Health exports make good global business
The Australian designed cochlear device has been implanted in nearly 200,000 patients worldwide, revolutionising sound perception for the profoundly deaf.
In 1974, a commercial television station in Australia held a telethon to raise funds to take an obscure Australian biotech project to prototype. Four years later, the medical device was implanted in the first human patient and 71-year-old Rod Saunders heard sound for the first time in 25 years. Now Australia’s most famous medical invention, the Cochlear story aptly demonstrates the barriers faced by Australian innovators in the medical industry.
According to Janelle Casey, Austrade’s global leader for Biotechnology, Health and ICT, “we face difficulty in commercialising innovation because we need capital injection, and that’s traditionally really hard for Australian innovation and technology in this country”.
Despite this handicap, Australian bioengineers, scientists and doctors are punching well above their weight in the global healthcare industry. Children with minor infections have benefited from Howard Florey’s discovery of the curative effects of penicillin. Many Australians with a snoring bedfellow have peaceful nights using Resmed’s treatment devices for sleep apnoea.
Victims of the Bali bombings healed quickly with the application of spray-on skin for horrific burns, developed in Western Australia, and women all over the world face less risk of developing cervical cancer following the Australian development of Gardasil, the first vaccine against human papillomavirus.
Even with these achievements, Australian exporters hold only a tiny share of a world medical market worth US$174 billion. The global medical technology industry is growing at a rate of 10 percent per annum, and with population on the rise, it is an industry set to take off. The Australian medical technology industry is worth $6.7 billion, and is expanding slightly faster than the world market at 12 percent each year. Casey believes that with less than one percent of the world market, the opportunities for Australian companies are endless.
New exporters
Australians can be ruthlessly competitive in a world market, provided they believe in their product and are prepared to put time and energy into penetrating international markets, says Alan Oppenheim, CEO of Ego Pharmaceuticals. Oppenheim sits at the helm of an Australian household name that has been exporting for 50 years.
“You can’t do too much research. Get to know your new market and how your channel will run in the new market,” he advises. Ego Pharmaceuticals provides a good example for new exporters looking to emulate Australian success. An Australian-owned small business, Ego has been competing with multinationals in the world market for decades. They have 40 staff in eight countries, but spend little on marketing. Profits are channelled back into research and development because, as Oppenheim warns, “all the marketing in the world is only going to sell the first bottle”.
New exporters should take advantage of Austrade’s export assistance programs, including Commercialisation Australia and even the recently slashed export market development grant (EMDG). Austrade organises Australian pavilions at major international trade fairs, including Medica in Germany, the Asia Medical Fair in Singapore and Arab Health in the Middle East, allowing Australian businesses to exhibit at a fraction of the usual cost.
Small Australian companies can leverage the total dollar spend of the Australian trade mission to see what opportunities are available. “You have to go overseas,” Casey says. “You have to see who you’re competing with and where you fit to help you work out your positioning, pricing, market entry models and distribution channels.”
Existing exporters
An understanding of where Australia fits in the market is essential for existing exporters looking to expand. Casey advises against businesses competing on consumables, as manufacturing in Australia is too expensive to be competitive in the export of low value medical products.
Where Australia can exploit its advantages is in high value, niche industry products. Australian companies can trade off competitive innovation, quality research and development and a powerful precision engineering sector with a long-term record in the automotive industry. “We really have quality expertise to help prototype our medical devices here in Australia,” Casey says. “Contract manufacturers can do short runs of prototypes easily.”
While traditionally Australia’s biggest export markets in the healthcare sector have been in the Asia-Pacific, the Middle East is an important emerging market for exports. “The Middle East has a big shortage of hospitals,” Casey says. “Saudi Arabia alone is building 200 new hospitals and they’re looking to fit out with a whole range of medical equipment and devices.”
Australia has a good reputation in the Middle East and, according to Casey, because Saudi Arabia, Kuwait and the United Arab Emirates have adopted Australian medical standards, making it simple for Australian companies to enter the market there, we have a particular competitive advantage.
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