Medical Products National Manufacturing Priority road map
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Medical Products National Manufacturing Priority road map
ii • MEDICAL PRODUCTS
Medical Products National Manufacturing
Priority road map
Our Vision
To support a globally recognised Australian medical products industry with the capability, capacity and expertise
to locally manufacture advanced and high-value medical products using sophisticated processes.
Our growth opportunities
Medical devices High value-add Cutting-edge Digitally integrated Animal health
medicines treatments products and
platforms
• Smart monitoring • Sophisticated • Regenerative • Digitise existing • Rapid diagnostics
devices pharmaceuticals medicines medical products • Antimicrobials
• Diagnostics • Biologics • Genomics • Emerging • Vaccines
• Personalised • Complementary • mRNA vaccines data‑driven
implants medicines products
• Bionics • Advanced
manufacturing
technologies
Our goals
2 YEARS 5 YEARS 10 YEARS
We are unlocking commercialisation Greater local manufacturing capability Australia has an international reputation for
opportunities through co-investments and increased international demand for world class medical products manufactured
in translation, integration Australian-made critical and in medical precincts with significant levels
and collaboration. sophisticated medical products. of end to end collaboration.
Unlocking our opportunities—the first two years
FOCUS: Drive scale and competitiveness in medical product manufacturing through increasing commercialisation, translation
of local research, supply chain integration and end to end collaboration.
Translate Australian Research Integrate into Supply Chains Drive a Collaborative Ecosystem
Finalise commercialisation in Australia Launch new manufacturing operations Establish medical manufacturing
precincts
Establish first run production and Integrate into local and international Form digital pathways for collaboration
prototyping supply chains
NATIONAL MANUFACTURING PRIORITY ROAD MAP • iii
Contents 1. The Modern Manufacturing Strategy 1 Getting the economic conditions right 2 Australia’s Modern Manufacturing Strategy 2 Why medical products? 3 Industry structure—understanding the current landscape and challenges 4 2. Vision—Medical products 7 3. Growth opportunities 8 Key areas of opportunity 8 Priority areas 9 4. Potential 13 5. Goals 16 Manufacturing sector 16 Whole of industry 17 6. Benchmarks of success 18 7. Making it happen 19 Actions 19 8. Engagement and partnerships 20 Actions 20 9. Collaboration 21 Actions 21 Appendix A 22 The road map development process 22 Building on existing findings 23 Road map in context 23 Appendix B 24 Barriers to scale 24 iv • MEDICAL PRODUCTS
1. The Modern Manufacturing Strategy
The Australian Government is manufacturing a new future for our nation. Manufacturing is critical to a modern
Australian economy—a key part of almost every supply chain that adds significant value to all sectors. The Modern
Manufacturing Strategy (MMS) is led by industry, for industry, to help our manufacturers scale‑up, become more
competitive and build more resilient supply chains. The Australian Government will be a strategic investor in this,
notably through the 6 national manufacturing priority sectors. Prioritising these sectors will drive productivity and
create jobs for Australians, both now and for generations to come.
On 1 October 2020, the Australian Government announced a $1.5 billion investment in the MMS to help Australian
manufacturers become more competitive, resilient and build scale in the global market. The 6 key areas of focus are:
Resources Technology & Critical Minerals Processing
Food & Beverage
Medical Products
Recycling & Clean Energy
Defence
Space
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 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.
This road map is designed to be dynamic—it will evolve with the industry and with other external forces such as economic
and global trends as they affect the industry. As the MMS is implemented, we will continue to work with industry to ensure
the road map evolves over its life, to take account of emerging opportunities and actions to support the sector to scale‑up,
become increasingly competitive and for businesses to integrate their commercial solutions with global supply chains and
markets. See Appendix A for more details on the road map process.
Through the MMS, the Government wants to support projects from industry that will transform manufacturing in Australia.
The Medical Products National Manufacturing Priority road map will help to inform the investment decisions that both
Government and industry make across the next 10 years, in particular, by supporting projects that willl:
• harness and build on the sector’s strengths and advantages
• provide innovative solutions to overcome constraints that limit value creation and may prevent the sector achieving
its full potential
• transform the sector by growing a high‑value, reputable and dynamic medical product manufacturing industry.
NATIONAL MANUFACTURING PRIORITY ROAD MAP • 1Getting the economic conditions right
The MMS outlines the whole‑of‑government agenda to help grow Australian manufacturing and ensure manufacturers
can harness global opportunities and achieve scale. Getting the economic conditions right is the first pillar of the Strategy,
noting affordable and reliable energy, lower taxes, industrial relations, training and skills, and cutting red tape are key
determinants for the success of local manufacturing businesses.
