Australia’s competitive strengths in medical products present great potential to scale manufacturing in Australia and deliver larger economic benefits and jobs of the future. This will be achieved by more manufacturers commercialising good ideas in Australia. To help Australian manufacturers commercialise and increase their scale, 3 areas of co-investment have been identified:
- Helping manufacturers finalise translation of their research in Australia, to provide a pathway to full-scale Australian production.
- Helping manufacturers to access and integrate with local and international supply chains, enabling manufacturers to get competitive products into global markets.
- Supporting the development of vibrant manufacturing ecosystems through collaboration that increase the commercialisation of good ideas and expand manufacturing output.
This road map outlines how these co-investment opportunities can unlock these growth opportunities. This includes specific actions that show how government and industry can co-invest, including the facilities and expertise that will help firms scale their manufacturing.
Translating Australian research to provide a pathway to production
Focusing co-investment on the translation stage in medical product development will help companies to finalise their commercialisation steps so products can be manufactured in Australia. Ensuring easy access to the appropriate facilities is crucial to translating research as it allows companies to validate a product through first production runs and prototyping.
Faced with a complex commercialisation pathway, many Australian businesses license or divest their innovative products for manufacture overseas. If the late stage commercialisation steps occur overseas (such as clinical trials and first production runs) the likelihood of reshoring full-scale medical product manufacturing is very low.
Securing more medical product manufacturing in Australia requires companies to have ready and affordable access to facilities which validate commercial viability of a manufacturing process. First production runs that help demonstrate repeatability and scale are a crucial step to basing manufacturing in Australia.
Co-investments could assist medical products companies in their late stage commercialisation by funding:
- demonstration of product scalability to unlock private investment. This would include assistance with late stage clinical trials, first production runs and prototyping in Australia
- assistance to ensure commercialised products meet relevant health and quality control standards to get regulatory approvals
- facilities that have a primary focus on helping companies finalise their production methods and receive regulatory approval in Australia such as:
- clean rooms
- short-run production lines
- commercial lab environments
- integrated advanced manufacturing facilities.
Priority should be given to projects that use high-value manufacturing processes and techniques to manufacture cutting-edge medical technologies and products. These facilities should have a primary focus on helping companies finalise their production methods and receive regulatory approval in Australia. Companies could then access commercial finance to scale their manufacturing operations.
Support greater access to local and international supply chains
Focusing co-investment on projects that help manufacturers integrate with supply chains, expand or launch new manufacturing operations in Australia will support a greater international presence of Australian-made products.
Medical products businesses will scale through seeking out foreign markets and integrating into international supply chains. At the same time, the medical environment requires multinational businesses to search, recognise, and acquire opportunities outside the geographic footprint of their existing networks. Co-investments with industry could attract new and expanded manufacturing facilities in Australia. Potential co-investments include:
- helping companies who have completed their commercialisation steps to build new manufacturing facilities for their products in Australia
- supporting existing businesses to onshore manufacturing they are currently sourcing internationally
- attracting new businesses with new capabilities.
This could involve a grant to offset capital investment costs in new or expanded facilities, or to develop ‘plug and play’ facilities to attract international manufacturers to base themselves here.
Co-investment could also support businesses to access supply chains and international markets. Potential projects include:
- infrastructure investments that enhance the export capability of multiple manufacturers through sharing the cost of packaging, storage and distribution. For example, establishing cold rooms near airports could streamline logistics and cut costs when exporting internationally
- investments in digital infrastructure such as sensors that track quality control for Australian exports and provide overseas markets with confidence they are getting a ‘clean and safe’ Australian product
- helping companies to access international experts in international supply chains, who can assist companies to target their products to key international distribution partners and navigate complex regulatory processes.
Driving scale across the manufacturing ecosystem
Co-invest in vibrant manufacturing ecosystems that support commercialisation and expand manufacturing output.
Collaboration helps businesses successfully scale the design, production and distribution of medical products. Sharing knowledge, facilities, capabilities and skills is a key pathway to scale. To scale medical product manufacturing in Australia, we need to establish the conditions required to make collaboration effective and easy for the manufacturing ecosystem.
Medical precincts can drive scale by enabling knowledge transfer, downstream processing and pooling of resources to reduce the cost of key inputs. These precincts produce a network-effect increasing collaboration and helping participating businesses to build scale.
Medical precincts can depend on key factors of success including a key anchor tenant (a large successful medical company), proximity to a hospital precinct, and access to research spaces or shared infrastructure. Proximity to transport routes and packaging and distribution warehouses would also be a consideration. These conditions support sharing of testing, manufacturing and distribution facilities, which help firms generate new ideas for commercial products and control costs. Firms are also able to draw on complementary skills and expertise, as well as creating efficiencies that sustain production and distribution of novel medical products.
It may be more timely and effective to support sites where many of those elements already exist.
40 Co-investment refers to private and government investment. This includes grant programs such as the Modern Manufacturing Initiative.↵
41 MTPConnect (2019) How Global MedTech & Pharma Corporates Engage with Australia, p. 4.↵