by Brad Roberts, SeerPharma
In 2011 the Australian pharmaceutical industry ranked 15th largest in the world market and revenues generated were in the vicinity of $22Bn, or about 1% of the global market.
The industry is Australia’s largest exporter, with approximately $4.1Bn of product shipped to over 60 markets worldwide; however we are a net importer with $10bn of imports annually.
The pharmaceutical industry employed in excess of 44,000 people, and the manufacturing sector consisted of around 150 manufacturers with revenues of $9.4Bn employing approximately 13,400 people.
As with much of the developed world markets, growth in Australia during the past year continued to grow but, at just 2.3%, growth was slower than in previous years, and the CAGR outlook is 2.6% over the next ten years.
Looking beyond 2012, industry growth will continue to be heavily influenced by the Federal Government and the PBS scheme. There is expected to be a growth in volume but a shrinking in value as government continues to constrain costs and generics continue to grow.
It is likely that local production capacity will continue to decline as competitor capacity and compliance levels in growth economies such as India and China improve. As a result we are likely to see growth in local contract manufacturers, particularly packaging operations. Consequently, employment levels in the industry are expected to decline by around 7% in 2015-2016 compared to 2005-2006 levels.
Contrasting this, the Australian medical device industry has more than 600 companies and employs approximately 17,500 people nationwide. Local manufacturers make up roughly one third of the 600 companies and these are typically characterised as small innovators employing less than 20 people. As with pharmaceuticals, Australia is a net importer of medical devices with imports exceeding $3.3bn versus $1.2bn in exports.
Current revenues are estimated to be in the region of $7.6bn (representing ~2.5% of the global market), however, the outlook is positive with medical devices expected to grow by a CAGR of 9% over the next five years, compared to a forecasted CAGR of 2.6% over the next ten years for the pharmaceutical industry.
While the future of medical devices in Australia seems positive, the Federal Government is focusing heavily on managing healthcare costs and, as with over developed countries, raised cost effectiveness barriers affecting pricing and reimbursement will present some challenges.
The Australian clinical trials industry is estimated to generate revenues of $1bn annually. However, Australia has lost some ground in recent years to developing countries. As the pharmaceuticals industry seeks to cut R&D expenditure, the option to run clinical trials at a lower cost and have access to large patient pools in Asia is proving difficult to counter.
In an effort to ensure Australia’s future competitiveness for global trials, the Clinical Trials Action Group was successful in getting key recommendations approved by the Federal Government in 2011. These recommendations will pave the way for speedier approval of new trials and streamline a national ethics approval process to enhance Australia’s attractiveness for clinical trials investment.
In summary, Australia faces stiff competition from developing countries, particularly in the manufacturing sector. However, it is well positioned to capitalise on opportunities in emerging South-East Asian markets. Additionally, changing attitudes to healthcare and aging populations coupled with ongoing innovation and development in biotechnology present noteworthy opportunities for the industry.