Figure 1: 4 pillars of Australia’s Modern Manufacturing Strategy
GETTING THE ECONOMIC MAKING SCIENCE AND FOCUSING ON AREAS BUILDING NATIONAL
CONDITIONS RIGHT TECHNOLOGY WORK OF ADVANTAGE RESILIENCE FOR A
FOR BUSINESS FOR INDUSTRY STRONGER ECONOMY
• Helping restore • Aligning research • Setting National • Making supply chains
business confidence and innovation Manufacturing Priorities more resilient to external
and recovery through capabilities and programs and developing road shocks including through
the JobMaker plan to priority areas maps for action a Supply Chain Resilience
• Delivering lower • Unlocking investment • Backing projects with Initiative
energy costs proposals through wide reaching impacts • Supporting global market
• Building management the Manufacturing through the Modern diversification
capability Modernisation Fund Manufacturing Initiative
round two
• Getting our tax
settings right • Backing digital
transformation
• Tackling red tape
• Improve our industrial
relations system
The Australian Government is getting the economic conditions right for manufacturers, paving the way for growth and
improved competitiveness in all sectors. Manufacturers need a pipeline of skilled workers as they transform and scale.
The Government is investing $7 billion this financial year to keep apprentices in jobs, to help jobseekers re‑skill and to promote
vocational training. We are working to ensure that we are creating the jobs of the future and that we have a pipeline of skilled
workers to support new and emerging industries, including in manufacturing. The Government’s reforms to higher education
will boost the number of graduates in areas of employment growth, including STEM.
A gas‑fired recovery will ensure Australian gas is working for local businesses and manufacturers, with a 13‑point plan and
a $49.8 million investment to unlock supply. This complements the Government’s initiatives to reduce electricity prices, boost
liquid fuel security and invest in low emissions energy technology through Australia’s Technology Investment Roadmap.
The Government is harnessing opportunities from emerging technologies and building business digital capability, including
growing Australian business’ cyber security resilience. Work to implement a Simplified Trade System will support Australia’s
exporters and importers to invest and grow local jobs by making it easier for businesses to integrate into global supply chains.
The Government is focused on making and sustaining jobs through the JobMaker scheme. This will unlock investment, and
expand the productive capacity of the nation through expanding the instant asset write‑off and temporarily allowing businesses
with a turnover of less than $5 billion to offset tax losses against previous profits.
2 • MEDICAL PRODUCTSWhy medical products?
Quality medical products are at the centre of a healthy society. They can also be the centrepiece of a dynamic economy based
on translating smart ideas into globally competitive manufactured products. Medical products make a significant contribution
to Australia’s economic prosperity. The sector is responsible for some of Australia’s most innovative commercial successes.
Australian medical products making a global impact include the cochlear implant, green whistle and cervical cancer vaccine.
Medical product manufacturing covers businesses and enterprises that develop regulated human and animal medical products.
Medical products also include associated activities with a clear health focus, such as digital health equipment and applications.
Manufacturing includes pre‑production activities such as R&D, design and logistics, and post‑production activities such as
distribution, sales and services.
The ultimate purpose of any medical product is supporting patient health. The development pathway at Figure 2 represents
how ideas are commercialised and produced, including commercial opportunities in pre and post production.
Figure 2: Medical products manufacturing pathway
Australian research Clinical
development
Pre-clinical Production Market access Marketing, sales
development and distribution and services
Phase Phase Phase
International research
1 2 3
Digital
Sources: Abridged from MTPConnect, Medical Technology, Biotechnology & Pharmaceutical Sector Competitiveness Plan, 2020, p20–21 and CSIRO,
Medical Technologies and Pharmaceuticals: A Roadmap for unlocking future growth opportunities in Australia, 2017, p4.
This pathway can vary depending on the product being developed. For pharmaceuticals, it can take well over 10 years to get
to market, cost billions of dollars, and involve numerous safety and efficacy trials. In contrast, a digital application that relates
to general health and wellbeing, and involves non‑invasive monitoring, might be unregulated. 1 These applications in some cases
may skip clinical trials altogether and follow a more iterative process similar to software development.
Companies can capture value at all stages of the manufacturing pathway. Much of this value is at either end of the manufacturing
‘smile curve’: in the intellectual property value developed from the research and development stage, to how the product is
integrated in the service provided for the clinician or patient. The sophisticated nature of many medical products can also lead
to complex production activities with significant opportunities to capture value. For example, drugs that treat rare diseases can
require expensive and advanced technologies to manufacture. The taskforce emphasised that companies should focus on
capturing this value, regardless of where the activity occurs in the manufacturing pathway.
Clinical trials are of particular importance to medical products. The process of running clinical trials is estimated to
be worth $1 billion to the Australian economy annually. 2 This can also benefit manufacturing as an intermediate step
to large‑scale production of medical products. Final production is often ‘anchored’ to the location where the late stages
of clinical development occur.
1 Software and digital solutions can be divided into two main categories: ‘health’ and ‘medical’ applications. Health applications do not require Therapeutic Goods Administration
(TGA) approvals, relate to general health and wellbeing, and involve non-invasive monitoring. A medical application will be TGA approved. Medical applications usually make certain
diagnostic or treatment claims, and may be classified as medical devices.
2 Department of Health, Clinical Trials, 7 August 2020, accessed 6 January 2021.
NATIONAL MANUFACTURING PRIORITY ROAD MAP • 3Industry structure—understanding the current landscape and challenges
Medical products are a major growth sector, important to Australia’s economy, wellbeing and security. In November 2020,
the sector supported 41,000 jobs. 3 Medical technologies and pharmaceuticals were Australia’s 8th largest export measured
by value in 2019. 4
Commercial activity in Australia’s medical product sector has steadily grown, reflected in Figure 3. The number of human health
companies has increased by around 1% per annum to 1,278 with a net increase of 50 companies since 2016. 5 The sector has a small
number of large companies, with the bulk of the sector made up of smaller players. Many of these small companies have either
a single product or single research project, often in pre‑commercial stages.
