clear CTN regulatory pathway provide for high quality and efficient clinical trials,” he said.

He added that although word was spreading, there was definitely more Australia could be doing to promote our clinical trials capabilities and attract international trial sponsors.

“From increasing coverage beyond the capital cities into regional population centers, providing infrastructure and financial support to investigators and institutions who host and run trials and articulating the Australian ecosystem’s differentiation internationally there is clearly an opportunity to build on the momentum we have.”

“This is tied closely to the capital stack in that stronger Series A and B financing syndicates in Australia will naturally create a flywheel effect for more clinical trials being conducted in Australia.”

Stockhead is a sponsor of AusBiotech Invest 2025.