This road map focuses on opportunities for co-investment and builds on the government’s broader economic reform agenda. The issues explored are designed to shape thinking and investment decisions to address identified barriers. The road map outlines:
- a vision for building the scale and competitiveness of manufacturing in the medical products sector
- opportunities that Australian businesses could target, based on our competitive strengths, emerging industry trends and future market potential
- actions for how industry and government can work together to address barriers to scale and capture opportunities. This includes government support which could improve the commercialisation pathways for companies that want to grow their manufacturing operations in Australia.
The road map development process
On 1 October 2020, the Australian Government announced $1.5 billion to be invested over the next 4 years in the Modern Manufacturing Strategy (MMS) to help Australian manufacturers become more competitive, resilient and build scale in the global market.
The centrepiece of the MMS is the $1.3 billion Modern Manufacturing Initiative which will allow government to invest in projects within 6 National Manufacturing Priority areas. The 6 National Manufacturing Priority areas are:
- Resources Technology & Critical Minerals Processing
- Food & Beverage
- Medical products
- Recycling & Clean Energy
Road maps have been developed with industry to set out plans for both industry and Government to strengthen Australia’s manufacturing capability. The road maps have been led by 6 industry taskforces to identify and set a future vision for the priority areas with clear goals, opportunities and actions over the next 2, 5 and 10 years.
Members of the industry taskforces were selected based on their expertise across the priority areas, and were supported by technical experts from the CSIRO, the Department of Industry, Science, Energy and Resources (the department) and Industry Innovation and Science Australia.
Taskforce deliberations focused on current and future issues, challenges and opportunities to grow Australian manufacturing and identify actions businesses and government can undertake to support scale, competitiveness and resilience in medical products in the next 10 years.
Government has also been working with industry beyond the taskforce to understand the manufacturing needs of the medical products sector. A public consultation process was held between 23 October 2020 and 9 November 2020 which received 340 responses, including 60 focused on medical products.
Input on the key strengths, opportunities and solutions to grow manufacturing have been used to inform the road map. The road map was also informed by bilateral meetings with key stakeholders and research conducted by the department.
Building on existing findings
Recognising the valuable work already completed in this area, development of the road map also drew upon relevant strategies including but not limited to:
- CSIRO Futures’ Medical Technologies and Pharmaceuticals Roadmap which identifies and analyses opportunities for Australia to become more globally competitive through focusing on the development of high-value and digitally enabled medical products.
- MedTech and Pharma Growth Centre’s Medical Technology Biotechnology & Pharmaceutical Sector Competitiveness Plan which identifies and analyses opportunities for the sector to achieve greater commercialisation success and increase the number of medium to large companies with late-stage product successes.
- Medical Research Future Fund (MRFF) which is a $20 billion long-term investment supporting Australian health and medical research. The MRFF aims to transform health and medical research and innovation to improve lives, build the economy and contribute to health system sustainability.
- Biomedical Translation Fund which is an equity co-investment venture capital program to invest in promising biomedical discoveries and assist in their commercialisation and address capital and management constraints
- National Health and Medical Research Council which is the Australian Government’s primary health and medical research funding agency, responsible for dispensing about $800 million per year towards medical research.
Barriers to scale
This road map seeks to support the medical products national manufacturing priority area to achieve its full potential by overcoming barriers to scale. The medical products taskforce sees the Government’s work to get the economic conditions right for all manufacturers as an important opportunity to improve competitiveness, particularly in:
- Skills: the sector is knowledge driven, so it relies on having access to the STEM and vocational skills needed to commercialise emerging technologies, and advanced manufacturing capabilities. Although the Australian workforce is highly-skilled, industry stakeholders did note specific skill gaps such as those required to design, test and manufacture medical products.
- Procurement: for many products it is governments who are the key customers. Having well-functioning and streamlined systems for supplying multiple entities and levels of public health systems can be critical to the market for many medical products manufacturers.
- Regulation: medical products rightly compete in a highly regulated environment. Australia’s strong and effective medical regulation has contributed to Australia’s reputation for safe and high-quality products. However, ability to navigate regulation effectively and efficiently is a key enabler of competitiveness for new businesses and products to enter the market. The regulatory differences between states and the characteristics of other countries impact on the market access for high quality Australian products.
- Energy: affordable energy and energy technology is critical for our manufacturers, particularly when they play an important role in supporting human and animal health and delivering critical medical supplies.
- Competition: capital is highly mobile in this sector and many countries are aggressively targeting private sector investment. Therefore, it is important to get the economic conditions right to attract investment
Many small and medium enterprises find it difficult to commercialise their products and bring them to market. There are 3 primary barriers that limit commercialisation:
- Difficulties in translating research into competitive products.
- Obstacles in integrating products into local and international supply chains.
- Challenges in establishing the conditions that enable collaboration.
For small companies with a good idea, the translation pathway in Australia can be difficult and expensive. Medical products are highly regulated, have long development timelines and require access to specialist skills and facilities for design, testing and manufacturing.
Faced with these challenges, many Australian manufacturers licence or divest their innovative products for manufacturing overseas. If commercialisation occurs overseas, the likelihood of reshoring large-scale manufacturing of these products is very low.
Australia is a small market with a small population. Selling medical products in international markets allows Australian businesses to increase their customer base, find a competitive edge and scale. The complexity of overseas regulations, lack of connections in overseas markets and challenges in joining multinational distribution networks can be barriers for small businesses. When firms are unable to expand into new markets, it is very difficult for them to truly scale.
Collaboration helps medical product manufacturers successfully scale their design, production and distribution capabilities. Medical products precincts provide manufacturers with an abundance of collaboration opportunities. In general, successful medical precincts bring together an ‘anchor tenant’ (a large successful medical company), with existing infrastructure such as hospitals and research facilities and have a focus on manufacturing. These conditions support the sharing of testing, manufacturing and distribution facilities, which help firms generate new ideas for commercial products and control costs. Firms can be unwilling to invest in these precincts if they are not able to capture all the value created through their investments. Producing these conditions also requires multiple entities investing in parallel, which can be difficult to sequence.
Successful collaborations allow firms to draw on complementary skills and expertise, as well as creating efficiencies that sustain production and distribution of novel medical products. To scale medical product manufacturing in Australia, we need to establish the conditions required to make collaboration effective and easy for the manufacturing ecosystem.
The need for collaboration across the medical products sector was brought into sharp focus during the COVID-19 pandemic. Barriers were broken down as local medical product manufacturers swung into action to combat the pandemic and get medical products from research lab to market quickly.
This road map seeks to address these challenges by highlighting opportunities for Australian businesses to build scale and capability. Importantly, the Government wants to support industry to make strategic co-investments in projects that overcome these challenges and that increase domestic translation of research, strengthen integration with local and global supply chains, and enhance competition and collaboration across the sector.
43 Includes private and government investment, including grant programs such as the Modern Manufacturing Initiative↵