Figure 3: Medical products snapshot
Economically significant Growing globally Untapped potential
$5.5b contribution to In 2018, global spending on Australian businesses
the economy = 0.3% health reached US$8.3 trillion, already spend big
of total GDP,1 and or about 10% of global GDP.3 on research and
$ 41,000 jobs.2
By 2050, the United Nations
development.
estimates 37% of the world’s R&D spend in 2019 totalled $1.6b.5
older population (65+) will reside
in Eastern and South-East Asia.4
Small but growing
Strong market capitalisation Small but growing
companion animal market
The ASX-listed Australian In 2020–21, Australian veterinary In 2019, factory gate sales
life science industry is pharmaceutical manufacturing of veterinary medicines for
valued at AU$100 billion is expected to record $852m in revenue companion animals was
and includes around with 5.4% annualised growth since $550.6 million and for
100 companies.6 2016 and employ the production sector
approximately it was $509.7 million.8
1300 people.7
Sources:
Sources:
1) Australian Bureau of Statistics, Australian Industry 2018-19 (cat. no. 8155.0); Australian Bureau of Statistics, Australian System of National Accounts, 2018-19, Table 5, Current Prices
1) Australian Bureau of Statistics, Australian Industry 2018–19 (cat. no. 8155.0); Australian Bureau of Statistics, Australian System of National Accounts, 2019–20,Table 5,
(cat. no. 5204.0)
Current Prices (cat. no. 5204.0).
2) Australian Bureau of Statistics, Labour Force, Australia, Detailed, Quarterly, Table EQ06, May 2020 (cat. no. 6291.0.55.003); Australian Bureau of Statistics, 2016 Census of Population
2) Australian Bureau
and Housing of Statistics,
(table Builder extract)Labour Force, Australia, Detailed, Quarterly, Table EQ06, November 2020 (cat.no. 6291.0.5.003) and Australian Bureau of Statistics,
2016 Census
3) World of Population
Health and Housing
Organisation (2020) (table Builder
Global spending extract).
on health 2020: weathering the storm, p.ix https://apps.who.int/iris/handle/10665/337859 (Accessed 13 January 2021)
3)4)World
United Nations (2019) World Population Ageing Highlights 2019, p.5 https://www.un.org/en/development/desa/population/publications/pdf/ageing/WorldPopulationAgeing2019-Highlights.pdf
Health Organisation, Global spending on health 2020: weathering the storm, 2020, p.ix, accessed 13 January 2021.
(Accessed 12 January 2021)
4) United Nations, World Population Ageing Highlights, 2019, p.5, accessed 12 January 2021.
5) MTPConnect (2020) Sector Competitiveness Plan https://www.mtpconnect.org.au/images/2020%20MTPConnect%20Sector%20Competitiveness%20Plan.pdf (Accessed 25 January 2021)
5)6)MTPConnect, Medical Technology, Biotechnology & Pharmaceutical Sector Competitiveness Plan, 2020.
AusBiotech (2021) Australia: a thriving life science hub with global reach https://www.ausbiotech.org/biotechnology-industry/fast-facts (Accessed 25 January 2021)
6)7)AusBiotech, Australia:
IBIS Industry Report a thriving
(2020) life
Veterinary science hubManufacturing
Pharmaceutical with global inreach, 2021,
Australia accessed 25 January 2021.
https://www.ibisworld.com/au/en/industry/c1842/industry-at-a-glance (Accessed 5 January 2021)
7)8)IBISWorld report,
Unpublished Veterinary Pharmaceutical Manufacturing in Australia, August 2020. 8) Unpublished Animal Medicines Australia data.
AMA data
The market capitalisation of publicly listed companies was $179 billion in 2019. CSL, Resmed and Cochlear made up almost
90% of market capitalisation and contributed 87% of the increase in market capitalisation from 2018 to 2019. 6 Veterinary
pharmaceutical manufacturing reflects similar trends to the broader medical products sector, with strong revenue growth
but growing consolidation. 7
3 Australian Bureau of Statistics, Labour Force, Australia, Detailed, Quarterly, Table EQ06, November 2020 (cat.no. 6291.0.5.003) and Australian Bureau of Statistics,
Australia
2016 Census of Population has(table
and Housing many opportunities
Builder extract). to take its medical products to the world by focusing on areas
4 MTPConnect, Medical Technology, Biotechnology & Pharmaceutical Sector Competitiveness Plan, 2020.
of strategic advantage and high value opportunity.
5 MTPConnect, Medical Technology, Biotechnology & Pharmaceutical Sector Competitiveness Plan, p.11, 2020.
6 MTPConnect, Medical Technology, Biotechnology & Pharmaceutical Sector Competitiveness Plan, p.10, 2020.
7 IBISWorld report, Veterinary Pharmaceutical Manufacturing in Australia, August 2020.
4 • MEDICAL PRODUCTS
High-value
Smart monitoring devices, pharmaceuticals, biologics
diagnostics, personalised and complementaryThis industry structure is indicative of the main challenge faced by medical manufacturers in Australia—to achieve true scale,
products need to be globally competitive. Companies that are able to make this step can grow. Encouraging more of these larger
globally competitive businesses will increase Australian medical product manufacturing. CSL has grown to be Australia’s largest
company, and is a one of the largest biotechnology companies in the world. 8 Other medical companies in the ASX200 have
a global presence based on providing a competitive value proposition to international customers.
