The Australian Medical Technology (MedTech) industry has emerged as one of the country's most sophisticated and innovative manufacturing industries in the wake of the Covid-19 pandemic. As industry growth accelerates, Australian MedTech continues to produce world-class solutions, showing increasing potential as a driver of economic growth, new skilled career pathways, all while improving health and patient outcomes.
The Australian MedTech market is sizeable, with 135 ASX-listed MedTech and pharmaceutical companies in Australia with a combined market capitalisation of A$179 billion, according to Treasury submissions provided by the Medical Technology Association of Australia (MTAA).
How can Australia's thriving MedTech firms achieve greater scale to supercharge their growth?
Examining the success factors and challenges Australian MedTech global expansion was investigated at the recent AusMedtech 2022. MinterEllison head of Life Sciences Partner, James Hutton hosted the key note plenary panel session: "Australian Success Stories: Australian manufacturing and global expansion".
Each of the four panellists had remarkable stories in their respective businesses. Each are at various stages of Australian and global regulatory approvals, with success in sales into key markets and of course manufacturing (both domestically and overseas) for their products. The panellists represented Australian success stories from:
Seer Medical – reimagining how people undergo long-term monitoring of epilepsy, sleep, and cardiac conditions for faster paths to diagnoses and better patient outcomes.
LiVac – specialising in medical devices that support minimally invasive surgery, improving patient outcomes and reducing healthcare costs.
Ellume – consumer and professional products for rapid acute diagnosis including the first over-the-counter rapid antigen test for Covid authorised by the US FDA in December 2020.
Cook Medical Australia – focused on development of minimally invasive and converging medical technologies including medical devices, biologic materials and cellular therapies.
Key issues and themes arising from the Panel included the following:
The continued renaissance of manufacturing in Australia
It's been said that stories of doom and gloom ignore countless Australian manufacturers who are not only surviving, but prospering, as they tap new areas of growth and take their innovations to global markets.
An industry research report revealed that even before the COVID-19 pandemic, 65% of Australians regarded manufacturing as important or very important, yet key challenges persist that hold back Life Sciences from growth opportunities.
The Managing Director of the Australian Manufacturing Growth Centre has been quoted as saying that "We must expand our understanding and look beyond the outdated view that manufacturing is just production. Manufacturing is a capability, an enabler and a vital component of our economy, it is a key driver of prosperity – it deserves our attention and needs to be nurtured.”
The impacts of Covid-19 thrust Australian manufacturing sharply into the national spotlight. Manufacturers responded in record time to produce many critical products for use domestically and around the world. However, for some, the impact of the pandemic served to reinforce key challenges and signposts to where the industry needs to head.
Manufacturing supply chain challenges
Manufacturing is key to almost every supply chain. The MedTech industry is no exception.
This has a critical impact on planning and reinforces many of the challenges around both onshore and offshore manufacturing. Some of the panel member companies manufacture (or contract manufacture) in Australia, others manufacture both in Australia and overseas, including the US. Quality of product supply and related QA processes become even more critical when manufacturing is conducted/contracted offshore. As established supply chains were challenged, new and collaborative chain collaborations were needed.
When global health supply chains were severely disrupted from the Covid-19 pandemic, the State of Victoria and MedTech companies around Australia accelerated their collaborative capabilities in scaling up local production to address critical medical shortages. There are lessons to be learned from that collaboration.
More and more MedTech manufacturers are realising the need to plan anything up to a year in advance to ensure that supply chains are secured and shocks are buffered.
Contractual arrangements must be 'bullet-proof'
The Covid-19 pandemic has also reinforced the need to ensure that when contracting with third parties (customers, manufacturing, distribution and all other supply chain contracts), enormous diligence is put in to role play all possible scenarios that might eventuate.
This includes factoring in pricing increases, the flexibility to scale up and scale down production and consideration of related matters such as force majeure protections and navigating regulatory hurdles. All external (and internal) factors need to be thought through to the maximum extent possible.
The days of glossing over 'standard contracts' on the basis that they are unlikely to be read have gone as everyone is now reaching for their contracts to see what the impacts and risks to their business may be.
Human capital challenge (even before Covid-19)
It has for some time been a constant challenge for MedTech companies in Australia to source and retain the right people and in the right numbers. This was reflected in the stories of all the panellists companies.
In relative world terms, it is said that Australia has a small pool of qualified medical device people. This reinforces the need to be constantly engaging with prospective and existing staff and ensuring that they are motivated and incentivised to remain in the workforce.
A healthy workplace culture reinforces a ready talent pool and an engaged workforce and will positively impact retention and particularly innovation. Manufacturing suffers from one of the highest skill shortages, as shown by a recent ABS finding that nearly 20% of manufacturers found a lack of skilled people was a significant barrier to general business activities or performance.
Increasing focus of on world markets and global expansion
A number of the panellists are already operating in, or in the process of targeting, offshore markets in addition to Australia and particularly the United States. While the regulatory processes in Australia, Europe and the United States are well known, depending on the relevant technology, the regulatory pathway in offshore markets (particularly given the size of the main markets) is increasingly driving business strategies. Engaging expert advisers with domestic and offshore markets knowledge supplemented by access to global networks are among the critical success factors that are needed.
Difficulties in operating across world markets
As with any Australian business seeking to open up offshore markets, the tyranny of distance will always be there and there is no simple answer to navigating multiple countries, legal jurisdictions and time zones. This occupies significant management attention and often leads to the ultimate strategy of having the right people in the right time zone to move these markets forward when resources (and therefore money) permits this to occur.
Scaling the business
Panellists discussed their respective challenges in scaling their businesses. While the challenges will be different for every company, supply chain, people and regulatory remain key as noted above. Some of the panellists have had a more traditional pathway across a longer time frame and others. For example, some have had more urgent 'bursts' of activity to meet the immediate needs of their markets. Flexibility and forward planning were cited as among the critical tools to cope with the often non-linear journey of the development of a MedTech product developer and manufacturer.
Accessing capital
There is no doubt that access to capital can be a constant obstacle. Government assistance through the various available programs is clearly helpful to the Australian MedTech company community, but it is not always possible for companies to meet the criteria for this assistance. Clear messages are that investors will continue to be attracted to sensible market-oriented business strategies with products that have clear pathways (or some demonstrated success along the pathway) to regulatory approval.
Conclusion
The AusMedTech conference and the insightful Panel session reinforced what is already recognised - that Australia’s advanced MedTech manufacturers are undoubtedly transformative companies. The response to the pandemic has proven that there is growing onshore manufacturing capability and growing public appreciation for the industry. Given the pandemic has demonstrated a responsive manufacturing community, the Panel has drawn out both the challenges and the things the MedTech community does well. There is optimism that if these challenges can be addressed to enable a competitive scaling up, Australia is significantly positioned to compete for a larger share of the growing global MedTech market.
