The Australian

A weak pure research base is holding Australia back in the global biotechnology market, claims a report comparing local and American biotechnology hubs.

Biotechnology companies in San Diego outperform their counterparts in Melbourne, Sydney and Brisbane mainly because they leveraged off a stronger publicly funded pure research base, said the report's author, research strategist Thomas Barlow.

Dr Barlow, a research associate with the University of Sydney's United States Studies Centre, said Australia's research base was "not as outstanding as is popularly imagined" and Australia's focus on applied, clinical research at the expense of pure research was also restraining its biotechnology sector.

The report says researchers in Melbourne and Sydney published more papers than their Californian counterparts. But there was evidence that some Australian life scientists were generating volume by publishing in low-impact and parochial Australasian journals.

"This raises questions about the quality and global significance of much of Australia's research in the life sciences," the report says.

Fundamental differences between the Australian and American cities "should temper near-term expectations about the extent to which Australian public sector research will generate commercial activity in biotechnology".

Dr Barlow said the Gillard government's science policy reforms were unlikely to get the Australian cities up to San Diego's standard. Policies targeting businesses directly were "much less important" than building the public research base, he added.

But Innovation, Industry, Science and Research Minister Kim Carr said Dr Barlow's assumptions "may be open to question".

Senator Carr said health research and development was higher than the Organisation for Economic Co-operation and Development average, rising to $953 million last year.

Ernst & Young has also reported that employment in the Australian biotechnology industry has grown steadily in recent years, rising to 11,060 last year. Revenue had increased to $3.9 billion.

Senator Carr said the US venture capital market was vast compared with Australia's.

"The government is assisting the industry to address this market failing," he said.

Senator Carr said the biotechnology sector would benefit from a 34 per cent increase in science and innovation funding since Labor came to power, along with programs within the government's 10-year innovation plan, Powering Ideas. They included the National Enabling Technology Strategy, which targeted biotechnology and nanotechnology, Commercialisation Australia, and the tax credit (40 per cent or 45 per cent) for business expenditure on R&D. Legislation for the credit, designed to extend tax incentives to more small and medium-sized enterprises, is before parliament.