Commercialisation challenges
While Australia has a growing medical products manufacturing sector, bringing a commercial product to market that
meets global demand is essential for medical product manufacturers to scale. This is a challenge for the industry, particularly
for small and medium enterprises. Some small businesses stay small because they find it difficult to navigate the
commercialisation pathway.
There are 3 primary barriers that limit commercialisation:
1. difficulties in translating research into competitive products
2. obstacles in integrating into local and international supply chains
3. 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 manufacture.
Faced with these challenges, many Australian manufacturers licence or divest their innovative products for manufacturing
overseas, rather than translating them into commercial products here. 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. Manufacturers need to access local and international supply
chains to get competitive products into global markets. The complexity of international regulatory systems, 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 manufactures successfully scale their design, production and distribution capabilities.
Medical products precincts provide medical product 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, research organisations and manufacturing facilities. These conditions support firms to share
testing, manufacturing and distribution facilities, which helps them to control costs and generate new ideas for commercial
products. 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 vibrant manufacturing ecosystems to develop.
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 quickly
get medical products from the research lab to market.
8 Redrup Y (2020) CSL enters ranks of world’s biggest biotechs Australian Financial Review, accessed 29 January 2021.
NATIONAL MANUFACTURING PRIORITY ROAD MAP • 5This road map seeks to address these commercialisation challenges by highlighting opportunities for Australian businesses to build scale and capability. 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 • enhance competition and collaboration across the sector. In addition to these industry‑specific challenges, there are other barriers to scale, which are outlined at Appendix B. Supporting the supply chain Too often, new medical product ideas are shipped offshore to businesses with greater capacity to commercialise and manufacture them. Industry and government need to work together to keep more manufacturing in Australia and capture more economic value locally. Domestic manufacturing can play a role in ensuring availability of medical products during crises such as the COVID‑19 pandemic. Scaled‑up industry is fundamental to developing a resilient and responsive medical manufacturing ecosystem, supported by crisis‑ready facilities and a skilled workforce. It is unrealistic to expect these items could be entirely derived from domestic sources. Australia will likely need to import some precursors and finished medical products. A range of work across government and industry is assessing and addressing supply chain vulnerabilities. This road map does not presuppose the outcome of this supply chain work. Leveraging existing strengths There is enormous potential to keep growing: • global demand for medical products is rising, particularly in Australia’s northern neighbours • Australia already has leading medical research, respected regulatory frameworks, and a reputation for high‑quality, clean and safe manufacturing • Australian global companies like CSL, ResMed and Cochlear demonstrate the potential for large‑scale success • the COVID‑19 pandemic demonstrated the ability of local medical product manufacturers to rapidly pivot and scale. This road map focuses on the high‑value opportunities for Australian businesses to manufacture medical products. There are opportunities where Australia is more likely to be competitive, and therefore more likely to achieve scale. There is significant potential to grow the medical products sector further by leveraging Australia’s: • highly skilled workforce • proximity to emerging markets • reputation for high‑quality products • world‑leading science, research and innovation capabilities. To realise this potential, the Government will work closely with industry to support our local manufacturers to grow and scale‑up, access export markets and become more competitive. 6 • MEDICAL PRODUCTS
2. Vision—Medical products
To support a globally recognised Australian medical products industry with the
capability, capacity and expertise to locally manufacture advanced and high‑value
medical products using sophisticated processes.
Medical products manufacturing will be led by strong, profitable businesses and world‑class researchers in a thriving and
collaborative ecosystem. Australian medical products will improve health and wellbeing in Australia and across the world.
The large global market for medical products offers export opportunities for Australian manufacturers to drive scale and
competitiveness. Growing and strengthening the medical products manufacturing ecosystem will also make Australia more
resilient to future shocks and supply chain disruptions.
The vision and opportunities in this road map leverage Australia’s comparative advantages in manufacturing medical
products. Australia conducts world‑class medical research, has a highly skilled workforce and a globally respected regulatory
framework. This has given Australian manufacturers a reputation for producing high‑quality, complex and safe medical products.
These comparative advantages provide a strong base for further growth and supporting resilience in times of crisis.
Focusing on commercial opportunities
This road map has been informed by an industry‑led taskforce, selected based on their expertise across the medical products
manufacturing priority area.
It focuses on high‑value commercial opportunities for Australian manufacturers, and making it easier for businesses
to commercialise those products and manufacture them here. In keeping with recent reports from CSIRO, MTPConnect,
the Australian Academy of Technology and Engineering and the Medical Research Future Fund, the taskforce has highlighted
areas of opportunity including:
• smart monitoring devices and diagnostics, personalised implants and bionics
• high‑value pharmaceuticals, biologics and complementary medicines
• cutting‑edge treatments, including regenerative medicine and genomics
• digital integrated products and platforms
• animal health.
