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The MedTech Blueprint – building a strong industry for Australia’s economic and social future

1The MedTech Blueprint

Contents

Introduction: ��2

Aims of the Medical Technology Industry Blueprint ��3

Issue one: Revitalising R&D - realising commercial outcomes ��4

Issue two: Education – Building a workforce for the MedTech industry ��5

Issue Three: Navigating Commercialisation pathways ��6

Issue four: How do we integrate with health policy ��8

Issue five: Being part of the Healthcare Solution now and in the future ��9

Issues Six: Building the manufacturing component ��10

Issue seven: How do we export Australian MedTech? ��11

Issue eight: Where are our spokespeople? ��12

Do we have the data? ��13

Blueprint Implementation ��14

Conclusion ��14

2 The MedTech Blueprint

Introduction:

This blueprint presents an overview of policy challenges and goals to develop strong growth in the MedTech industry for Australia’s future� The MedTech industry is well regarded for its contribution to patient health, and provides significant economic value to research and development of new devices� This leads to better and more cost effective health care services, and supports manufacturing, employment, trade, benevolence and community sponsorship�

Our vision is to grow a strong industry for Australia’s future by working with Government, industry and stakeholders to create the right business environment for innovation, deliver sustainable healthcare and grow Australia’s share of the $10 billion global market�

The NSW Government, committed to health and economic development, has supported the Medical Technology Knowledge Hub to develop the concept of the MedTech Blueprint�

The next stage in the process will be to develop detailed blueprint implementation strategy� The Australian Government’s commitment to the Medical Technologies and Pharmaceuticals Growth Centre may provide the appropriate vehicle to undertake development of this national implementation plan, in partnership with industry and state governments� When implemented, this will deliver strategies to address the industry’s priorities and provide the foundation on which the industry can develop and prosper�

Key stakeholders include:

• Medical technology companies

• Healthcare professionals

• State governments

• The Australian Government

• Consumer groups

• Regulators

• Researchers

• Policy makers

• Investors

• Venture capital providers

• Universities and other educators

• Medical, think tanks and other key influencers

• Medical Technologies and Pharmaceuticals Industry Growth Centre

• Other Industry Growth Centres(eg Advanced Manufacturing)

The detailed implementation plan will also involve a thorough desktop review of industry documentation and published research on the medical technology industry� In addition, it will include other industries which have developed strong growth strategies and achieved them, focusing on international best practice, and particularly markets where there has been substantial or rapid industry growth�

Our vision in developing the MedTech Blueprint was to identify clear recommendations to progress a strong industry policy platform� This work can then be built on and leveraged, to more strongly position the industry while avoiding duplication of effort on MedTech, health and economic strategies�

The development of this document has been informed by a consultation process involving industry, medical, education, government and community representatives� Consequently, it provides a strong guide to the questions which will emerge during broader and more detailed consultation�


Aims of the Medical Technology Industry Blueprint

The medical technology industry delivers a broad spectrum of products to Australian healthcare, ranging from bandages, syringes and disposable gloves to pacemakers and hip and knee prostheses, through to the most advanced surgical implants� The attached Fact Book produced by MTAA provides a detailed dataset on the industry’s contribution�

Despite the significance of our industry, there is limited awareness of the broad economic and social benefits from medical technologies� In addition, there is an assertion from government and other sectors – most notably the private health insurance sector - stating that MedTech in Australia is expensive, and that there should be greater restrictions on pricing� There is a negative focus on some product categories, with calls for greater regulation or higher barriers to market entry�

There have been occasions when Government Ministers, Senators and MP’s have referred to medical technologies simply as one of the cost drivers of the health system, without quantifying the consequence of that investment in terms of quality of life and productivity� Our industry needs to be able to provide a more wholistic picture of the benefits of that investment, and what the consequences are in terms of keeping people healthy and productively living, working and participating in the community�

While these criticisms have not gained extensive purchase with regulators or the broader community, they limit the capacity of the industry to effectively prosecute growth plans� In particular, the pursuit of red tape reduction, amongst other goals such as developing capacity in emerging MedTech companies and ultimately a growth plan for manufacture of medical devices�

We have identified as our core aims of the blueprint:

• Government and community awareness of the significant economic and social impacts the MedTech industry makes be improved

• The MedTech sector should emerge from its particular corner of the healthcare system, where it is regarded as a ‘device supplier’, instead becoming recognised as an integrated contributor in what we would term ‘total healthcare’

