Quality of Life

Global Orthopaedic Technology

Leading Western Sydney-based orthopaedic implant designer and manufacturer, Global Orthopaedic Technology, has a problem. And an opportunity.

Global is the country’s largest Australian-owned manufacturer and distributor of implants and instrumentation for the orthopaedic device industry, yet it is easier to market the company’s products in the US and Europe than at home in Australia.

The very idea of exporting artificial knees and hips to the US, with its massive healthcare multinationals, may strike the reader as similar to bringing coal to Newcastle, but the good news is that American companies in this field have a limited ability to act fast and develop new technologies. Global, and others in the business of devising better means of improving patients’ quality of life, are good at precisely what Australia is always being praised for: innovative research and development (R&D) and high-quality manufacturing and marketing.

For example, Global’s Australian designed and manufactured Paragon™ hip replacement is being exported to the US, the world’s largest orthopaedic implant market, while its high-performance GRU™ knee replacement has been used in successful robotic surgery performed in the United Kingdom.

But like many other Australian manufacturers, Global is being compromised by often archaic regulation and bureaucratic processes. No one disputes the need for stringent regulation of medicine in general and orthopaedic surgery procedures in particular. But it may puzzle many people, especially those patients limping on imperfect legs and hips or victims of serious sports injuries, that the barriers to the commercialisation of a knee or hip prosthesis made in Australia are higher than those for a basically similar product made in the US. There are thousands of Australians walking around today on US made hips and knees who could be walking on domestically designed and produced prostheses instead.

Global Orthopaedic Technology’s co-founder and director Steve Banks understandably takes a dim view of this odd situation. He is hoping that the new federal government will work with industry to address the situation and improve the regulatory process – something which affects most businesses in the country, not just the medical sector.

Assistant Treasurer and Senator Arthur Sinodinos, has expressed a commitment to reducing red tape, though he has been initially concentrating on the finance sector – tax and superannuation, financial advisory services and consumer credit. However, last November he spoke to The Australian about other areas: “Federal government wants to see more international corporate success stories based on innovation, such as bionic ear company Cochlear, blood products company CSL and sleep apnoea company Resmed.” In his first major interview since taking the key role, a portfolio that includes superannuation and financial services, Senator Sinodinos said the Abbott government was keen to encourage more Australian companies to be able to commercialise local innovation.

Prime Minister Tony Abbott had previously said: “Red tape is one of the most significant impediments to innovation. Since 2007, the Rudd/Gillard Government has added over 16,000 regulations and repealed less than 100. The Coalition has established a Deregulation Taskforce, chaired by Senator Sinodinos, to reduce the regulatory burden on businesses by at least $1 billion a year. The Coalition wants to work with industry to identify the blockages that hinder innovation and risk taking.”

At the launch of the Coalition’s Policy to Boost Productivity and Reduce Regulation in July 2013, Senator Sinodinos said: “Often there is this pressure to do something – show you’re doing something – and the way we do that is often to say: ‘well we’ll pass a law or we’ll pass a regulation.’ But the fact of the matter is… it’s this cumulative impact of Commonwealth law, State law, local regulations, which is impacting on business – particularly smaller businesses who lack the infrastructure to deal with all of this.”

“And so what often happens is, particularly smaller businesses end up not really observing everything they should be observing. They end up in trouble, because they can’t keep up with this whole process. And what that means, of course, is that we stifle innovation and creativity. Where there are excessive costs to regulation, we want to root them out of the system, but we want to do it in consultation with the people who are directly affected by that sort of regulatory impact.”

So while Steve Banks has some reason for hope that promises might be turned into action, there are still concerns. He is especially worried about a second tier of legislation on top of the Therapeutic Goods Administration (TGA) that significantly disadvantages domestically manufactured artificial joints. The effect is a time lag of close to four years for a domestic manufacturer to gain approval for a new product – three years for running clinical trials and a further one to two years in submitting and gaining the necessary regulatory and reimbursement approvals.

For companies like Global, this additional layer of red tape is significantly compromising the ability to fund ongoing research and development in the medical device sector and further grow their business, locally and into the overseas market.

The products in the Global portfolio are not simply imitations of existing devices. In the spirit of innovation, the company has pioneered techniques to improve bone remodelling in total hip replacement surgery. The Paragon™ hip system’s patented design has innovative features to improve the patient’s bone integration into the implant, which subsequently promotes the long term survivorship of the device. Global is also adept at designing products that can be used for a wider demographic spread, while many of the multinationals concentrate on the most numerous proportion of the population. Implants need to be carefully selected for fit since patient needs vary by race, gender and physical size.

However, the industry suffered when DePuy of the US, a division of Johnson & Johnson, ran into trouble with its radical ASR hip system. This was launched in 2005, with some in the industry claiming it had been fast-tracked by the FDA in the US without proper clinical trials. De Puy did not, so to speak, have a leg to stand on and withdrew the system in 2010, “after receiving new information from the National Joint Registry of England and Wales as part of the company’s ongoing surveillance of post-market data.” [DePuy’s comment]

Since the debacle, the trend in the industry has been to back known technology, refining what already works instead of innovating. It appears also that, as a result, the TGA may have overreacted. No one disputes its good intentions of protecting the Australian public, but the burden now being placed on respected domestic manufacturers is, according to Global, considerably greater than elsewhere. It is easier for Global to market its products in Europe and the US than at home, and Steve not unreasonably feels this is unjust, not to mention illogical. European Union (EEC) legislation on important items, such as vehicle emissions, are used worldwide – why should medical standards not also be treated as global?

In the public sector, there is a lengthy waiting list for joint implant surgery. In the private sector, where the vast majority of these procedures take place, the TGA’s extra tight restrictions are having the effect of holding back the domestic manufacturers, several of whom have gone to the wall recently, according to Steve. The multinationals can afford to fund the lengthy approval process, he argues, but the smaller local companies can’t. It was hardly a complete coincidence that, the day before we spoke to Steve, Senator Sinodinos’ star “bionic ear company Cochlear” saw its shares dive after a disastrous first half year performance.

“Australian medical technology, especially in the orthopaedic sector, is held in very high regard by the Americans,” says Steve. “We are seen to be quite nimble in terms of getting product to market compared to the massive multinationals. What makes us attractive is the way we can keep up with trends and technology. We have just received a very significant order for one of our hip systems from the US and we are very pleased and proud.”

But the company remains frustrated at having to wait so long and invest so heavily in the analysis of clinical trials (which duplicate what has been documented in Europe and the US) before gaining approval for its products here at home. Steve is staggered that such a situation has arisen. He and the team at Global Orthopaedic Technology are consulting with the new Abbott Government and are now hopeful that the Government’s pledge of being “open for business” rings true and regulatory barriers like these are removed for the sake of Australian innovation and manufacturing.

For more information about Global Orthopaedic Technology, please visit http://www.globalortho.com.au/.

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