This road map focuses on helping businesses to develop more medical product manufacturing in Australia. Key actions
to support this vision and drive scale in manufacturing include:
• creating better pathways for companies to translate their ideas into commercial products in Australia. This
includes co‑investments in facilities that allow companies to undertake first production runs and prototyping
• assisting manufacturers with a globally competitive product to integrate into local and international supply chains
• developing vibrant manufacturing ecosystems that support commercialisation and expand manufacturing output.
NATIONAL MANUFACTURING PRIORITY ROAD MAP • 73. Growth opportunities
Key areas of opportunity
Medical devices High value‑add Cutting‑edge Digitally Animal health
medicines treatments integrated
products and
platforms
• Smart • Sophisticated • Regenerative • Digitise existing • Rapid
monitoring pharmaceuticals medicines medical diagnostics
devices • Biologics • Genomics products • Antimicrobials
• Diagnostics • Complementary • mRNA vaccines • Emerging • Vaccines
• Personalised medicines data‑driven
implants products
• Bionics • Advanced
manufacturing
Medical product manufacturing has enormous growth potential. Opportunities in the sector come from the growing demand
for healthcare (driven by an aging population), advances in customised and precision healthcare, and digital technologies.
In 2018, global spending on health reached US$8.3 trillion, or about 10% of global GDP. 9 Growth per capita in health spending
has been consistently above 2% over the past 2 decades. 10 Growth is strong in Australia’s neighbouring markets. By 2050,
the United Nations estimates 37% of the world’s older population (65+) will live in Eastern and South‑East Asia. 11
The population in the tropics is growing at a much faster rate than the rest of the world. 12 Austrade notes this will provide
significant opportunities for developing new industries and exporting goods and services for tropical areas. 13 In the medical
products sector, Australia could manufacture products to address health challenges such as antibiotic‑resistant tuberculosis,
malaria and other vector‑borne diseases, and emerging infectious diseases.
Australian businesses are well‑placed to supply these products, drawing on our:
• world‑class research
• highly skilled workforce
• respected regulatory framework
• reputation for producing high‑quality, complex and safe medical products.
These competitive strengths lie in high‑value, complex medical products that require sophisticated manufacturing
processes and technologies.
Australia’s science, research and innovation capabilities are critical enablers of transformation in manufacturing,
particularly in the medical product sector. Both the government and industry can seize new opportunities through
embracing new technologies, processes and practices, including automation, digital operations and innovation. These
enablers will support business competitiveness and will have positive spill‑overs across our economy, while helping our
manufacturers scale their operations and harness emerging opportunities.
9 World Health Organisation, Global spending on health 2020: weathering the storm, 2020, p.ix, accessed 13 January 2021.
10 World Health Organisation, Global spending on health 2020: weathering the storm, 2020, p.4, accessed 13 January 2021.
11 United Nations (2019) World Population Ageing Highlights, 2019, p.6, accessed 12 January 2021
12 By 2025, the sum of the world’s tropical economies—the global tropical product—is projected to reach US$40 trillion. Trolinks Inc Professor Peter Andrews, Queensland Chief
Scientist, ‘Tropical potential: a tale of two inequities’, September 2009 in Austrade, Northern Australia: Emerging opportunities in an advanced economy, 2017, accessed 8 January.
13 Austrade, Northern Australia: Emerging opportunities in an advanced economy, 2017, accessed 8 January.
8 • MEDICAL PRODUCTSThe ASX-listed Australian In 2020–21, Australian veterinary In 2019, factory gate sales
life science industry is pharmaceutical manufacturing of veterinary medicines for
valued at AU$100 billion is expected to record $852m in revenue companion animals was
and includes around with 5.4% annualised growth since $550.6 million and for
100 companies.6 2016 and employ the production sector
approximately it was $509.7 million.8
1300 people.7
Priority areas
Sources:
1) Australian Bureau of Statistics, Australian Industry 2018-19 (cat. no. 8155.0); Australian Bureau of Statistics, Australian System of National Accounts, 2018-19, Table 5, Current Prices
Medical products range from everyday items like wound dressings and gloves, to highly sophisticated products like
(cat. no. 5204.0)
implants, vaccines and life‑saving drugs. The medical products sector is a dynamic environment that is continually
2) Australian Bureau of Statistics, Labour Force, Australia, Detailed, Quarterly, Table EQ06, May 2020 (cat. no. 6291.0.55.003); Australian Bureau of Statistics, 2016 Census of Population
developing
and Housing (tablenew technologies.
Builder extract)
3) World Health Organisation (2020) Global spending on health 2020: weathering the storm, p.ix https://apps.who.int/iris/handle/10665/337859 (Accessed 13 January 2021)
Key growth opportunities include:
4) United Nations (2019) World Population Ageing Highlights 2019, p.5 https://www.un.org/en/development/desa/population/publications/pdf/ageing/WorldPopulationAgeing2019-Highlights.pdf
(Accessed 12 January 2021)
• smart monitoring devices and diagnostics, personalised implants and bionics
5) MTPConnect (2020) Sector Competitiveness Plan https://www.mtpconnect.org.au/images/2020%20MTPConnect%20Sector%20Competitiveness%20Plan.pdf (Accessed 25 January 2021)
6) AusBiotech (2021) Australia: a thriving life science hub with global reach https://www.ausbiotech.org/biotechnology-industry/fast-facts (Accessed 25 January 2021)
• high‑value pharmaceuticals, biologics and complementary medicines
7) IBIS Industry Report (2020) Veterinary Pharmaceutical Manufacturing in Australia https://www.ibisworld.com/au/en/industry/c1842/industry-at-a-glance (Accessed 5 January 2021)
• cutting‑edge treatments, including regenerative medicine and genomics
8) Unpublished AMA data
• digital technology and platforms
• animal health.