• The industry identify growth paths to fill in its current gaps, to support the ‘total healthcare’ goal through an uninterrupted ‘MedTech ecosystem’ which includes R&D, manufacturing, regulation, reimbursement, clinical investigations and export

There are a series of complicating factors which hamper our pursuit of these outcomes, including:

1� MedTech companies deal with stakeholders, including doctors, regulators and payers on a product basis, which can make for narrow relationships

2� New technology takeup is often slow, with decision-makers anchored to traditional products, and resistant to the cost of incrementally-better technologies – the desire to implement innovations is therefore all about cost reductions at the point of sale versus efficiency and desirable clinical outcomes for the long term

3� We have a consequent vulnerability that consumer exposure to our brands is much greater in the event of failure than success

4� Australia suffers an imbalance in trade in medical technology where almost all of the technology we manufacture is exported and most of what we use is imported - our aim is to increase our global market share

5� While Australia has powerful success stories such as ResMed and Cochlear, our manufacturing base is relatively small, which is a crucial gap in our footprint�

6� The regulatory and reimbursement systems that enable patient access have not kept up with the pace of technology

Ultimately our aim is to establish the optimal business environment for the MedTech sector by implementing policy structures and market access tools that enable an efficient and supportive infrastructure to support strong industry growth�

The following pages identify priority issues we consider should be key areas for development and implementation of a MedTech Blueprint�


Issue one: Revitalising R&D - realising commercial outcomes

Medical technology is at the epicentre of health innovation� It is built into the DNA of our industry that new design, invention and customisation are the only guarantee of competitive advantage and corporate sustainability� However, it is well documented that Australia faces major challenges in translational research from our investment in R&D�

In 2013-14 Australia invested $9�2B (0�44% GDP) in R&D and $5�5B was allocated to research in the health and medical area� 5�5% of university publications are in the top 1% of citations and Australia registers in the top five nations for Medical Technology publication impact�

However, for every $1 billion invested in Research and Development in Australia, we only produce two start up companies with University owned intellectual property� In 2012, Australia had just 14 spin out companies�1

In summary, Australia does not have the right policy structures in place to gain a commercial return on its investment in research and development by way of new jobs, new export markets and access to state of the art technologies� Flinders University Medical Device Partnering Program is an exceptional example of an initiative designed to foster university/industry collaboration supporting development of cutting edge medical devices� These kinds of programs need to be rolled out more widely across Australia to realise commercialization opportunities�

In addition, as many of our largest companies are subsidiaries of multinationals, they carry out research in their head office markets as well as in countries that have tax incentives and access to clinical trials�

1� There is a further tendency to move innovation projects to manufacturing hubs, so that designers can work closely with builders in refinement of novel products and updated editions

2� Compared to pharmacy and medical services, there is limited medical technology R&D taking place in Australian universities and research centres

Nonetheless, Australia continues to provide a strong opportunity for research and new product design; our universities produce large numbers of scientists, technicians and industrial designers; State governments are developing medical technologies strategies and the Commonwealth Department of Industry is establishing growth centres in Medical and Pharmaceutical Industry as well as Advanced Manufacturing�

1 Australian Innovation System – Annual Series, Department of Industry and Science 2013 http://www�industry�gov�au/industry/Office-of-the-Chief-Economist/Publications/Pages/Australian-Innovation-System�aspx#

The industry has recently worked effectively with key campuses, including Macquarie, Flinders and Monash University to better develop capability in Med Tech R&D�

However, there is general agreement within the research community that the current competitive funding schemes for research in Australia, such as those administered by the ARC and NHMRC do not encourage collaboration between the public and private sectors�2 Therefore, there is a need to develop appropriate incentives focused specifically on fostering collaboration between research organisations and industry to drive commercial outcomes�

The assessment of research performance is still dominated by a focus on indicators such as:

• Manuscripts published in high impact peer reviewed journals

• Research students (masters and PhD) enrolments and completions

• Success in securing competitive public research grants (ARC and NHMRC)

Areas to consider:

MedTech R&D should form part of a ‘total healthcare’ research strategy� This could be used to provide a multi-sector perspective to the Commonwealth Government and its research agencies�

1� An audit of current R&D, to provide a benchmark

2� A comparative audit of overall healthcare research, both public and private in Australia;

3� International comparison of R&D output in terms of how many companies are created from government investment in research in other countries and what are optimal models to accelerate commercialisation

4� Identification of sector-wide limitations to R&D, including: Intellectual property issues; market analysis and commercialisation capabilities; base technology; and education

5� Review of the distortions inherent in different university rankings for NHMRC/ARC grants, and industry-sourced funding

