Analysis and Commentary

Why the $11 billion Australian medtech sector’s supply chain is at risk of another “COVID” shock

Analysis and Commentary

The medtech sector needs further investment in manufacturing to protect against further potential global shocks as medical supply chains in Australia have not recovered fully from the COVID-19 pandemic which caused havoc with patient care. By Dr Jack Richards. 

In the face of threats like pandemics and shifting economic and geopolitical conditions, it’s imperative that the medtech industry, which generates gross revenue of $11 billion per year, becomes more resilient through an increased focus on improving domestic manufacturing capabilities in the sector.

The COVID-19 pandemic served as a wake-up call for all sectors, including medtech, underscoring the critical importance of having a resilient and adaptable supply chain.

It highlighted our reliance on medical devices and the significant impact that the absence of even one piece of a single device can have on people’s lives.

There needs to be a focus on investment in medtech manufacturing to improve our current supply chain which is heavily reliant on overseas imports, which remains a major concern.

Consider this: more than 97 percent of diagnostic products used in Australia are imported, exposing it to supply chain shortages during periods of high demand and stress on global supply chains, according to a MTPConnect report.

The ability to source components locally will help alleviate potential delays in essential testing and services but also offer the additional benefit of stimulating the economy through job creation in manufacturing.

Our biotech company was founded in 2019 around a year before the COVID-19 pandemic and we opted to establish own research and development (R&D) and manufacturing facility in Melbourne.

We established early on, and before COVID, that we needed to be able to manufacture our devices inhouse and we were fortunate that we took that decision as we were far less impacted than other companies.

The reality is that here in Australia we are exposed to geopolitical uncertainty in our supply chains and we need to take action now to rectify that.

The MTPConnect report also highlights that 92 percent of companies had their supply chains impacted by COVID-19, 100 percent experienced increased freight costs and 65 percent had shipping delays.

Improving Australia’s supply chain resilience in the medtech sector delivers on critical objectives:

  • It will ensure uninterrupted access to critical medical devices and diagnostics during emergencies and pandemics.
  • Enhances patient care by reducing disruptions in the availability of essential healthcare products.
  • Mitigates risks associated with global supply chain vulnerabilities, such as geopolitical tensions or natural disasters.
  • Supports innovation and growth within the Australian medtech sector by fostering a reliable and robust infrastructure.
  • Creates employment opportunities across the supply chain, from manufacturing and logistics to research and development, contributing to economic stability and growth.

Positively, there are two recent Federal and State Government initiatives which are focused on local manufacturing and job creation and these serve to highlight why there needs to be an immediate focus on the medtech sector.

The Federal Government released its Medical Science Co-investment Plan in April which outlines the need to rebuild and diversify Australia’s manufacturing industry, with the medical devices industry identified as a key area of investment.

The Made in Victoria 2030: Manufacturing Statement outlines the State Government’s commitment to investing in manufacturing to drive jobs and growth.

Our own focus on local manufacturing not only strengthens the resilience of the supply chain but also aligns with state and federal government objectives to foster local job creation and economic growth.

We need to prepare for the ‘new normal’ and further commit to building supply chains with resilience as a new priority.

Picture: supplied

Dr Jack Richards (pictured) is an infectious diseases physician and is co-founder and Scientific Director at ZiP Diagnostics, a Melbourne-based pioneering biotech manufacturer that was established in 2019. ZiP aims to provide rapid, high performance and low-cost point-of-care tests to improve health care globally for humans, animals, and the environment. ZiP has established world-class research and manufacturing facilities in Victoria, achieving critical accreditations to enable the manufacture, sale, and export of human health in vitro diagnostics. 

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