In many cases these opportunity areas overlap. For example, new implants may release pharmaceuticals
into the bloodstream while simultaneously providing live data to medical workers on a patient’s vital signs.
Figure 4: Medical product opportunities
Australia has many opportunities to take its medical products to the world by focusing on areas
of strategic advantage and high value opportunity.
High-value
Smart monitoring devices, pharmaceuticals, biologics
diagnostics, personalised and complementary
implants and bionics medicines
Cutting-edge treatments,
including regenerative Digital technology
medicine and genomics and platforms
Animal health rapid
diagnostics, antimicrobials
and vaccines
NATIONAL MANUFACTURING PRIORITY ROAD MAP • 9Smart monitoring devices and diagnostics, personalised implants and bionics The devices medical professionals use to diagnose, monitor and treat medical conditions are becoming smarter and more customised. Production of these devices will require more sophisticated manufacturing processes, generating value across the product lifecycle in design, manufacture and diagnostics. Australia’s track record as a high‑quality and safe manufacturer offers opportunities for Australian businesses to meet demand for these new products. Development timelines and costs are generally lower for medical devices, compared to pharmaceuticals and biologics. 14 This means that small and medium‑sized companies are better able to compete and capture value. Smart monitoring devices and diagnostics Smart monitoring devices and diagnostics, and the algorithms that interpret the data generated, help medical professionals and patients make better health decisions. Highly technical and sophisticated monitoring and diagnostics instruments are used in clinical settings, like ECG machines, respiratory monitors and biosensors. These devices are becoming smarter—capturing more data, integrating more with other medical equipment, and using more sophisticated analysis—to give better insights. Future growth opportunities include better wearable devices for high‑risk industries (for example, mining) and ingestible smart devices and biosensors. Point‑of‑care and home diagnostics are also key drivers of market demand. 15 Implants Implants include devices placed inside or on the surface of the body. They are usually made from plastics, metals, ceramics or tissues such as skin or bone. Australian manufacturers are achieving better health outcomes by using innovative manufacturing methods to improve implant fit and performance. Implants are increasingly being integrated with monitoring devices to provide new insights. Future growth opportunities for Australian businesses will likely include 3D printed or custom‑made tissues and organs, along with surgery models to help prepare for complex surgeries. This could leverage off Australia’s growing capability in additive manufacturing. Bionics Bionics are artificial systems that are able to function like or support living systems. For example, a hearing aid works like a human ear to help people hear. Bionics bring together Australia’s world leading engineering, materials science and medical research communities. Future products are likely to include bionic hearts and eyes, along with artificial limbs controlled by neural pathways. Australia has significant expertise in this area built through companies like Cochlear. High‑value pharmaceuticals, biologics and complementary medicines Medicines may contain a single active component or multiple active components (complex medicines). Although there are many ways of characterising medicines, the 3 main categories are: 1. Pharmaceuticals, which are chemically synthesised and have a known structure (often described as ‘small molecule’ drugs). 2. Biologics, which are derived from a biological process and may be composed of proteins, nucleic acids, living tissues and cells (often described as ‘large molecule’ drugs and vaccines). 3. Complementary medicines, including certain vitamin, mineral, herbal and nutritional products. The cost and length of time required to bring a new medicine to market can be substantial. 16 Businesses need to globalise and tap into larger markets to generate a return on investment. Australia may not be able to compete with high‑volume producers who are close to large markets with very low input costs. Australia does have a track record of high‑quality, clean and safe manufacturing. This creates an advantage in making complex medicines using highly sophisticated processes. Precision healthcare and growth in new markets is driving increased global demand for these more complex, customised products. 14 MTPConnect highlights that medtech products typically only need between 4–10 years with an average cost of US$30 million to US$150 million. See MTPConnect, Medical Technology, Biotechnology & Pharmaceutical Sector Competitiveness Plan, 2020, p. 8. 15 CSIRO, Medical Technologies and Pharmaceuticals: A Roadmap for unlocking future growth opportunities for Australia, 2017, p. 14. 16 MTPConnect highlight that the risk‑adjusted costs of bringing a new medicine or vaccine to market is estimated at between US$648 million and US$2.6 billion. See MTPConnect, Medical Technology, Biotechnology & Pharmaceutical Sector Competitiveness Plan, 2020, p. 8. 10 • MEDICAL PRODUCTS
Proprietary and complementary medicines are 2 areas where Australian manufacturers can command premium prices. Proprietary
medicines are still under patent protection and give manufacturers a higher profit margin. Australia’s reputation as a clean and safe
manufacturer can also be leveraged to command higher prices when exported. This includes premium Australian‑made products
such as complementary medicines and nutraceuticals, including vitamin supplements and minerals, fortified foods, functional
foods and beverages. Nutraceuticals could be worth $4 billion by 2030. 17
Generic pharmaceuticals and biosimilars command lower profit margins. 18 Investing in highly efficient and automated facilities
could offer Australia some opportunities to manufacture certain generics and biosimilars which are particularly complex products.
