Australia Medical Device Industry Analysis — Goldstein Market Intelligence

The medical device and diagnostic industry in Australia have developed at a rapid rate, with strong growth in digital health technologies and devices using advanced materials, robotics, imaging, IT, design, and adaptive diagnostic technology platforms. The industry is also evolving with the convergence of technology and skills from aligned innovation sectors, such as ICT, medical research, and advanced materials.

The health and medical sector in Australia is supported by a robust regulatory and funding system that includes a competitive R&D tax incentive scheme and a world-class healthcare system that creates a highly favorable environment for innovation, investment, and collaboration.

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Source: Goldstein Market Intelligence

This Medical Devices and Diagnostics Industry Capability Report provides an overview of Australian capability in medical technologies and includes examples of some of the many companies with specialist expertise. These companies design, manufacture, and test tools and instruments, apparatus, and articles used for diagnosis, prevention, monitoring, and treatment of health issues. Many of these devices are subject to approval by a therapeutic regulator, in Australia, this is the Therapeutic Goods Administration (TGA).

Market Environment

Australia’s medical devices industry comprises over 500 companies generating total revenue of USD 8.09 billion, exporting over USD 2.1 billion each year and in 2013–14, employing over 19,000 people.

Currently, low-risk devices can be self-certified by a manufacturer to enter the Australian market, while riskier devices must be assessed by a qualified body. Certain medium-risk devices may have to be evaluated by TGA while high-risk devices must be reviewed by TGA before entering the market. Under the new action plan, Australia is proposing if industry self-certification for low-risk devices is appropriate, as well as creating a specialist unit to evaluate new technologies such as 3D printing and software applications and working to provide clearer cybersecurity guidance to industry.

The Australian medical device, biotechnology and pharmaceutical industries are distinct but closely related, featuring strong inter-dependencies and a flow of ideas between medical research organisations, traditional and advanced manufacturing and the local healthcare system.

The Australian medical device industry is characterized by a large group of small to medium-sized enterprises (estimated at 54 percent) and a smaller but sizable proportion of global multinational companies or their subsidiaries (about 35 percent of the sector). These companies are delivering improved patient outcomes and efficiencies in healthcare systems around the world, as nearly all of the medical devices and diagnostics manufactured are exported.

Australia has 35 medical device and diagnostics companies listed on the Australian Securities Exchange (ASX). Total market capitalisation of listed medical devices companies had reached USD 8.91 billion by August 2014, and the sector is delivering one of the strongest returns for investors on the ASX6.

The majority of Australian companies (54 per cent) have grown from start-ups. Over one-third (35 per cent) of Australian companies were established as a subsidiary of a multinational company.

The Australian medical devices and diagnostics industry has pioneered niche products such as 3D customised titanium implants, 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, and diagnostic technologies for sleep disorders, neurophysiology and cardiology.

This industry is supported by an entrepreneurial and globally-competitive Precision Engineering Industry (PEI), which covers the research, design, development, manufacture and verification of high accuracy components, as well as high precision machines and systems.

Evolving Value Chain

Traditionally, medical device companies have delivered value primarily through manufacturing and selling their products. But as pressures on the healthcare system mount, there are foundational shifts in the care delivery model, and as a result, the industry value chain is up for a drastic overhaul.

In the new normal, companies will need to step out of their conventional manufacturing role. Services and data intelligence will need to be integrated with products to offer holistic solutions, requiring a ‘power play’ across the value chain — strengthening existing business-to-business (B2B) plays and creating new ones, while introducing business-to-consumer (B2C) plays. These power plays will likely include a continuous slew of deal activities mergers and acquisitions (M&A), strategic alliances and partnerships.

Medical device companies will ultimately seek to play a larger role in the value chain and get closer to customers, patients and consumers. Done right, this will not only add new revenue streams for them, but also contribute to shorter, cheaper, and fewer hospital visits and thus lower healthcare costs.

Connect with customers, patients, and consumers

In a bid to get closer to the end user, manufacturers now, more than ever, should leverage data and build intelligence into their products — it is fast becoming an essential part of the new device value proposition. Data and analytics allows companies to directly and continuously connect with users, placing prevention ahead of treatment and cure, and giving patients greater control over their care. To quickly enhance their technology capabilities and effectively introduce smart offerings to their portfolio, medical device companies may consider partnerships with other players.

Zimmer Biomet has partnered with technology platform provider HealthLoop to support patients awaiting joint replacement3. HealthLoop’s patient engagement app educates patients with pre-to-post-operative protocols, and collects data on outcomes and post-surgery therapy, to help estimate reimbursement costs. Philips has taken a different approach towards targeting the end user. Through its digital healthcare platform, Philips HealthSuite, the company aims to increase market share in a range of segments as wide as healthy living, prevention and diagnosis, treatment, recovery and home care. The cloud-based platform uses Internet of Things (IoT) technology to collect and analyze data from multiple devices, and could ultimately support hundreds of millions of interconnected patients, devices and sensors.

Clinicians receive intelligence to help them diagnose, monitor and prevent diseases, while patients avoid unnecessary (and expensive) clinic or hospital trips, and both patients and consumers can access valuable advice on lifestyle and diet. In 2016 the number of patients being monitored remotely grew by 44 percent and is projected to exceed 50 million by 2021, while the global market for remote patient monitoring devices is expected to reach USD 1.9 billion by 2025.

Manufacturers are also integrating intelligence into their devices, offering real-time insights based on patient data. AliveCor has developed a medical-grade electrocardiogram (ECG/EKG) band, which can be used by smartwatch wearers to detect cardiac arrhythmia conditions causing stroke and measure heart rate and rhythm.

Australia Healthcare Data

The leading underlying causes of death in Australia are coronary heart disease, stroke, dementia (including Alzheimer's disease), lung cancer, chronic obstructive pulmonary disease (principally emphysema and chronic bronchitis), breast cancer, prostate cancer, diabetes, and colorectal cancer. Although Australians are living longer, they are also increasingly suffering from chronic disease. 50% of Australians are estimated to have at least 1 of 8 selected common chronic disease conditions: cancer, cardiovascular disease, mental health conditions, arthritis, back pain and problems, chronic obstructive pulmonary disease, asthma and diabetes.

The demand for medical products and healthcare services is expected to grow for all age groups with continuing advances in medical technology, the increasing burden of chronic disease, the aging population, rising incomes and changing consumer expectations. Australians have one of the longest life expectancies in the world (sixth amongst the OECD countries) and demand will continue to increase as Australia’s aging population progressively relies on the health system for care.

Projections were based upon the current estimate size and conditions, considering factors such as expected need, the propensity of lifestyle disease, proposed spending, regulatory developments, and other social factors, such as international health projects, economic performance, trends in import levels, size and performance of domestic manufacturing sector, national healthcare development plans and currency issues.

Because of remarkable advances in science and technology, including those in the health care industry, life expectancy in many countries has been steadily growing. As a result, the expanding proportion of elderly people promises further growth of demand for medical devices. The total combined quantitative rankings reflect the degree to which they are existent in each market; aging populations in developing economies now tend to expect therapies for health conditions that previous generations simply endured or that were life-ending.

The United States is expected to continue to play a leading role in medical device research and development. After declining in 2009, research and development spending rebounded to $2.9 billion in 2010 and $7.3 billion in 2011. From 2013 to 2020, larger medical device companies are expected to increase their research and development budgets by approximately 3 percent, while the rest of the industry is expected to increase spending for this element by more than 5percent.

Goldstein Market Intelligence helping businesses to be successful at strategy and take informed decisions to grow the business in future.

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