The ability to drive developments in medical and scientific research is vital to improve the quality of life for billions across the world. However, the medical and scientific research fields are particularly capital-hungry areas. For instance, a single piece of equipment can cost millions of dollars, putting enormous pressure on these institutions.
There is also often a mismatch between when funds are required to purchase equipment and the commercial development of research. On top of this, growth in the sector remains subdued.
Research house IBISWorld’s figures show the medical research sector is a $5 billion industry, but that annual growth is running at only 1.3 per cent.
As its latest report indicates heavy reliance on public sector finance and increasing pressure for these businesses to raise their own money means organisations in the science sector need to do everything they can to make the most efficient use of their capital.
One way they can do this is by taking advantage of innovative equipment finance solutions. It is a particularly effective way for medical institutions to manage their sources of capital given the heavy reliance on expensive medical equipment in their operations.
It is a solution that made a lot of sense for one client in the medical research space. The organisation is an established, well-respected Australian research leader. It takes a holistic approach to medical research and combines clinical research, lab sciences and epidemiology to explore health issues.
One of its main challenges is to secure future research grants. To achieve this it needs access to world-class equipment. Previously, it had used its own funding sources to buy medical equipment, and had an annual budget of $3 million to do this, effectively diverting funds from other important areas of the business such as talent acquisition.
Other consequences of relying on its own funds included outdated equipment and lower productivity among research staff, inevitably leading to poor research outcomes.
Rather than continue to draw on its own funds to purchase equipment outright, the facility chose to work with Alleasing to develop a suitable financing alternative for its operations.
By working one on one with the institution, a facility was created to allow the finance of clinical assets, IT and telecommunication equipment and lab fit outs and also draw on the facility as required.
The solution means the business no longer has to make large capital outlays. It also gives it flexibility when it comes to the acquisition and divestment of assets. Alleasing’s facility also helps to reduce the institute’s long-term cost of funding.
Access to the right funding sources also has operational benefits including higher productivity and collaboration between researchers. It has also allowed the institute to attract and retain the top scientific talent from Australia and around the world resulting in an enhanced ability to tackle complex diseases and issues.
In an environment in which grant funding is scarce, few medical research businesses can really rely on their own resources to make large capital purchases.
Access to an efficient equipment finance facility takes the financing burden away from these businesses to allow them to focus on what they do best: find important medical research breakthroughs.
The latest Alleasing Equipment Demand Index (the Index) for New Zealand, So many assets, so much potential, issued in February 2017, shows businesses expect to substantially grow their asset base this year.Read full story
Amid an uncertain economic outlook and unexpected market conditions, the Alleasing Equipment Demand Index (the Index), Capital constraints: A common complaint, shows small businesses are the most bullish of the groups surveyed about demand for equipment finance this year.Read full story
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