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US biotech deal blazes Aussie trail

The Australian, Canberra

US biotech deal blazes Aussie trail

David Nason, New York

12 April 2006

At just $4million, it’s hardly the biggest biotech deal ever struck by an Australian company, but it’s an important first.

That’s how the Sydney-based contract research organisation Novotech is describing the pediatrics-related clinical trial it will run for US biotech firm SkyePharma.

The trial, due to be announced overnight at the international BIO 2006 conference in Chicago, involves Novotech managing a research project with sites in the US and Australia.

The research will involve 200 patients in 25 hospitals, 20 of them in the US, being monitored by 12 Novotech scientists for two years.

This marks the first time an Australian contract researcher has taken US-based clinical research required by the US Food and Drug Administration from the local and European companies that have traditionally performed the work.

And in the US, where most of the world’s $US9 billion ($12.3 billion) a year in clinical research is spent, Novotech chief executive Alek Safarian says it’s a door well worth opening.

"We are confident this can lead to much more drug development work being done jointly in Australia and the US," Mr Safarian said.

"And the opportunities won’t just come to us. This will benefit the entire clinical research sector in Australia.

"The global drug development outsourcing scene is very robust at the moment, and for a US company to award a project of this size and complexity to an Australian firm really says a lot about the scientific capabilities and sophistication we have available in Australia."

Mr Safarian said the Australian contract research sector was now worth about $80-100 million a year.

He said the Novotech gamble of opening a US office last year had obviously proved its worth.

But he also had a good word for Australia’s often-maligned free trade agreement with the US, saying the "positive vibe" of the FTA had indirectly helped Novotech make the breakthrough.

"There were no trade barriers the FTA brought down for us, but we have probably benefited from a business climate where there are now more Australian companies talking to more US companies," Mr Safarian said.

"But the main thing is we have won exactly the type of deal we had in mind when we opened operations in the US.

"There is a real demand for a CRO such as Novotech to offer trials across the two countries, providing the benefits of Australia’s highly regarded cost-effective clinical trial capabilities while at the sametime taking advantage of access to the much larger US market for rapid patient enrolment."

Studies have shown that the costs of clinical research are as much as 30 per cent lower in Australia than for similar work in the US or Europe.

Mr Safarian said Novotech was now aiming at earning 50 per cent of its revenue from US-based operations within three years.