Australia’s high standards for pharmaceutical goods present a solid brand overseas, but there is a tangle of red tape to unravel before shipping products abroad.
The health industry is one of the most regulated industries in Australia and our rigorous standards generally surpass those of most other countries. Unfortunately, while our trustworthy reputation is good for representing our health products overseas, regulation by the Therapeutic Goods Administration (TGA) is often a barrier for exporters.
The pharmaceuticals sector of the health industry becomes a tangle of red tape. Defined as any commodity related to medicinal drugs, pharmaceutical goods comprise medicines for human and animal ingestion or other types of consumption (via injection, absorption, sprays and drops, for example), including complementary health products and the raw materials used as ingredients for medicines. Overlaps include products from bioscience and biotechnology as well as medical supplies and equipment which may have components for consumption, for example, an EpiPen, which is an injecting device containing an adrenaline substance to treat severe allergic reactions.
Dr Tony Lewis, executive director of the Complementary Healthcare Council of Australia (CHC), says regulation is a major problem for companies looking to export and sees bureaucracy as a barrier to potential exporters. “There’s a resistance by the TGA around standards, perhaps they feel that the standards here are the only appropriate standards,” he says. “Our view is that they’re appropriate in the local market but for export they’re an impediment.”
The council has lobbied to remove regulatory barriers, in particular the rule that forces companies to comply with Australian regulations (particularly the labelling rules) even if the product is destined solely for the export market. This compliance, and the duplication it manifests, becomes a cost factor that many small businesses see as a discouraging expense. “We'd like to see some freeing up of that process, to have products that are purely going to be exported just comply with the requirements overseas. A product sold in Australia that would require a warning label here has to carry that label into the overseas market where, for the most part, they're not required. So that puts the person exporting here at a disadvantage,” says Lewis.
“In Australia, complementary medicine is regulated as medicine whereas similar products marketed in the US are referred to as dietary supplements. They're regulated as food so they don't have to comply with codes of manufacturing practice, they don't have to put the warning labels on and comply with requirements for the height of lettering and everything else.”
The Motive
So, what is the attraction in exporting pharmaceuticals? Taking maximum advantage of intellectual property (IP) is one reason. A standard patent lasts 20 years, so after the research and development phase many pharmaceutical companies may only have a few years to capitalise on their exclusive competitive advantage in the open market to recoup costs. Because Australia has such a small population, worldwide exposure reaps benefits through increasing demand for product through volume.
Protecting IP is an important part of a pharmaceutical exporter’s worldwide strategy. IP Australia is the government body that holds patents here. As Australia holds a number of agreements with other countries with regard to patents, this patenting body can also help businesses navigate international patent systems. Although there are fees involved, it is a good way to ensure you have a unique product to sell and protection for it.
The government also has a number of programs in which businesses can participate to simplify the export process. For example, Austrade provides advice for businesses looking to export, others may choose to undergo an export capability assessment, which will look at a business in the context of the industry and the specific countries targeted for export.
Maverick Biosciences, from Dubbo in NSW, exports products to the biopharmaceutical sector to use in the manufacture of medication, vaccines, and nutritional products. They have used Austrade’s assistance to make the export process easier–for example, through Austrade’s relationships with trading partners such as Japan, one of their main clients. "It's been extraordinarily valuable to have relationships with people in our target markets," says Maverick co-founder, Cameron Crowley.
Exports comprise 98 percent of Maverick's business, which Crowley attributes to their ability to get the details right to make things easier for the importer. “We produce and supply material exactly as per their manufacturing and regulatory needs while meeting rigid requirements to ensure timely and trouble free importation,” he says.
The unique characteristics of pharmaceutical products means these goods also have very specific requirements when it comes to transport including temperature and humidity control, product handling and freight security, to prevent products from entering the black market.
Greg Paradine is the commercial manager for the Life Sciences and Chemicals division at freight forwarding company DHL. "The biggest challenge in pharmaceutical exports and imports is temperature-control shipments. When companies do their clinical trials and product stability testing they do it at certain temperatures. For biologicals, the most stable temperature range is two to eight degrees because they'll get the longest shelf life. But for the freight world, two to eight degrees is the hardest temperature range to move something at, because we're moving it through so many different parties. It's easier if it's frozen or if it's ambient. For two to eight degree shipments, we become risk managers more than anything else."
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Service First
According to Paradine, cost is a factor but is of little importance compared with reliable service which enables companies to streamline their product life cycles. "What a pharmaceutical demand planner will say is they want quality of service and regular service so they can manage their inventories and keep product loss or damage at a minimum. Cost really doesn't come into it."
