Life-saving treatments could be available sooner after the federal government pledged $250 million to turn research into medicine.
The independent Biomedical Translation Fund, to be established in 2016 as part of the federal government's new innovation agenda, will invest in biomedical businesses.
It aims to bridge the "valley of death" between biomedical research and getting a product ready for use by patients - a lengthy and costly process few investors are willing to take a gamble on.
Health Minister Sussan Ley said Australia was renowned for ground-breaking discoveries in medical research but opportunities to commercialise were lost to overseas investors.
"By investing in the early stages of commercialisation, we open the research pipeline from the laboratory bench to the patient's bedside," she said.
"This investment will provide the funds to improve the quality of life of Australians."
The fund will be paid for with two instalments of $125 million from funding earmarked for the Medical Research Future Fund.
Medicines Australia boss Tim James said innovation policies delivered economic and health benefits to Australia, stimulating Australia's capabilities to discover and develop breakthrough medicines.
"Our members already deliver more than $1 billion every year to Australian research and development and the more our politicians deliver policies which encourage innovation the more chance for this investment to grow," he said.
