Australia is a recognised leader in healthcare innovation, science and research. It produces novel science, cutting-edge technologies and a strong talent pool. The medical technologies (MedTech) and pharmaceuticals sectors are among the most innovative and significant contributors to R&D globally and within Australia. Australia contributes 3% of the world’s biomedical research. It is one of the strongest performing sectors in business expenditure on R&D. Manufactured exports in 2015 was $4.6 billion, and the industry generates 48,000 jobs (10,000 medical technologies; 22,000 pharmaceutical and biotech; 16,000 health and medical research). (CSIRO, 2017)

Australia’s competitive advantage in MedTech and Pharmaceutical has little penetration into Indo-Pacific rapidly expanding market – from medical devices, laboratory equipment, diagnostic tools to digital health like telemedicine and data science, including human capital development.

Australia’s MedTech and pharmaceutical ecosystem comprises a range of significant activities and a well-established value chain of stakeholders. The activities span service delivery to manufacturing and development. These are all applied to strengthen health systems, including tackling the burden of heart disease, diabetes, chronic lung disease, cancer, obesity and mental health conditions. Its value chain consists of many parts – from consumers and patients, universities, other research organisations, local small and medium enterprises, and multinational companies, funders and investors, service providers, industry organisations, governments, regulators, policymakers and clinicians. (See Figure 1)

While the MedTech and pharmaceutical value chain span community, policy, research and industry, its innovative capacity lie in the nation’s innovation and science ecosystem. The ecosystem consists of a strong education and research sector, world-leading public research agencies, cutting- edge research infrastructure and innovative businesses expanding their impact globally. (Australia Government, 2017)  Increasingly, it also consists of large multinational companies like Johnson & Johnson and Pfizer that use Australia as an international trade and investment base for doing business in the
Indo-Pacific region.

At the heart of the ecosystem are innovation precincts. Precincts are located around major institutions such as universities, hospitals and medium to large companies involved in the commercialisation of innovation.

"Precincts are locations where intellectual capital, commercial focus and collaborative approaches converge. It is at this convergence that discoveries are made, commercial applications created, and talent developed to lead innovative growth."

A couple of points about precincts: first, precinct infrastructure does not provide a seamless concept-to-international market path for businesses. It instead gives companies a capabilities-based, problem- solving service organisation to seed innovative sectors like MedTech, biotechnology and pharmaceuticals. Companies in these precincts tend to look for capabilities that can assist them with rapid design, development, validation of products to manage access to Australia’s established R&D infrastructure and high- value skills base. (See Figure 2) Precincts help companies – from start-ups, SME and large corporations – to reduce risk, cost and time-to-market for new products.

The second point is that most precincts in Australia currently lack the in-house expertise and capability to help companies take their ‘export-ready’ products to international markets. Companies tend to rely on the Government for help. For instance, through a range of support by the Victorian Government, the state’s MedTech and pharmaceutical sector has generated close to A$40 billion in exports over twenty years (1999-2017).

Support includes infrastructure investments, regular trade missions and access through its extensive international network of trade offices. There is an opportunity to take a national approach by providing support to companies with export or near to export ready products access international markets like Indonesia. (See Figure 2)

Australia has four of the world’s best 25 life sciences and biomedical innovation clusters – Melbourne (ranked no. 4), Sydney (7), Perth (17), Brisbane (25). The Melbourne Life Sciences cluster is ranked number four in the world after San Francisco, Boston and New York. (See Figure 3)

Melbourne is one of the largest Life Sciences clusters globally. (See Figure 4) It hosts more than 40% of Australia’s biomedical researchers. It attracts 40% of Australia’s medical research funding, and it is one of only three cities in the world to have two universities in the global top 20 biomedicine rankings – University of Melbourne and Monash University. About 53% of all ASX listed Life Sciences companies are based in Melbourne. (Victoria State Government, 2017)

HEALTHCARE INNOVATION PRECINCTS

Precincts develop through a combination of factors. Market forces is an important factor leading companies to seek innovation and talent to help stay competitive. Many of them form links with research organisations to help expand market opportunities. In 2015, Philips Healthcare moved its US R&D headquarters to Boston- Cambridge. A year later GE followed with shifting 600 of its tech jobs to the area. Now Amazon, Twitter, Google, IBM, Schlumberger, Microsoft, Comcast and Oracle have an R&D presence in the Precinct.

