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Executive Summary
The Australian medical equipment industry sector has consistently provided good prospects for U.S. exporters. Australia is the 9th largest market for US exporters of medical products, and the 4th largest market in the Asia Pacific Region after China, Japan and Singapore. Australia is a competitive and mature market, and there is demand for a full range of innovative medical equipment. The Australian population generally expects a high standard of medical treatment and there is a continuing need for state-of-the-art medical products. U.S. companies compete with other well-established multinational suppliers in the market.
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Market Entry
Successful market entry strategies for Australia have three common elements: understanding the market, selecting the optimal partner, and providing ongoing support to that partner. It is important to gain an understanding of the Australian context for a product or service, its competitors, standards, regulations, sales channels, and applications. Success in the market will require appointing an Australian distributor or establishing a local subsidiary and setting up a local sales presence. Typically, distributors for medical products will cover the entire country and some may also have a subsidiary office in New Zealand. Given the size of the Australian continent - same size as continental U.S.-, and the distance from other countries, local support and service is important. Most of the criteria American firms use to select distributors are applicable to Australia, with expectations adjusted to the scale of the market given the population of 25 million. Performing due diligence on potential local partners is just as important as in the United States.
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Current Market Trends
The Medical Technology Association of Australia reports that the total market for medical devices in Australia is valued at $4.9 billion USD. The Australian market for medical technology represents a little less than two percent of the global market. Australia’s spending on healthcare is approximately 10 percent of GDP, similar to the United Kingdom but less than the United States (17 percent).
U.S. medical technology is traditionally well-received in Australia due to its perceived high quality. The market is sophisticated, mature, and quick to adopt new healthcare technologies. Importers seek to obtain cost-effective and innovative products that will improve patient outcomes and reduce healthcare costs.
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Best Prospects
Products that serve Australia’s ageing population are likely to experience growth. BMI Research forecasts that the orthopedic and prosthetic market will be the fastest growing sector within the Australian medical device market over the next five years.
The leading underlying causes of death in Australia are coronary heart disease, stroke, dementia (including Alzheimer 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 diseases. Approximately 50 percent of all Australians have one chronic disease and around 20 percent have at least two. These include, cardiovascular disease, cancer, chronic kidney disease, diabetes, mental health, musculoskeletal conditions, oral health, and respiratory diseases (including asthma and COPD).
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Market Size
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Total Healthcare expenditure (including investment) US$140.8 billion
http://www.aihw.gov.au
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… as percent of GDP 10%
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Hospitals, Procedures, Healthcare Professionals
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Number of Hospitals
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1,350
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…Public
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693
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…Private
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657
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Number of hospital beds
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96,000 (Public + Private)
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…available beds per capita
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4 beds per 1,000 population
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Physicians
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91,341
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…of which surgeons
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1,271
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…of which pediatricians
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2,059
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Dentists
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20,589
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Demographics
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Population
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25,750,198
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Life expectancy men/women total
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82.8 yrs.; men 80.7 yrs.; women 84.9 yrs.
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Infant mortality
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3.3 deaths/1,000 live births
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Percent of population older than 65 years
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4.2 million
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Annual deaths
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4.9/1,000 population
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…caused by [highest disease burden]
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coronary heart disease
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…caused by [second highest]
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Dementia and Alzheimer disease
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Competition
Approximately 80 percent of medical devices and diagnostics used in the market are imports. The three major suppliers are the United States, the European Union, and Japan.
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Currrent Demand
Health provision and funding comes from the government (public) and non-government (private) sectors. The Federal and State governments fund approximately 70 percent of total health expenditure, and the private sector funds the remaining 30 percent. The private sector is comprised of individuals, private health insurers, and other non-government funding sources. Approximately 45% of Australians have private health insurance. Under Australia’s government-funded healthcare scheme, the Government is the primary purchaser of medical equipment. Depending upon the type of products, public hospitals generally account for approximately 70 percent of purchases of medical equipment, with the remaining 30 percent from the private sector. Prices and volumes are influenced by government healthcare policies and provisions of public healthcare services.
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 ageing 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 ageing population progressively relies on the health system for care.
Opportunities exist for products that provide a significant improvement in clinical outcomes and products with clearly differentiated capabilities. There is also a growing demand for products that lead to faster patient recovery, reduce hospital and rehabilitation costs and alleviate or manage disability and chronic pain. Australia’s aging population will significantly influence the demand for products, and products that serve the aging population are likely to experience growth.
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Registration Process
The Therapeutic Goods Administration (TGA) regulates the medical equipment industry. There are more than 55,000 medical devices on the Australian Register of Therapeutic Goods. Australia’s regulatory framework is based on the International Medical Device Regulators Forum (IMDRF) and European Community guidelines. U.S. exporters must appoint an Australian representative/sponsor to obtain regulatory approval from the TGA. U.S.-manufactured medical devices require EC certification or US FDA regulatory clearance together with a MDSAP certificate. Alternatively, U.S. manufacturers can apply to the TGA for a Conformity Assessment Certificate. Information is available at www.tga.gov.au.
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Reimbursement
Obtaining reimbursement is important and industry has commented that reimbursement governs the way healthcare is delivered in Australia. The reimbursement process, however, is complex. The Australian Government subsidizes the cost of certain products and services through a range of different funding arrangements including public subsidy through the Pharmaceutical Benefits Scheme (PBS) and the Medicare Benefits Schedule (MBS), and through private health insurance reimbursement of prostheses through the Prostheses List.
Information on the Government’s Health Technology Assessment processes to inform decisions about the registration of health technologies for use in Australia, and the reimbursement provided under these funding programs is available at: http://www.health.gov.au/hta.
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Procurement
Information for federal government and state government tenders for the three largest states in Australia is available at:
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U.S. Commercial Service Contact Information
Name: Monique Roos
Position: Senior Commercial Specialist
Email: Monique.Roos@trade.gov
Phone: +61 2 9373 9210