6� A desktop survey of international best practice solutions to address these limitations including consideration of how competitive public funding schemes could create incentives for collaboration between public and private sector

7� Development of a co-operative pathway for some shared basic science, in line with National Health Priorities and the issues outlined above� This would be an open innovation network, and we would hope it would involve external groups including universities, research centres, CSIRO and ANSTO

2 Advisory Council on Intellectual Property 2012, Collabora-tions between the public and private sectors: The role of intellectual property, Final report, Canberra


8� Exploration of hierarchical tax benefits for R&D, sequencing from:

a� Simple R&D rebates

b� A greater rate for a commercialised patent

c� A further increment for job creation stemming from that patent

d� Sustainability increments for maintenance of such jobs in Australia

9� Clear data tracking for such investment

This R&D programme, by following from the cooperative and priority goals outlined above, should naturally support the ‘total healthcare’ paradigm� The purpose of this exercise is to commence the vertical integration of the Australian MedTech industry into a complete ‘Med Tech Ecosystem’� This would be assisted by government policy changes to current funding formulas for universities including mechanisms such as, but not limited to:

• Peer-reviewed manuscripts co-authored with industry partners

• Collaborative, contract and consultancy research projects completed

• Number and survival of spinoffs

• Number of patents and license agreements

• Research students who have completed industry placements / training

• Research students employed in industry following graduations

Issue two: Education – Building a workforce for the MedTech industry

Tied into the R&D and manufacturing challenges, the Australian MedTech industry faces a shortage of graduates with key skillsets� More importantly, even where graduates in engineering, lab science and manufacturing do specialise in healthcare, they rarely have specific knowledge of Medical Technology�

This problem is compounded by the attraction of appropriate graduates to overseas jurisdictions where combined R&D and manufacturing is occurring�

The Knowledge Hub wishes to identify how we can work with universities and vocational education providers to develop a Med Tech specific course� Versions of this do currently exist, but we are keen to broaden the offering�

This would particularly focus on graduates who can specialise in MedTech specific:

• Design and innovation

• Engineering

• Manufacturing, packaging and logistics

• Device delivery support

• Healthcare policy, planning & Health Technology Assessment

• Economics and compliance

• Business skills, innovation and entrepreneurship

• In addition, programs that link graduates to clinicians, end users and commercial operators�

In keeping with the ‘total healthcare’ theme, we would note that these graduates will not simply have skills in their specific area, but will understand the entire ecosystem, as well as broader healthcare requirements� For example, a designer who does not understand cardiac disease will not develop a competitive new stent�

Alongside these courses, we would also like to see development of university and vocational offerings to assist with update and career development for those already in the MedTech sector� This will also assist us in retaining employees�

In Australia research has traditionally been conducted in the university sector� Approximately 60% of all Australian researchers are employed in higher education with another 10% employed in research agencies� Only 30% of Australian researchers are employed in the private sector, in contrast with 80% in the United States, 64% in Switzerland and 70% in Japan�3

3 Science, Technology, Engineering and Mathematics in the National Interest: A Strategic Approach, Office of the Chief Scientist, July 2013


Areas to consider:

1� The workforce skills study being developed as part of the NSW Knowledge Hub to undertake an audit of current skills gaps and requirements in the industry

2� Structured engagement with universities and schools to influence the curriculum and the number of students studying maths and science

3� A survey of international approaches to building Med Tech capability, both from outside, and within the industry

4� A survey of other Australian industry sectors who have effectively worked with educational providers to upscale capabilities

5� Identification of potential partners, including education providers and innovation centres

6� How the industry might assist this through targeted scholarships and work experience

7� How we might leverage our think tank, R&D and education approaches to create the most robust ecosystem

8� Consider models such as the Chris Gilbey Transition Project at University of Wollongong designed to connect students with business that are net users of science and engineering PhD candidates�

Ideally graduates from MedTech specialisations would enter the full scope of healthcare, including the regulatory space, and hospital services� We believe that the industry needs exchange with other employers across healthcare to best integrate and refine our offering�

Issue Three: Navigating Commercialisation pathways

The McKeon Strategic Review of Health and Medical Research Australia notes that Australia does not reap the full benefits of medical research output, due to lack of support for early clinical projects and an ‘immature commercialisation environment’�

The Australian Government spends around $8 billion per year on research, however only 1�5% of this figure is spent on commercialisation�4

