The federal government is being urged to establish a new fund to support the commercialisation of diagnostics manufacturing in Australia to reduce dependence on US and European supply chains for the medical equipment.
In the wake of the COVID crisis, the Australian government has been looking to build sovereign manufacturing capability to increase its preparedness against a future pandemic by bolstering supply chains for local health needs.
MedBioTech and the pharmaceutical Industry Growth Centre MTPConnect, together with industry body Pathology Technology Australia on Monday published a diagnostic technology sovereign capability and resilience national action plan. More than 140 stakeholders participated in the consultation process that informed the action plan.
While the National Reconstruction Fund currently has $1.5 billion earmarked for investment in medical science and $1 billion for advanced manufacturing over the next decade, “without specific provisions in place to ensure portions of funding pools are allocated to scaling businesses, there is potential that most funding will be received by larger, established players with greater resources to invest in application processes,” the report says.
Australia imports 95 per cent of its diagnostics needs and has no sovereign capability for the manufacture of immunology, heamatology, or acute illness and infectious tests. Also, Australia manufactures only 1.1 per cent of its PCR test needs locally.
This is despite health projects experiencing among the highest growth rates in the business expenditure on research and development.
The plan also called for the establishment of a National Diagnostics Development Centre to drive commercialisation, a coordinated diagnostics policy across states and territories, as well as procurement reforms that prioritise local diagnostic products.
This follows the release of preliminary findings last October.
The proposed Diagnostics Manufacturing Fund should target “later-stage projects and ensure support is provided for regulation, reimbursement and manufacturing”. Current grants for the health and medical sectors currently skew heavily towards early-stage research, and there are limited funding and incentives for manufacturing, the report says.
The fund should be operated by a new independent National Diagnostics Development Centre staffed by “multiple stakeholders, including healthcare professionals, pathologists, health economists, epidemiologists, researchers, industry representatives, commercialisation experts and government officials”, to coordinate industry development initiatives and provide a collaborative platform.
Among many barriers to building the diagnostics manufacturing industry, the report highlighted stringent requirements and prolonged application processes by the Therapeutic Goods Administration and the Medical Service Advisory Committee as barriers to diagnostic manufacturing.
Deterred by the complex process, many firms seek regulatory approval overseas first, according to the action plan. “This is risky for Australia’s diagnostic ecosystem, as these companies then tend to establish manufacturing facilities abroad,” the report argues.
Government procurement that focused on cost rather than quality has also made it difficult for local SMEs to compete. A lack of commercialisation expertise among researchers as well as difficulties and difficulties recruiting skilled workers were also flagged as major barriers.
Manufacturing wage subsidies, alongside other incentives and training pathways should also be implemented “to encourage individuals from sunset industries, where domestic manufacturing is in decline, to retrain in growth sectors such as diagnostic manufacturing”.
MTPConnect chief executive Stuart Dignam said the action plan will ensure Australia’s can capitalise on its world leading diagnostics research and development.
“With the implementation of these practical initiatives to build a resilient domestic diagnostics sector, we can not only help to protect the health of Australians but also foster the growth of dynamic, globally significant companies, create new high-paying jobs and spur economic growth in a field where Australia has already shown its competitiveness,” he said.
Pathology Technology Australia chief Dean Whiting said that despite having passed the peak of the COVID-19 pandemic, “supply chain vulnerabilities remain”.
“Rapid action on this plan will see Australia better placed to manage future health emergencies and critical supply disruptions and by strengthening our diagnostic capability, we also increase our ability to compete in global markets and boost our national prosperity,” Mr Whiting said.
According to Pathology Technology Australia’s annual report 2021/22, Mr Husic was “very supportive of the action plan” during its development. The final report has been delivered to Mr Husic’s office.
In September, the action plan also gained endorsement by Assistant Minister for Industry Tim Ayres which would help the government capitalise on “the opportunity to build end-to-end sovereign manufacturing capability for diagnostics tests”.
At the time, Mr Ayres flagged an interest in examining “supply chain vulnerabilities and other barriers to position Australia to successfully produce in vitro diagnostic devices reliably and sustainably”.
