by Maurice Parlane, New Wayz Consulting
New Zealand’s pharmaceutical market is currently worth US$379m and growth in public healthcare sits at a little over 9% of GDP, though the rate of growth has slowed considerably in recent years.
While the market growth for medicinal products is relatively modest, the human therapeutics sector is growing and now employs over 900 people and generates annual revenues of $200m. This is a four-fold increase in the past ten years and the sector recorded a CAGR of 6.3% between 2005-2009 in spite of the GFC.
While many regions of the world saw a dramatic reduction in the number of bioscience companies between 2007 and 2009, New Zealand saw a 27% increase during the same period, according to the latest industry growth report. Most biotechnology companies tend to be small, employing less than 10 people.
There is little local manufacturing and most companies import, principally from Australia, the USA and EU. The manufacturing landscape is dominated by NZP and Douglas Pharmaceuticals who generate over 90% of the sector’s revenue. As a result the market has many SMEs primarily engaged in R&D with little or no manufacturing capability, or manufacturing is outsourced overseas.
New Zealand’s veterinary manufacturers punch above their weight compared to their Australian counterparts. On top of local demand for veterinary products there is a healthy demand for export due to Australia and New Zealand’s reputation as producers of animal and agricultural products.
While no comparative figures are available at the time of this report, indications are that the veterinary sector has grown by a CAGR of >10% over the past three years and is now comparable in size to Australia’s.
Several factors contribute to this, with the most significant being the relative size and capability of New Zealand’s dairy industry and the difference in regulatory strategies between the two countries. New Zealand’s regulatory framework is seen as more suitable to export markets due to its government-led compliance and biosecurity programs. In Australia, GMP compliance audits are not conducted by the government.
In New Zealand the medical technologies industry employs about 3,000 people and there are about 70 identifiable companies. A 2009 report commissioned by NZ Trade and Enterprise indicated these companies earned $550m in revenue, with Fisher & Paykel Healthcare contributing the lion’s share.
This sector shows a good degree of similarity to the human healthcare sector where, outside of the dominant major organisations, there are a proportionally a large number of organisations engaged in R&D who are SMEs and have products in niche areas of the medical technology market.
The bioactives sector includes organisations involved at various stages of the value chain of a nutritional ingredient or product derived from natural sources, including nutraceuticals and functional foods. This sector employs around 3,000 people and generates revenues in the order of NZ$760m.
There are over 150 New Zealand owned companies in the bioactives sector and the global market is growing rapidly – over 30% of these companies have a presence outside of New Zealand.
Bioactives possibly hold the largest potential for growth in the biotechnology sector as major organisations such as Fonterra, with approximately 30% of the world’s dairy exports and revenues exceeding $19bn, and other primary and food industry players look to develop value-add product lines in the bioactives market.
Looking forward, the future for New Zealand’s life science industry holds promise amid challenging economic times globally. In contrast to a significant reduction in the number of biotech companies globally in recent years New Zealand’s biotech sector grew by 27% – sure signs that the industry is in good health.\