By the time products reach Paradine, companies should have everything in order but he still needs to make sure his clients have all the necessary paperwork before he can move the freight. He advises that companies do their homework. "Knowing your export market, knowing how you're going to sell the product and make it available for sale is 99 percent of the way there," he says. "If they do that research properly at the beginning and have their approvals to sell the product into the export market, the rest can look after itself."
Access to the market is another important consideration. Crowley says the Japanese market has been good to them. "Japan is good due to a significant history of trade there, the regulatory framework is set up. Culturally they’re good to do business with–their word is their bond." Lewis nominates the US as one of the easiest export countries for complementary health products, but warns it's also a saturated market.
On the flipside, Crowley singles out Europe as a difficult customer "due to regulatory changes that the member states are often disagreeing about for our type of materials. There are many grey areas”. Lewis says Chinese provinces present similar disparity. "In China you have to go through separate regional authorities to get your product approved and the cost is enormous, which I think is an export barrier. The market is potentially huge so it's tempting. Culturally it's quite different, so it's quite a risky venture."
Cultural considerations usually apply to pharmaceutical products derived from animals, and companies need to be careful exporting products deriv
ed from pigs to Jewish or Muslim countries, for example. Generally, however, synthetically produced goods and most plant-derived materials are culturally acceptable.
Finding Partners
Partnering with a marketing or distributing company in the destination country is also a smart move. One way to find a partner is to look at the various associations in the pharmaceutical industry of the destination country, for example the CHC equivalent in any country will probably belong to the International Alliance of Dietary/Food Supplement Associations (IADSA). Another way is simple word-of-mouth. "You want to get the right advice about your partnership before you get into it. It’s usually done on the recommendation from someone who has already used them and knows they’re honest and scrupulous and hard-working with all the support that your products are going to need," says Lewis.
Paradine agrees, saying partnering is a popular way to expedite the process. "The disadvantage would be if you don't partner properly. You run the risk of your product not getting where it should be in the time frame expected."
In Paradine's experience, not many small pharmaceutical companies export products. He says he tends to see more imports, for starters, and notes, "the number of small pharmaceutical companies around is fairly small compared to what the big guys do". But most exporters he sees are successful. "It's a very mature market. Very rarely does something move that doesn't have a specific requirement on the other end. They have the luxury of a stable supply chain. It keeps things ticking along.”
From a complementary health perspective, Lewis says the 2003 Pan Pharmaceuticals manufacturing scare still affects companies today. "Blackmores has a lot of export markets around the region. One of the reasons they're successful is that when the Pan crisis happened they weren’t affected, because none of their products were manufactured by Pan. Other companies had their products manufactured by Pan and their products were taken off shelves and destroyed. A lot of those companies never got back into the export market.”
The difficult part of exporting pharmaceuticals is the initial paperwork, but it may just be the right time to start the process before the market becomes crowded. When the regulatory environment opens up in the near future, you should be ready.
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Exit Australia
Before you export you'll need to make sure your product complies with regulations set by the Therapeutic Goods Administration (www.tga.gov.au).
If you hold your product under a patent, you may need to approach IP Australia (www.ipaustralia.gov.au) to cover your IP overseas as well.
If you are exporting plant or animal material, then see the Australian Quarantine and Inspection Service (www.daffa.gov.au/aqis) website for specifications on exportation.
Pharmaceutical products with chemical components may need to comply with Civil Aviation Safety Authority (www.casa.gov.au) guidelines for hazardous goods travelling by air. Your freight company should also be able to help you with information on restrictions.
International Regulatory Bodies
Health Canada: www.hc-sc.gc.ca
China State Food and Drug Administration: www.sfda.gov.cn
European Medicines Agency: www.emea.europa.eu
Hong Kong Department of Health Pharmaceutical Service: www.psdh.gov.hk
India Central Drug Standard Control Organization: www.cdsco.nic.in
Indonesia Ministry of Health: www.depkes.go.id
Japan National Institute of Health Sciences: www.nihs.go.jp
Malaysia National Pharmaceutical Control Bureau: www.bpfk.gov.my
New Zealand Pharmaceutical Management Agency: www.pharmac.govt.nz
United Arab Emirates Ministry of Health: www.moh.gov.ae
United Kingdom Medicines and Healthcare Products Regulatory Agency: www.mhra.gov.uk
United States of America Food and Drug Administration: www.fda.gov