Decades of investment is another factor contributing to precinct development. Federal and state governments and universities invest significantly over time in physical, transport, digital and research infrastructure to support precinct development. In 2007, the Australian Government built a national synchrotron facility on land next to Monash University. The facility supports research and industry applications in advanced materials, food technology, defence science, biomedicine, electronics, energy and mining. Victoria’s ‘Plan Melbourne’ is a metropolitan planning strategy over 35 years to develop transport links and accommodation to improve the growth and clustering of business activity and knowledge-based industries. Universities also are key drivers behind innovation precincts through significant investments in science infrastructure, entrepreneurship programs, and talent development. (Universities Australia, 2017)  In 2003, Monash University completed its first stage development of the Monash Science and Technology Research and Innovation Precinct (the STRIP). The Precinct capitalises on its location – in technology and commercial light- manufacturing corridor in south- east suburbs. The STRIP has now become core to the Monash Technology Precinct.

Melbourne’s healthcare innovation clusters are organised into
two geographical precincts: the Melbourne Biomedical Precinct located in metropolitan Melbourne; and the Monash Technology Precinct, in Southeast of Melbourne metropolitan. Over a relatively short time, both precincts have become important drivers of commercial and export growth.

Following are some highlights:

• Australia is a leading location for the commercial MedTech and pharmaceuticals sector. The commercial sector includes more than 180 companies based in Victoria, including 61 ASX-listed companies with a combined market capitalisation of A$60 billion.
• Employs more than 23,000 highly skilled people.
• A thriving ecosystem for healthcare start-ups with 13 internationally competitive companies listed on the ASX over the last five years with a combined market capitalisation of $7.1 billion as at March 2018.9 (See Figure 5)
• Attract companies such as CSL, Pfizer, Johnson & Johnson to establish head R&D branches.
• Exports (high-value manufactured export products) increased from $683 million in 2012 to $2.2 billion in 201810. (See Figure 6)
• Top five export markets (2011-2016) – United States,
• Europe, South East Asia, East Asia, including China and the Middle East and North Africa.

THREE ENABLERS IN SUPPORT OF PRECINCTS

Australia’s healthcare innovation precincts are locations where research and business converge to create commercial and export ready products.

They form a ready-made cluster open to commercial partnerships and access into Indonesia.

That if adequately supported, through three export development enablers – insights, outreach and brokering – precincts can play an important role in supporting Australia’s long-term Indonesia and Asia engagement. These enablers are needed so that an effective supply-demand value-chain can be crafted that ultimately results in the transfer of knowledge, technology and capability between nations. These enablers will improve the connectivity between the two countries and beyond sharing knowledge, will ultimately allow for businesses to trade in areas of importance to both nations.

An example of three enablers in support of Australian precincts engaging Indonesia’s health sector:

This article forms part of a discussion Paper prepared as part of a series of short reports on specific topics identified by the Business Council of Australia and Asia Society Australia Asia Taskforce (with PwC Australia and The University of Sydney Business School as knowledge partners) to supplement the findings and recommendations contained in the Taskforce Interim Report.  

Asia Taskforce Advisors on Indonesian Healthcare Innovation

Eugene Sebastian, Executive Director, Australia-Indonesia Centre
Abid Khan, Deputy Vice Chancellor and Vice President (Global Engagement), Monash University
Joanna Donagan, Director, Global Initiatives, Monash University
Helen Fletcher-Kennedy, Chief Operating Officer, Australia-Indonesia Centre

Notes:

1. CSIRO, 2017, Medical technologies and pharmaceuticals: a roadmap for unlocking future growth opportunities for Australia, April, p.10
2. Australian Government, 2017, Partnering with Australian on innovation, science and research, Commonwealth of Australian, Canberra-http://science.gov.au/international/CollaborativeOpportunities
3. 5 Victoria State Government, 2017, State of the sector: Medical Technologies and Pharmaceuticals, Department of Economic Development, Jobs, Transport and Resources, July, Melbourne
4. NDF Research, 2017, The Best 25 life sciences clusters – http://www.ndfresearch.com/australias-life- sciences- clusters.html
5. See Universities Australia, 2017, Startup Smarts: Universities and the Startup Economy, Canberra – https://www. universitiesaustralia.edu.au/wp-content/uploads/2019/06/Startup_press-v2-web-1.pdf; Gardner, M., 2018, How Australian universities are driving innovation, Universities Australia, July – https://www.universitiesaustralia.edu.au/ media-item/how-australian-universities-are-driving-innovative- growth/
6. Victoria State Government, 2017, State of the sector: Medical Technologies and Pharmaceuticals, Department of Economic Development, Jobs, Transport and Resources, July, Melbourne
7. Dandolopartners, 2020, State of healthTech Victoria, LaunchVic, Melbourne – https://launchvic.org/files/State-of- HealthTech-Victoria-FINAL.pdf
8. Victoria State Government, 2019, Pharmaceuticals and medtech export growth soars, Department of Jobs, Precincts and Regions, 23 September – https://djpr.vic.gov.au/about-us/news/pharmaceutical-and-medtech- export-growth- soars
9. Victoria Chamber of Commerce and Industry, Export Commodity Trade data 2016, Victoria State Government, 2019