Australian Medtech: An Opal in the Rough?

If you’ve been paying attention MPO’s website lately, you will have noticed the several medtech news stories coming out of Australia. For instance, Australian medical device company OncoSil Medical Ltd. recently completed a gap analysis assessment of U.S. regulatory requirements and announced it would soon submit an investigational device exemption to the U.S. Food and Drug Administration (FDA) for its pancreatic cancer treatment medical device. In January, Nashua, N.H.-based Resonetics LLC partnered with Australian Scientific Instruments Pty. Ltd. based in Canberra, to bring its RESOlution laser-ablation product line to the continent down under. In February, Flagstaff, Ariz.-based W. L. Gore & Associates Inc. announced plans to expand the treatment range available in Australia and New Zealand for its Gore Excluder AAA (abdominal aortic aneurysm) endoprosthesis used to treat abdominal aortic aneurysms. And in late February, the Ministry of Health of Australian state New South Wales (NSW) launched the second round of Medical Devices Fund, a grant program designed to encourage and support investment in the development of medical devices in the state. Applicants for the grant money have been asked to present an innovative device technology—new to market or world—developed locally and supported by intellectual property. 

Based on medical device manufacturer prices in 2012, the United States leads in market share at 40 percent, with Europe in second place at 30 percent. Japan, Russia, China, Canada and Brazil are the respective runners up.¹ According to the Medical Technology Association of Australia (MTAA), there is no official data collected yet on the sale of medical technology in Australia.

The MTAA calculates the size of the industry based on extrapolation of data from its database and from statistics collected by industry surveys. According to this data, total revenue for the Australian medical technology industry for 2011-12 was more than $8.7 billion (U.S.). If sales of in-vitro diagnostics also are included ($7.3 million), the revenue is $9.5 billion, and with the further addition of dental products ($6.1 million), around $10 billion. Currently, according to Evaluate Medtech, the global medical technology market is valued at about $325 billion per year.

“Australia suffers an imbalance in trade in medical technology with most of the technology used in Australia imported, and nearly all of the medical technology products manufactured in Australia exported,” Susi Tegan, chief executive of the MTAA, told MPO. “Australia has excelled in the development of niche products to supply the global market—Resmed’s devices to treat sleep disorders, Cochlear’s electronic hearing device, and Sirtex’s SIR-sphere cancer treatment device.”

Resmed Inc., which was founded in Australia, now is headquartered in San Diego, Calif. Its device offerings include a range of positive airway pressure devices for the treatment of sleep apnea and non-invasive ventilation devices for respiratory care.
Cochlear still maintains its headquarters in New South Wales, as does Sirtex. Sirtex’s SIR-spheres are tiny microspheres used in selective internal radiation therapy for liver tumors.

Not surprisingly, considering its investment and encouragement of medical innovation, the vast majority (55 percent) of medtech companies in Australia are located in NSW, one of six  Australian states. One of last year’s recipients of the NSW Medical Devices Fund grant was Saluda Medical Pty Ltd., a NSW company that makes technology for closed loop control of neuromodulation therapies. The company won funds for its closed loop spinal cord stimulation device for chronic pain. Saluda falls into the small percentage of companies that started as spin-offs, in this case from NICTA in February 2013. NICTA is Australia’s Information and Communications Technology Research Centre of Excellence, and the pain management technology Saluda now owns is based on four years of research funded by NICTA and developed in collaboration with the Pain Management Research Institute at the Royal North Shore Hospital. The implantable device works by attaching to the spine and sending electrical pulses to block the pain.

“NSW has traditionally been the home of a large percentage of pharmaceutical companies, which in terms inspired the establishment of spin-off medtech companies and helped attract Australian headquarters of multinational companies,” said Tegan. “NSW is also the most populous Australian state with good health, research and tertiary education infrastructure.”

According to the newest industry report from the MTAA, 62 percent of all medtech companies in Australia were founded between 1990-2012. Only 10 percent of medtech companies were founded before 1970. The industry experienced sustained growth in the 1950s and 1960s, but it was only after 1970 that rapid expansion started. Almost 40 percent of all companies were founded post-2000. Today, there are more than 500 medtech companies in Australia—54 percent grew from startups, about a third were established as a subsidiary of a multinational company, and the rest are spin-offs from larger companies, universities or mergers.

Most major global orthopedic players have a presence down under. DePuy Synthes’ Australia office, Synthes Australia, was established in 1972 and has its head office in Sydney, NSW. Zimmer Holdings Inc. has offices in all six states; Smith & Nephew plc in five. Medtronic Inc. and Stryker South Pacific also make their Australian home in NSW. 

Reference
1. “The European Medical Technology Industry in Figures.” Eucomed.