International evidence indicates positioning people and organisations with a range of different skill sets in a collaborative structure can largely mitigate the issues which prevent commercialisation of medical technology� The main reason for this is that all aspects of commercialisation overlap and a company is most efficient when it can define early in the process what the end user wants and how to get the product to that stage�

Because Australia doesn’t have these structures in place commercialisation rates are low and most medical technology is imported and distributed by companies that are sales and marketing experts�

Policy leadership and development is needed to foster industry innovation and growth by putting into place mechanisms to support and accelerate commercial outcomes from public investment in research� The Blueprint implementation plan will need to address potential impediments to technology transfer for commercialisation, including solutions to:

• lack of commercial experience

• lack of institutional support for commercialisation

• decision making structures and attitudes

• researcher attitudes and experience

• difficulty in finding industry receptors

• lack of resources�5

4 Australian Government 2011-12� Science, Research and Innovation Budget Table

5 Australian Research Council, Commonwealth Scientific and Industrial Research Organisation and National Health and Medical Research Council, National Survey of Research Com-mercialisation (2002), 43–44�


Areas to consider:

The Blueprint implementation plan will need to refer to industry policy efforts in the following areas and recommend new and complementary approaches, where relevant, to improve our commercialisation successes:

• Implementation of the Federal Government’s industry growth centre initiative for med tech and pharma designed to improve collaboration, increase commercialisation, prioritise skills strategies as well as the Entrepreneurs Infrastructure Fund

• Implement Federal Government’s election policy to Protect and Streamline Health and Medical Research Funding, in particular focus on streamlining clinical research trials - global competition for clinical trials is increasing all the time and Australia risks losing its competitive advantage if approval processes are slow and cumbersome and costs are increasing

• Consider implementation of tax proposals that create incentives for business investment in Australia – the Australian Innovation and Manufacturing Incentive is a tax proposal that provides a reduction on any profits derived from the commercialisation of qualifying IP in Australia, either via licensing or manufacturing and sale of products incorporating qualifying IP at a rate of 10%� This would create an end-to-end tax regime to secure Australia’s global competitiveness for the future and drive growth in an industry that is part of the solution to major challenges in health care delivery in the future

• Support emerging companies and SMEs – there is no mechanism that enables government to buy back the results of their innovation, the Small Business Innovation Research program in the United States encourages domestic small businesses to engage in Federal Research and Development activities to increase private sector commercialisation of innovations derived from Federal government research and development – this is the missing link that the Australia Government needs to consider to generate a return on their R&D investment

• Each year Federal agencies in the United States with R&D budgets that exceed $100 million are required to allocate 2�8% of their R&D budget to these programs

• Access to finance is consistently a major barrier to SMEs navigating commercialisation pathways – many other countries implement government guarantee loan schemes which could be explored as a mechanism for addressing this barrier

• In addition, at a little over 2% of the global market it is not sustainable for the industry, home-grown or otherwise, to meet unique regulatory requirements in Australia that create additional costly barriers�

• Pursuing regulatory reform to follow on from the recent Australian Government changes to third party assessment6 will need to be addressed in the Blueprint implementation plan

• Developing IP and R&D mechanisms that will attract international investment and projects into Australia for IP

6 See MTAA white paper on third party conformity assess-ment – http://mtaa�org�au/docs/position-papers/mtaa-posi-tion-on-third-party-conformity-assessment-august-2012�pdf ()


Issue four: How do we integrate with health policy

As noted above, one of the greatest challenges for the MedTech sector is that we are regarded as device manufacturers and suppliers instead of part of the solution to healthcare service provision�

This is part of the ‘total healthcare’ message, that medical technology is part and parcel of a more complete set of health choices: in some cases it is a choice between surgical or medical solutions; in some, a new technology tips the balance towards new surgical techniques; and in some cases, new technology radically changes the world experience of an otherwise healthy patient�

Medical technology does not just deliver surgical efficiency, or patient mobility� It may deliver the ability to return to work, to care for grandchildren, volunteer or to become self-sufficient and productive�

However, as with other components of ‘total healthcare’, we are currently funded through a separate silo, administered by the Prostheses List Advisory Committee and its implications for private hospitals, State Government hospitals, outpatient services and the Private Health Insurance Administrative Council�

This tends to separate Med Tech from primary care, which is funded through its own distinct mechanisms of the Pharmaceutical Benefits Scheme and the Medical Benefits Scheme� Other hospital and allied health services, as well as health prevention, have their own distinct funding sources�

While we recognise that this is a more than ambitious goal, we believe there is room to move in how health funding choices are made: rather than having fixed funds for different contributions to health outcomes, there should be greater opportunity to demonstrate the value of Med Tech in a ‘but-for’ context�

Areas to consider:

• How do we value the total contribution of MedTech on a ‘but-for’ basis, to support our baseline ‘total healthcare’ approach (this is not to say that we discount other components of healthcare delivery, but we want our starting point to be the total value outcome in which we are participants?

