Sustainable Finance: No such thing as waste (NZ Herald)

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Travel opinion: On being a real traveller (NZ Herald)

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Infrastructure: Can Auckland be a major hub?

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NZ could be a connector of China and Latin America, but it’s not without its challenges, writes Tim McCready

Developments in air travel are making longer non-stop flights possible and commercially viable. Currently, the longest distance flight is Singapore Airline’s 15,300km between Newark New Jersey and Singapore — not quite reaching the distance to fly direct to South America from China.

The Herald’s aviation editor, Grant Bradley, says new aircraft technology could allow load restricted non-stop flights from Southeast Asia to South America — but those departing from China must still stop along the way.

“By stopping over in New Zealand (or Australia), airlines do get the opportunity to tap into more passenger and freight markets,” he says.

“But in saying that, Auckland Airport’s aim of being something of a mini-hub for Southeast Asia — South America flights could be some way off too; the demand isn’t there yet.

“And worryingly for Auckland, Latam airlines will overfly the city with some of its flights from Sydney to Santiago from the end of the year, instead of calling here.”

The Building the Southern Link conference, held in Auckland earlier this year, sought to leverage the opportunity, suggesting that New Zealand’s place in the world as a major and natural connection between China and South America is an idea whose time has come. It brought together more than 200 international experts and key stakeholders, to discuss the opportunity, and develop recommendations to move forward.

“New Zealand is either first cab off the rank, or the last,” former trade minister Tim Groser told attendees.

He says that for a small country, you must have the wherewithal to not wait for good company, but to get ahead of the queue and move swiftly. This is a central lesson if you survey the history of New Zealand’s relationship with China in particular. China attributes “five firsts” to New Zealand:

  1. In 1997, New Zealand became the first country to agree to China’s accession to the WTO by concluding the bilateral negotiations component of that process.
  2. New Zealand was the first country to recognise China as a market economy in 2004.
  3. New Zealand was the first developed country to commence free trade agreement negotiations with China. In November 2004, New Zealand and China launched free trade agreement negotiations.
  4. In April 2008, New Zealand became the first country to successfully conclude free trade agreement negotiations with China.
  5. In November 2016, New Zealand and China jointly announced the launch of negotiations to upgrade its bilateral free trade agreement, a first for a developed country with China.

Groser says New Zealand has been an outlier in that respect. “Traditionally foreign ministries look for good company — political safety,” he says. “The tendency is to join queues, not to form them. If we’ve had some success, it’s because we’ve taken well calculated risks — because if we don’t, we end up at the back of the queue.”

Trade and Export Growth Minister David Parker says New Zealand’s geographic location — which was once considered a disadvantage — was now a development opportunity. He says the idea of the Southern Link is one that the Government is behind — it fits with their objective of diversifying our economic linkages further.

“What do we need this southern hub to do?

“At the simplest level, the hub should facilitate seamless and convenient exchange of goods and travel for people between the eastern and western sides of the Pacific Ocean,” he said.

“In this sense, New Zealand offers a clear alternative to crowded northern hemisphere airports.”

At the conference, Chinese Ambassador to New Zealand Wu Xi said: “The key features of the Belt and Road Initiative are connectivity, openness and inclusiveness. In many ways, it is like a modern version of the ancient Silk Road.”

She said it has created new energy and momentum for global economic growth, and a framework for ideas like the Southern Link to take shape.

Groser agreed — saying the Belt and Road Initiative, first described in 2013 by Chinese President Xi Jinping (and at that time known as One Belt One Road), is a “mother of a plan — you don’t get bigger vision than BRI”.

New Zealand is a small, sophisticated country — and well organised. The conclusion of working groups at the conference agreed that the potential exists to make the Southern Link a reality, but there are issues that will need to be addressed.

These include political complications, transit visas, air services, customs and biosecurity regulations, trade facilitation and border policies.

Many of these are a lot more complex than they might appear. Stephen Jacobi, executive director of the New Zealand China Council, told the conference that the Southern Link must be a partnership between government and business.

He says we need to convince government that the changes to public policy and regulation are worth making, “because the prize — in terms of increased trade, travel and tourism — is high”.

Groser wrapped up the conference by throwing down a challenge:

“A plan not backed by a vision is a nightmare. But a vision without a plan is hallucination,” he said.

“We have a big idea. I think it’s on the move — and I think we should seize the time.”

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Agribusiness: Innovating to face the future (NZ Herald)

Agribusiness: Sharing in the market (NZ Herald)

Report: How global medtech & pharma corporates engage with Australia (MTPConnect)

Pharmaceutical and medical technology corporates increasingly rely on external innovation to supplement and bolster their innovation pipeline. BioPacific Partners and MTPConnect recently undertook research, including a series of interviews with key personnel within the largest multinational companies, to uncover current trends and their attitude toward accessing external innovation from Australia. Download the report here to read more.

Pharmaceuticals

The size of the global pharmaceutical industry is estimated at US$1.2 trillion. The cost of research and development for new drugs, the high risk of failure, and the significant exposure many large pharmaceutical multinational companies have to patent expiry of blockbuster drugs means big corporates are increasingly looking for external innovations to fill product pipelines.