Clinical trials are another important opportunity area which provides a key stepping stone to full‑scale production. Agile domestic
manufacturing could be scaled to supply this market. Industry stakeholders have noted that clinical trials are a ‘sticky’ foundation
to large‑scale production. The efficiencies manufacturers gain from co‑locating late‑stage trials with production, make retaining
trials a significant factor in capturing additional value.
Cutting‑edge treatments, including regenerative medicine and genomics
Cutting‑edge treatments such as genetic and stem cell technologies have the power to change lives and transform the
medical products sector. Commercialising these products in Australia also offers early access to potentially lifesaving treatments
to Australian patients. Drawing strength from our cutting‑edge research capabilities, Australia has the potential to accelerate
medical product commercialisation in regenerative medicine (RM), genomics and mRNA vaccines.
Regenerative medicine (RM)
RM is a relatively new field of study that treats injuries and diseases by harnessing the body’s ability to heal itself. 19 The global RM
market is estimated to be worth AU$120 billion by 2035. 20 RM has a range of high potential applications. This includes growing
and repairing organs, and new cellular therapies that treat disease and genetic disorders, such as Parkinson’s disease, Alzheimer’s
disease, multiple sclerosis and leukaemia. 21 While Australia has been at the forefront of RM research, including conducting some
of the world’s first human stem cell trials, there are opportunities to further commercialise this research. 22
Genomics
Genomic technology is a new and potentially disruptive technology. Genomic medicine refers to diagnosis and treatment based
on DNA sequencing. 23 It promises better patient outcomes and a more efficient health system through rapid diagnosis, early
intervention, prevention and targeted therapy. 24 There are opportunities for Australian manufacturers to leverage Australia’s
significant research capability to commercialise products. This could potentially deliver cures for cancer, children’s illnesses
and diseases with low survival rates.
mRNA vaccines
During the COVID‑19 pandemic Australian researchers have collaborated with industry to build capability in the development
of mRNA vaccines, which are at the forefront of global medicine. Normal vaccines contain elements of a virus. mRNA vaccines
work differently by only delivering the genetic instructions for our cells to make viral proteins which cause the body to launch
an immune response. As mRNA molecules are simpler to produce than proteins and can be manufactured by chemical synthesis,
mRNA vaccines are quicker to be redesigned, scaled‑up and mass produced. Building on Australian research leadership and
new global demand, there could be opportunities for Australia to become a manufacturer of mRNA medicines.
17 CSIRO, Victoria’s Nutraceutical Industry: A Roadmap to unlock future growth opportunities for Victoria, 2020 p. 3, accessed 6 January 2021.
18 Biosimilars are biologic medicines that treat the same disease in the same way as a reference biologic, but are no longer patent protected.