• Given this evidence, how might we more effectively integrate and blur the lines between healthcare funding silos, so that MedTech is part of the solution, not just the cost?

• How do we value broader, ‘non-health’ benefits of our technology, particularly:

a� More general economic effects, such as workforce participation and tax contribution

b� Sustainable health benefits, for example mobility benefits for chronic disease management

c� Less tangible benefits, including productivity and quality of life

• How does this fit into the data & communications strategies outlined below?

The MTAA is well aware of the inertia in health funding structures, and the extreme difficulty of changing the various algorithms for Health Technology Assessment (HTA) and funding� However, in this case, we would like to describe both practical and optimal approaches, to illustrate how some of our contribution is lost in the gap�

Areas to consider:

• Ultimately, our goal is to build a reimbursement, or payment system that enables equitable patient access to innovative medical technologies, regardless of the geographic location of the patient� Generally, a benefit from a private health insurer will only be paid for an item listed on the Prostheses List (PL)

• The PL criteria is outdated and limiting as well as being a significant barrier in improving patient access to medical technologies� In addition there are inconsistencies across funds and even within the same fund across different hospitals� Consequently, privately insured patients may be denied access to innovative technologies with are available in the public sector

• Development of an Essential Care List; establish a subsidised list of cost effective and clinically effective medical products that support improved health management in the home setting

• Consider models similar to the Health Technologies Adoption Program at the National Institute for Health and Care Excellence (NICE) in the UK who’s role is to help the National Health Service (NHS) adopt innovative technologies such as surgical implants, diagnostic and remote monitoring services which have already demonstrated clear benefits to patients

• The organisation works directly with industry and the NHS in order to improve technology uptake and develops ‘adoption guidelines’ that detail how the health system can sustainably introduce technologies for clinical use by outlining what the barrier might be� Its role is also to provide advice to manufacturers of innovative medical technologies to navigate the complexities of the NHS to improve market access�


Issue five: Being part of the Healthcare Solution now and in the future

Along with the specific National Health Priorities, the five policy areas in which we should be most prominent are:

1� Chronic Disease Management (CDM), including: ischaemic heart disease; diabetes; chronic obstructive pulmonary disease; and osteoporosis

2� Lifetime health prevention, to avoid chronic disease

3� Ageing, including its links to CDM

4� Remote and indigenous health, including rheumatic heart disease and other CDM

5� Disability care

Each of these is a broad contextual driver of current health policy, and the increasing costs in these areas are a primary source of downward pressure on healthcare suppliers�

We are also particularly interested in the best way to engage with alternative approaches to high-burden healthcare funding, including through private health insurance approaches to patient management, and the National Disability Insurance Scheme�

Some of these are areas in which MedTech has a clear direct role (e�g� diabetes management) and some are areas in which we have a more oblique interest (health prevention)� However, we believe that in order to tell the ‘total healthcare’ story, we need to be clearly engaged in ‘total lifetime health’, particularly the most prominent issues of the day�

Areas to consider:

1� Identifying the specific role of current and emerging Med Tech in each of these areas, with a focus on CDM, to emphasise that our devices are not one-time consumables

2� Assessing the gaps in each category which might be addressed with new technologies, including digital and tele-health, remote monitoring and assistive technologies to provide a priority set for member R&D

3� Suggesting programmes, particularly in ageing and disability, where we might increase access to prostheses and other Med Tech, to potentially partner with the NDIS and other disability groups

4� Providing policy commentary on how Med Tech is used differently or more innovatively in overseas jurisdictions for better health maintenance outcomes

5� Describing the role and potential role of Med Tech in preventive health, including mobility, injury recovery, bariatric surgery and others

6� How do we work with medical and consumer groups, data providers and policy specialists to fit these approaches into the three issues outlined above?