“Innovation does not have a boundary. There is no border limit, wherever there is good science, we go for it,” says the head of business development from a top 5 pharma company.

Pharmaceutical corporates are very positive about the Australian industry. “Australia has a lot going for it because it has great education, great science, a similar regulatory environment, and a great market,” says an external innovation director from a top 10 pharma company. “If something is making headway there, there’s a whole lot of hurdles it has overcome and it makes me think I can pick it up and run with it elsewhere.”

Pharmaceutical multinationals are often not embedded within the Australian environment – they see the logistics and cost of maintaining a scout in the region as an unjustifiable expense. However, the distance from the USA and Europe reduces the frequency and ease of engagement, and these delays are a significant barrier.

“One really needs to scour the world for innovation. But unfortunately, isolation adds a barrier for people – the time difference is inconvenient to make calls, travel distance – it is reality, and although that’s kind of silly with modern communication, it is still reality,” says a BD boss from a top 5 pharma company.

“You need to go and smell the place, interact with people, and get a feel for how far along the technology is. That’s where feet on the ground is useful,” says a top 10 pharma BD executive.

“Geography means the bar has to be higher,” say an external innovation boss from a top 10 pharma company. This lack of presence means that these companies are unable to explore innovation opportunities through informal interactions, and are therefore less likely to be aware of potential opportunities.

Some corporates suggest that Australia is a ‘nice to have’, rather than ‘cannot leave out’. “But innovation wise, the region deserves to be in the place of being critical rather than being nice to have,” says the head of external innovation from a top 10 pharma company.

Australian innovators can overcome these barriers by attending international industry events with partnering platforms such as BIO – considered a necessity by multinationals for identifying innovations of interest and catching up with those they have been paying attention to.

“We can’t justify spending resource in Australia when we barely have enough resource to cover China and Japan…. We have to rely on chance meetings at BIO or research conferences,” says an external innovation director from a top 10 pharma company.

Another barrier raised by corporates is the perception that Australian innovators struggle to translate science into commercially attractive propositions. A lack of understanding regarding the risk, global regulatory requirements, and data required by multinationals means technology is often not packaged with a value position aligned to the requirements of a multinational.

“Technology transcends geography – but business culture does not,” says an open innovation director from a top 5 pharma company. “I would put Australia in the bucket of there is some technology available but the business friction is high.”

“You’ll get university professors that think it’s okay to work on the development of their company while keeping their full-time academic job, whereas here in San Francisco, people will leave their full-time job,” says an external innovation director. “It wouldn’t be a question, they’d just leave.”

Medical technologies

The medical technology industry – which includes medical devices, diagnostic and medical imaging equipment – is estimated to have a global market size of US$350 billion.

Like their pharmaceutical counterparts, medical technology corporates look externally for new technology. They say they have no hesitation accessing world-class innovation from Australia, but suggest it is easier to hunt for medical technologies in their own geography – they point to Australia’s relatively small number of companies compared to the United States and Europe to evidence this.

In contrast to the pharmaceutical industry where partnering with innovators at an early stage of product development is now the norm, most medical technology multinationals prefer to wait until a technology has regulatory approval and can demonstrate strong sales. This mitigates the challenge of registration and the considerable work involved convincing physicians and surgeons that an innovation is worth considering (and often retraining for) over existing alternatives.

“[We] will not acquire companies that do not meet all our criteria. And the universe of buyers is not bigger than it was last year, or the year before – it is smaller. That’s the biggest issue,” says a VP from a top 5 medtech company. “You could beat your head against the walls wanting to be acquired – instead, companies should be focused on building their business.”

Medical technology innovations are increasingly being developed for a consumer market, including mobile phone sensors, smartwatches, fitness trackers, apps – and data. This movement is causing great concern in the industry over where revenue will come from.

Explains BD VP from a top 5 medtech company: “I joke that I’m glad I am closer to the end of my career than the beginning because I’m not inherently wired to think this way. Belonging to the older generation of medtech, I had a gut feel, and it was pretty good. I don’t have that for the future… I think it is incredibly naïve to think that technology and digital won’t fundamentally change the sector.”

These changes, as well as disruption from advances in China, mean corporates are being forced to adapt their business models. Along with this, global tech giants including Google, Apple and Amazon have begun a move into medical devices.

Explains a BD director from a top 5 medtech company: “Someday I am going to need a new hip. I’ll go onto Amazon, where there will be a base one, and then ones with extra features… I’ll select my hip, pick my doctor, choose a hospital (after checking their reviews), and take my basket to the checkout. Somebody is going to figure it out.”

Unlike the pharmaceutical sector, medical technology events are far less partnering-focused than in the pharmaceutical industry. Most corporates attend these events for corporate responsibility, government affairs, meeting vendors, and for recruitment purposes.

In part, this is because the niche areas of interest to medical technology corporates mean that most are aware of developments in their space. “In certain spaces we know the activity so well – we are rarely surprised,” says a business development VP from a top 5 medtech.

But for Australian innovators, they encourage a direct approach. Says one executive: “95% of opportunities come from companies that have called us. We can quickly and easily gauge the pros and cons of technologies and companies.”

 

 

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