Carrots and sticks for Aussie medtech

7 minute read

Silicon Valley or the 'valley of death' – do medtech start-ups have a home Down Under?

The Australian medtech ecosystem is a mixed bag of carrots and sticks for local companies.

Five industry players have weighed in on what’s needed to keep home grown talent on turf Down Under.

Ross Sutherland is business development director at US-based medtech scale-up EBR Systems. He said that the Australian landscape for medtech has both incentives and hurdles for innovators with bureaucracy putting a “continuous downward pressure” on medical companies.

“A lot of really innovative small medtech companies get beyond the innovating phase and look overseas, because if there’s too many barriers from a regulatory and reimbursement point of view then it might just be all too hard,” he said.

However, Australia also offered some strong incentives which is why EBR Systems is listed on the Australian stock exchange despite being founded and based in Silicon Valley in the US.

“We were drawn to Australia for a couple of reasons,” said Mr Sutherland.

“There’s significant government incentives to conduct clinical research in Australia – R&D credits. About 47c in every dollar that we spend in Australia comes back to us so it’s actually a really attractive place.”

EBR Systems is at the cusp of commercialising a leadless pacemaker for heart failure patients. They’ve just finished an FDA study, a large clinical trial and are working towards commercialisation, Mr Sutherland said.

Mr Sutherland said he was seeing a rise in translational research institutes that foster Australian research with the sole purpose of it becoming a commercial product. The institutes are usually attached to universities that might be attached to hospitals, he said.

“There’s also various state or federal funding models that medtech companies can tap into that offer some significant amounts of money that are available to support commercialisation.”

Mr Sutherland mentioned the new National Reconstruction Fund (NRF) of $15 billion, announced in October 2022 by the Minister for Industry and Science, Ed Husic MP.

“It is a huge pot of money to support industries of value, and one of them is medical technology. There’s $1.5 billion allocated to medical manufacturing. EBR Systems probably won’t do this, but if we were a US company wanting to set up manufacturing in Australia, that would be something very attractive,” Mr Sutherland said.

Legislation was passed in March this year to establish the National Reconstruction Fund Corporation as a corporate Commonwealth entity to invest in projects in areas deemed as priorities for the Australian economy.  

Ian Burgess, president of the Medical Technology Association of Australia, said government incentives would assist and may make a difference for specific companies that receive funding. However, the NRF would not in itself solve the problem of “complex regulatory reimbursement pathways” that slow down market entry considerably, he said.

Mr Burgess said it was an example of the broken links in the industry value chain where incentives are provided by one hand while barriers are being created by the other.

“There’s a whole range of organisations that assist start-ups in Australia and they are very good. However, there’s no use just addressing one part of the value chain or one part of the evolution of technology. That’s just the start-up stage. It’s got to be the whole system approach.

“We’ve got a vibrant, thriving, local R&D and innovation sector but there can be a valley of death along the way where we lose those technologies. They just fall by the wayside, or we lose them overseas.”

Mr Burgess said he’s seen small Australian start-ups undergo the challenges of “the valleys of death” and then when they’re at manufacturing stage they look abroad.

“They say ‘I’ve now got to get through a regulatory process in Australia and then got to get through the reimbursement process. And who is going to pay for the solution?’

“They look at the US and see they can get to market more quickly. So, they say ‘I’m just not going to bother setting up manufacturing in Australia’,” Mr Burgess said.

Mr Burgess said the size and scope of the US market may also make it more attractive for certain kinds of technology.

Dr Katja Beitat leads health tech at Cicada Innovations, a deep-tech innovator based in Sydney. She agrees that the US or Europe have the potential for greater scale, offering “access to a larger market”.

“Australia also lacks relevant infrastructure, resources and skills to manufacture at scale, and there are better tax advantages for more mature ventures when they move overseas,” she said.

“These overseas advantages are greater still for certain types of technology. For example, in the field of AI and machine learning, Australia currently lacks the necessary investment in infrastructure, skills, and research to be able to be competitive at a global level.”

However, Dr Beitat said that a larger market does not guarantee success, and could also bring more competition. She added that success could be stymied by unfamiliarity with US mechanisms for healthcare reimbursements.

Dr Beitat was generally positive about the potential of the National Reconstruction Fund and said it will enable focus industries to build into “global clusters of innovation”.

She said more start-ups would be encouraged to stay in Australia if there was more competition in private funding or venture capital that would improve access to risk capital.

“Start-ups would also be encouraged to stay through changes to procurement patterns, and by providing Australian companies with preferred or facilitated access to government and public health systems as technology buyers,” she said

Dr Beitat also said medtech start-ups might also move overseas to have access to strategic partners.

Eldin Rostom is co-founder of, an Australian medtech that just graduated from a highly competitive, accelerator program for early start-ups in Seattle.

Mr Rostom said that the Creative Destruction Lab program in Seattle was “extraordinary” and allowed him to build significant momentum for the company.

He said the US had a “deeper pool of knowledge and experience” to learn from because of their larger number of medtech successes.

“Australia offers a lot of support from the government. I’m part of a start-up community with friends who are building healthtech and medical device companies. But the industry here is still maturing. It’s still underway,” he said. uses AI diagnostic tools to distinguish between multiple chronic nasal and airway disorders which present with very similar symptoms. is at pre-commercialisation stage and is moving on to their next phase of clinical development in their lab in Port Melbourne.

Mr Eldin commonly gets asked why he doesn’t move his business to the US.

“I deeply believe that Australia is truly is one of the best places to build deep-science-based companies,” he said.

“We do a fair bit of clinical work in the US but we mainly do our research and development in Australia. We’ve got great infrastructure, we’ve got great scientists and research, great talent. The only thing we are slightly lagging behind in is capital, and that’s just due to our sheer size difference compared to the US,” he said.

Michelle O’Brien is strategy and content director for Wild Health Summits and Health Services Daily. She said Australia’s lack of interoperability was another major barrier to innovators staying on home turf.

“The new medtech solutions are creating data that is incompatible with Australia’s existing digital infrastructure,” she said.

Ms O’Brien said that new medtech was creating a broad range of data, much of it generated by the patient. This is at odds with Australia’s old digital health infrastructure which can’t accept data such as a photograph or a health assessment form, she said.

“This wave of innovation is about consumer-driven data but the old system is very much designed around the clinician. Those old systems were not designed to accept modern, consumer-pushed data,” she said.

Ms O’Brien says interoperability would provide a much broader market for new medtech.

So, is the grass really greener abroad?

Overall, key players in the medtech ecosystem said Australia has both strong incentives and “arduous” barriers to running a viable business onshore. What appears to be missing is an overarching strategy that aligns government incentives with regulatory and funding red tape.

End of content

No more pages to load

Log In Register ×