Our goal is to elucidate how the industry can better deliver innovative and cooperative solutions to reduce the burden of CDM, ageing, disability and poor health choices on both individual sufferers, and the health funding system�


Issues Six: Building the manufacturing component

The MedTech sector is far from alone as an industry which imports the majority of its manufactured product� While MedTech creates large numbers of jobs in Australia each year, most of these are in marketing, sales, distribution, compliance and device support� We have manufacturing successes, but they are a minority of our technology�

This will not be rapidly overcome� Traditional forms of manufacturing, the art of converting raw materials into finished products, has an observed tendency to gravitate to cheap labour and other factors of production, or to highly beneficial taxation regimes: neither of these is an area in which we wish to compete� However, advanced manufacturing does represent an opportunity for competition in Australian manufacturing and can be improved by changing the way manufacturing integrates with the research community and improving the efficiency of our innovation system�

It is important to note in the context of the decline of the automotive industry that many auto component suppliers are looking to diversify into alternative sectors for survival and that under the appropriate circumstances MedTech fits within this description� Some auto component manufacturers in South Australia have already transitioned�

If this diversification is not supported and encouraged we risk losing the knowledge and skills base in manufacturing and we may not have the future capacity to engage in advanced manufacture at all� Importantly this diversification needs to be closely linked to R&D to be successful�

The digitisation of the product development process means we are seeing design, production planning, engineering, manufacturing, and services merging into one unit instead of being sequential Advanced manufacturing is about variability, complexity and extensive customisation with high value add� It usually involves low volume, high-value manufacturing with a customer and export focus, allowing manufacturers to provide a customised solution to the market�

It also requires new and advanced skill sets meaning close integration with educational institutions is a critical platform� One anchor point for manufacturing must be an R&D hub, and the tax sequence is one mechanism for encouraging incentives for business investment� Although a rapid turnaround in Australian manufacturing is difficult to imagine, creating a thriving advanced manufacturing base is a critical component of a ‘MedTech Ecosystem’, which can be illustrated as:

Finance

Clinical Investigations

Regulation

Manufacturing

Reimbursement

Skills

Export

Policy


Within this ecosystem, there are a number of functions in terms of staff development, compliance and marketing, but the core story is of a pathway from Australia’s prowess in basic science, through a fully realised industry, to export markets� This is consistent with Australia’s competitive advantage in education and high technology, and our status as a trading nation�

To address the manufacturing component, we would suggest:

1� Augmentation of the R&D strategy elements above, including both tax and open innovation, to identify how they can attract and keep manufacturing

2� Consideration of manufacturing promotion in the development of bilateral and multilateral trade pacts

3� Assessment of ‘made in Australia’ benefits, including:

a� Customisation for local use

b� Quality assurance and tracking, which also has potential export impact

4� Options for contract or component manufacturing, wherein:

a� Australian factories would make some high-tech components (coatings, PCBs)

b� Australia would become an end-point assembler of important components

Despite the practical difficulties to manufacturing growth, it remains an important element to be considered in the blueprint implementation strategy as part of the overall ecosystem�

Areas to consider:

1� The Australian Government’s Industry Innovation and Competitiveness Agenda has highlighted advanced manufacturing as one of five targeted growth areas to foster collaboration between research and industry, the MedTech industry has an important role to play in driving growth in advanced manufacturing and driving private sector engagement in this initiative will be critical�

2� Identifying opportunities by way of free Trade Agreements and other trade agreements

Issue seven: How do we export Australian MedTech?

Globally, the medical technology market was valued at US$349 billion in 2012 and is forecasted to grow to US $455 billion with a compound annual growth rate of 4�5% between 2012-18�7

Although comparatively small on a global scale, the medical devices industry in Australia is highly innovative� The Australian medical devices industry has pioneered niche products such as non-invasive blood glucose monitoring systems, continuous positive airway pressure (CPAP) devices for sleep apnoea, long wearing night and day contact lenses, melanoma detection devices, transdermal insulin delivery devices, diagnostic technologies for sleep disorders, neurophysiology and cardiology and the world’s first bionic eye and brain monitoring system�8

However, new sets of challenges and new ways of doing business are emerging�

Many economies are dealing with the challenges of ageing populations, people living longer and the subsequent demand on the health care budget� The demand for health goods and services is growing fast, particularly in emerging economies with ageing populations and a growing middle class with higher quality healthcare expectations�

Customers now demand more in financial, convenience and health terms� MedTech companies must focus more on service and business model innovations that meet new industry demands rather than on incremental product improvements�9 While clinical efficacy is a must, the true value in MedTech today is a company’s ability to provide information services and other assistance to solve additional problems such as improving diagnostic, increasing operating room efficiency, reducing length of hospital stays, monitoring patients remotely and keeping people out of hospital�10

Australian companies need to be part of the international discussion and research and global supply chains� Small companies also need strategic assistance to connect with global supply chains�

We would like to see an extension of open innovation, whereby multinationals cooperate with SMES to:

• Develop new products

• Undertake HTA and pre-market activities

• Identify and develop new markets

7 Evaluate MedTech World Preview 2013, Outlook to 2018 – the Future of MedTech

8 Austrade Medical Devices ICR

9 PWC, Health Research Institute MedTech Companies Pre-pare for an Innovation Makeover, October 2013

10 ibid


If industry can identify pathways for a shared approach across a single device or disease solution, rather than an acquisition, then it will more likely build domestic manufacturing and provide inspiration for future researchers� This process should involve the broadest possible spectrum of healthcare professionals to ensure we are providing solutions which support value, better outcomes and the principle of ‘total healthcare’�Alongside this, we would like to explore how Australian suppliers might follow healthcare exporters, such as the hospital and aged care service providers who will enter China under the provisions of the new ChAFTA (China Australia Free Trade Agreement); health planners working in the Middle East and South East Asia and healthcare service providers operating in the Pacific, Middle East and the United States�Areas to consider:

· What business models are working effectively overseas a)Desk research discovering what works in other countries and assistance provided to assist exporters b) Strategies that Australian exporters can use to integrate these models effectively

· Identification of regulatory issues and reimbursement pathways in international jurisdictions

· International collaboration opportunities for researchers and companiesa)To understand market entry pointsb)To understand future direction

· Working with multinationals · How does this integrate with broader Australian

export strategies including those of Austrade

Issue eight: Where are our spokespeople?

At its simplest, the challenge for the MedTech industry is to energise an external group of stakeholders to become supporters of our industry�

A broad swathe of potential stakeholders can be identified, including:

• GPs and specialists, who should promote the growth of MedTech because of its contribution to the success of their patients, and the efficiencies it delivers to their practices

• Health policy influencers, including consumer groups, for the investment we make in R&D to provide better quality health outcomes

• Payers, both Government and Private Health Insurers, who are getting better return on investment in terms of disease management

• Employees, with the sector in total engaging some 19,000 people in work during 2013

• State and National Governments, with revenues from $10 Billion in turnover in the past year

The MedTech industry is a substantial contributor to the nation’s health, representing only around 4% of health expenditure� A recent report commissioned by AdvaMed found that medical technologies generate economic returns that are substantially greater than their costs in terms of benefits to patients and ensuing productivity from improved quality of life�11

The industry delivers a critical community benefit by maintaining an inventory of over 1 million products, which is unparalleled by any other technology sector� At the same time, MedTech is a major employer group, and a substantial investor in research and development�

Our first challenge is therefore to identify a structure and associated campaign to have others fly our flag� We would posit six questions to be addressed in the blueprint implementation plan on this challenge:

1� How do we best cooperate with other industry associations, such as Medicines Australia, the Pharmacy Guild, the Australian Medical Association and the Medical and Allied Health Colleges to develop a common message around the benefits of medical technology?

2� How might we extend that to particularly promote our message through trusted community contact points, particularly pharmacists, general practitioners, nurses, physiotherapists, optometrists, dentists and allied health care professionals

11 Healthy Savings; Medical Technology and the Economic Burden of Disease, July 2014, Milken Institute, July 2014


3� What does our extended narrative sound like? In particular, how can we provide substance to the multi-sector cooperation by describing the true integration of medical technology as part of ‘total healthcare’?

4� What is the optimal path for engagement with community groups – specifically disease and disability spokespeople – to highlight the contribution of new technologies?

5� Given that payers will always be the most resistant to our message, how do we best establish a dialogue on pricing and efficiency, to minimise the conflict between suppliers, users and funders?

6� Do the Knowledge Hub and its partners currently have the correct skillset to deliver this type of engagement?

This is very much a structure and strategy requirement: we are not looking for a complete communications campaign, though matching of messages to stakeholders is required� The overriding goal is a shared narrative�

Do we have the data?

In order to describe our ‘Total Healthcare’ role, we need to better understand where MedTech sits, and how it integrates into lifetime health delivery� This will support our target narrative that MedTech is not a device industry – it is a partner in medical and wellness services�

To develop this, we may need to reach out to a set of experts, including:

• Health policy professionals

• Health economists

• Scientific researchers, both on and off campuses

• Demographers

• Commercialisation specialists

• Health educators

• Specialist stakeholder groups, e�g�: rural health; indigenous health; aged care

We should identify not only the dataset and potential providers, but a long-term structure within which the industry can ensure it has the information to provide both positive narrative, and compelling arguments for change� In addition industry wants access to data to be in a position to develop the healthcare solutions for future healthcare challenges�

Areas to consider:

1� To facilitation the cooperation and communication described in Issue One above, what are the key data and evidence we will require over the next 5-10 years?

