Why US investors allocated $1.43 billion into this Australian industry

From 2018 to 2022, Australia’s Life Sciences sector received $1.43 billion from investors based in the United States. A recent study indicates that this investment has turned the Life Science industry into a major growth area for the Australian market. As a result, commercial real estate has seen increased activity since the COVID-19 crisis. Now, there is more emphasis on medical development, highlighting the importance of this sector in Australia’s economy and society as a whole.

Breaking down the data

AusBiotech studied investment data and discovered 100 transactions between US investors and Australian life sciences companies. This occurred during the review period.

In 2018, there were 14 deals totalling $139.1 million. In 2019, this increased to 21 deals worth $229.3 million. In 2020, there were 15 deals valued at $125.6 million. The number of deals rose to 26 in 2021, totalling $294.75 million. By 2022, there were 24 deals, with a significant increase in total value to $642.34 million.

“There has been a rising appetite amongst investors for Life Science venture capital investment and private investment opportunities. This is expected to continue at an increasingly significant rate,” explains CBRE Australia’s Director of healthcare and social infrastructure, Sandro Peluso. 

“Since 2000, the ASX300 Pharmaceuticals and Biotechnology index has grown by more than 360%.”

Identifying the potential of Life Sciences

While the growth is promising, it’s also crucial to understand the reasons driving this investment demand. These include Australia’s ageing population, growing demand for medical treatments and life-extending products, and increased government funding for the sector itself. Fundamentally, Australia’s projected population aged 85 and above is expected to increase from 534,000 in 2021 to 1.28 million by 2041—an increase of 140%.

The Australian government employs the National Health and Medical Research Council, Biomedical Translation Fund, and the Medical Research Future Fund, in addition to university grants, to finance health and medical research. From 2010 onwards, the total government expenditure on health research in Australia has been 16.5%, which is significantly higher than the median of 7.8% in other nations.

“There is a shortage of quality Life Science facilities in Australia with only a small number of investors seeking exposure in this emerging asset class. The biggest concern is always the lack of historical evidence associated with an emerging asset class,” says CBRE’s Negotiator for Australian Healthcare and Social Infrastructure, Kai Wang.

“Many Life Science companies have experienced major growth in the past two years and are ready to invest in new facilities. Developers and investors have noticed the surge in demand for quality Life Science assets in the central Melbourne health precinct with North Melbourne being under the spotlight. This is expected to become the next biggest health and biomedical hub in Melbourne,” adds Peluso.

The Australian Life Sciences sector includes:

• Medical laboratories 
• Medical research organisations 
• Health manufacturing 
• Pharmaceutical companies 
• Contract research organisations (CROs) 
• Biotech firms
• Contract manufacturing organisations (CMOs)
• Genomics

In Australia, the Life Sciences sector falls under the umbrella of Social Infrastructure. Learn how helping society can benefit the future or contact our team to start your journey in this field.