A Melbourne-based stem cell treatment biotech has won a $6.2 million tax incentive for research and development from the Australian federal government.

Mesoblast's treatment has been found to be effective in helping children survive bone marrow transplants and for treating rheumatoid arthritis.

Mesoblast is also working on treatments for inflammatory ailments, cardiovascular disease and back pain.

The use of stem cells to fix damaged or diseased human tissue is becoming big business, with more than 700 companies globally with a regenerative medicine focus.

Mesoblast is one of a handful in Australia making progress in commercialising stem cell treatments.

The global market is valued at A$16.4 billion and is expected to grow at 23.2% a year to reach A$67.5 billion in 2020, according to analysts at Frost & Sullivan.