19 MTPConnect, Regenerative Medicine: Opportunities for Australia, 2018, p.2.
20 MTPConnect, Regenerative Medicine: Opportunities for Australia. [short citation]
21 MTPConnect, Regenerative Medicine: Opportunities for Australia. [short citation]
22 MTPConnect, Regenerative Medicine: Opportunities for Australia. [short citation]
23 Garvan Institute of Medical Research, Genomic Cancer Medicine Program , 2021 accessed 19 January 2021.
24 Australian Genomics Health Alliance, Integrating genomics into healthcare, 2021, accessed 19 January 2021.
NATIONAL MANUFACTURING PRIORITY ROAD MAP • 11Digitally integrated products and platforms Integrating digital technologies into their products is a commercial opportunity for Australian manufacturers to improve their value proposition and tap into new, high‑value opportunities. This includes integrating digital technology into existing products, such as smart pill bottles that remind patients when their next dose is due. 25 New products are also emerging including sensors, wearables and other connected devices. Australians are often early adopters of new health technology, giving Australian companies a competitive advantage from an informed test market, before they take their products global. Digital technology refers to a wide range of tools and systems that generate, store and process data. This includes traditional IT technologies, along with new cross‑cutting technologies such as artificial intelligence (AI) and machine learning (ML), blockchain, robotics, quantum computing and the Internet of Things (IoT). Digital technology is transforming how healthcare is delivered, refreshing existing products, creating new products and improving existing processes and business models. Continued improvement in data collection and analysis is revealing new insights, which can be leveraged into commercial products. Patients and clinicians can draw on data from multiple sources, make sense of it using AI software, and then make better health decisions. 26 The George Institute for Global Health is using data platforms in health care delivery. Uses include text messages to improve medication compliance in people with cardiovascular disease and the ‘FoodSwitch’ app, which allows consumers to scan food labels and find the healthiest choices. 27 Better data management and software monitoring is reducing human error, the cost of care, and improving health service delivery. Animal health A broad range of medical products are used to support animal health. Often, these products use similar technologies to human health products. For example, a biological vaccine for animals is produced using the same methods as human vaccines, but may be packaged differently. In 2019, factory gate sales of veterinary medicines for the production sector was $509.7 million and for companion animals, $550.6 million. 28 Animal health is a growing area of economic opportunity. Healthy animals also produce safe, high‑quality food and fibre products for local and international markets. In 2020–21, Australian veterinary pharmaceutical manufacturing is expected to generate $852 million in revenue with 5.4% annualised growth since 2016 and employ approximately 1,300 people. 29 Recovering herd numbers, advances in farming practices and growing expenditure on pet wellbeing are key drivers of this growth trend. 30 Growing areas of global demand in animal health include vaccines and new antimicrobials, which are agents that treat bacteria, fungi, algae, virus and parasite infection. These products are a critical input to support domestic livestock health and use technologies similar to those used in human health. The use of animal medicines in the livestock industry improves animal health, welfare and productivity in a sector that accounts for more than 10% of production in Australia’s key commodity groups, contributing more than $2.6 billion to the Australian economy. 31 Monitoring devices and diagnostics also support animal health, providing commercial opportunities to sell to Australian primary producers. Rapid diagnostic tests allow for on‑farm testing of disease and vaccination status, facilitating improved animal care decisions. As demand for these new products grow, there is an opportunity for Australian manufacturers to develop competitive advantage and supply Australian and international primary producers. 25 Brown B, Smart Pill Bottle, Health Tech Insider, 2019, accessed 19 January 2021. 26 CSIRO, Medical Technologies and Pharmaceuticals: A Roadmap for unlocking future growth opportunities for Australia, 2017, p. 49 27 Austrade, Digital Health Industry Capability Report, 2016, p. 10 28 Unpublished data, Animal Medicines Australia. 29 IBISWorld report, Veterinary Pharmaceutical Manufacturing in Australia, August 2020. 30 IBISWorld report, Veterinary Pharmaceutical Manufacturing in Australia, August 2020. 31 Animal Medicines Australia, Animal Health Industry, 2015. 12 • MEDICAL PRODUCTS
4. Potential
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: 32
• 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.
The following sections of the road map outline how these co‑investment opportunities can unlock the growth opportunities
outlined above. 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.
Translate
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.
32 Co‑investment refers to private and government investment. This includes grant programs such as the Modern Manufacturing Initiative.
NATIONAL MANUFACTURING PRIORITY ROAD MAP • 13Integrate 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. 33 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. 33 MTPConnect (2019) How Global MedTech & Pharma Corporates Engage with Australia, p. 4. 14 • MEDICAL PRODUCTS
Collaborate
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.
NATIONAL MANUFACTURING PRIORITY ROAD MAP • 155. Goals
Milestones for 2, 5 and 10 years have been identified to guide the future growth of the medical products manufacturing industry.
The goals have been developed using the streams that constitute the Government’s $1.3 billion Modern Manufacturing Initiative:
• Collaboration Stream: will bring together businesses, researchers and investors to build economies of scale and allow
them to compete in international markets
• Translation Stream: will support projects to translate good ideas into new or enhanced commercial outcomes
• Integration Stream: will target the integration of local firms into global value chains.
Manufacturing Success at 2 years Success at 5 years Success at 10 years
sector —by end of 2022 —by end of 2025 —by end of 2030
1. Overarching • Australia has made the • Local manufacturing • Australia’s manufacturers
right co‑investments to capability is growing are globally competitive
set up medical products for critical and specialist thanks to strong rates of
manufacturers for medical products. commercialisation,
long‑term success. • Growing rates of domestic integration and
• Supported by manufacturing are collaboration.
Government, the sector building on investments • There has been significant
is unlocking in translation, integration growth in the medical
commercialisation and collaboration. products sector, driven
opportunities through • Small firms have begun by Australian firms
co‑investments in to scale and there are successfully scaling.
translation, integration more mid and large • Australia has a number
and collaboration. sized businesses active of successful mid and
• There are growing rates in Australia. large medical
of private sector • Scaled firms are making manufacturers companies
investment in medical more globally competitive conducting high‑value
product manufacturing. products and providing activities onshore.
them to the international These activities are
market. driving increased jobs
in the sector and
delivering
transformational
economic outcomes
for local communities.
2. Translating • To unlock growth • Increasing numbers • Through investments
Australian opportunities and of Australian businesses by industry and
research to target barriers to scale, are finalising the government, a clear
co‑investments have commercialisation of pathway to commercialise
provide a
been made to support their products in Australia. Australian ideas has
pathway to manufacturers to been developed.
production • There are a growing
translate good ideas number of products being • Australia’s strong
Helping manufacturers into commercial products commercialised and manufacturing firms
finalise translation of in Australia. manufactured in Australia, are able to take more
their research in Australia, • Industry and government rather than licenced Australian ideas along
to provide a pathway to co‑investment has been overseas. Increased rates this pathway.
full scale Australian made in projects that help of commercialisation
production. companies finalise their are allowing more firms
commercialisation steps to seize high‑value parts
so their products can be of the value chain.
manufactured in Australia. • Australian firms are
• Co‑investments have taking advantage of
been made in facilities co‑investments to
that allow companies to scale and expand their
undertake first production manufacturing footprint.
runs and prototyping.
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