2� Which datasets are most apposite to annual renewal and reporting, to track performance and contribution?

3� How do we align these to the Commonwealth’s current nine National Health Priority Areas?

4� Who are the recognised experts to provide this (note, we have a strong preference that they should be from Australia)?

5� What are the relative pros and cons of the MedTech industry variously:

a� Establishing its own think tank to fund and gather relevant information

b� Establishing a study centre along with other industry participants and stakeholders to examine the ‘total healthcare’ policy approach

c� Working with a specific university to establish a MedTech research focus

d� Working with existing research groups, such as the George Institute or the Grattan Institute

e� More selectively commissioning reports from key experts?


6� When we have the data we seek, what are our parameters for:

a� Publishing it ourselves

b� Focusing on refereed publication by the contributors

c� Using it primarily as background for industry submissions?

7� How do we establish credibility with the experts nominated above?

Blueprint Implementation

The medical technology industry makes a significant contribution to Australia’s economy through job creation and export markets and to Australian society by developing products that improve our length and quality of life� Australia has many competitive advantages to growing a prosperous industry including a significant health and medical research capability, quality health system, highly skilled manufacturing workforce, stable finance system and access to the growing middle class markets in Asia, projected to grow up to 25% over the next ten years�

In the future this region will be home to the majority of the world’s middle class meaning there will be increasing demand for goods and services in health and aged care within our region� Industry and government could work together more strategically to take advantage of these growth opportunities to develop the industry to its potential�

The Blueprint will drive and support the industry’s continued contribution to, and integration of, the Australian population’s health needs, research & development opportunities, industry development, communications, rural and remote health care, indigenous health, finance, trade, manufacturing, education, employment, ageing and social services, small and medium business needs�

The Blueprint’s detailed implementation plan will emphasise the decisions made in each of these areas and how they impact the development of the Med Tech industry, exemplifying why a whole of government approach to realising its potential is needed�

It will detail the significant challenge we face in healthcare delivery now and in the future, considering the costs of an ageing population, the increase in chronic diseases, coupled with the community’s desire for improved health care delivery� It will explain how the MedTech industry is well placed to be part of the solution to this, indeed, a partner in holistic planning and integration� That solution lies in our ability, in particular, to develop technologies with remote monitoring capabilities which enable health care services for people in the community, outside the hospital system, saving significant costs and improving healthcare services�

It will also describe the steps required to make the MedTech industry a thriving industry for Australia’s future by establishing a more effective entrepreneurial,

collaborative and commercialisation culture within a deregulated business environment, allowing it to be competitive and thrive in a global market�

Development of the implementation plan will require significant further wide and targeted consultation and support by government and all aspects of industry for its success� As mentioned we believe it should operate as the roadmap for the Federal Government’s Industry Growth Centres to develop growth centres in areas with competitive advantages, such as MedTech and Pharma as well as to improve the efficiency of the regulatory system�

The implementation plan will also take into account and work with existing initiatives already supporting the industry including:

• New South Wales Medical Device Fund and Medical Device Commercialisation Training Program

• New South Wales Medical Device Knowledge Hub designed to operate as a vehicle for collaboration between academia, industry and government

• Victoria’s Medical Technology strategy focused on enhancing linkages and relationships between key players across the industry

• South Australia’s Manufacturing Works strategy which drives the transition from the traditional manufacturing sector to advanced manufacturing

• South Australia’s Medical Technologies Program which supports the Medical Device Partnering Program – a collaboration between industry, research and end-users

• Tasmania – population health planning to enable healthcare solutions through innovative technologies

Finally, implementation will involve determining the most effective ways to integrate current work into a whole of government strategy to support each component of industry development including research, product requirements, engineering and design, clinical investigations, manufacturing, regulatory approval, sales, marketing and export�

Conclusion

The MedTech Industry has great potential to be a strong industry for Australia’s future, underpinned by high skilled employment�

In order to prosecute a strong growth plan, the MedTech industry needs to address each of its policy and regulatory challenges� This blueprint identifies issues and offers the framework for the development a national implementation plan� The Medical Technologies and Pharmaceuticals Growth Centre is a likely vehicle to realise this aim, and we will continue to progress this possibility�

the medtech blueprint - building a strong industry for ... · developed strong growth strategies...

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