Interview with Carl Gibson, chief executive of Complementary Medicines Australia

Australian complementary health: State of the industry 2015

By RJ Whitehead

- Last updated on GMT

Australian complementary health: State of the industry 2015

Related tags Complementary medicines Chief executive Australia Regulation

Although a jolly affair, the Complementary Medicines Australia annual conference a year ago took place to a backdrop of concern over the so-called race to the bottom in consumer preventative health.

Speaker after speaker took the podium to warn of a disturbing trend that was beginning to shake the industry: the practice of discounting in pharmacies across Australian cities. Australian companies had been suffering even more compared to their counterparts in countries like the United States, some said. There was nothing that could be done other than wait it out and hope for the best.

Carl Gibson, chief executive of CMA

It’s surprising how things have changed in the 364 days leading up to the 2015 CMA conference. Thursday’s event will no doubt be illuminated by bright cheer after a year that had probably not been anticipated by many of the delegates last year. 

Even in the face of recent headlines that have highlighted challenging times for China’s economy, many Australian natural medicines manufacturers and ingredients suppliers have seen their fortunes improve considerably through redoubled demand from east Asia’s vast market.

Signs of growth had started two years ago; the last 12 months confirmed them. In just 24 months, exports to Asia had grown by 36%, according to figures from AusTrade, Australia’s trade commission for exports. 

South Korea had overtaken New Zealand as Australia’s top export market. Over half the countries in the top ten list of complementary medicine exports were now in the Asian region, where there remains continued healthy demand for Australian products.

And this isn’t even reflective of the true situation, Carl Gibson, CMA’s chief executive, believes.

Anecdotally, the quoted figures are just the tip of the iceberg. They only apply to sizeable shipments when even more goes in the way of smaller exports that don’t register on these figures​,” he says. 

To put it into context, some Chinese companies are even coming into Australia to buy up stock to then export back to China. This leaves a shortage on shelves for Australian consumers​.” 

Gibson says that many city retailers are being forced to ration homegrown products, which a year ago would have been unheard of. From race to the bottom there is now a vacuum, meaning that companies will necessarily ramp up production, which in turn will hopefully result in Australian job creation and more competitive prices. That is indeed a rosy situation.

It is no secret that Asian countries like China have struggled with the quality and provenance of products made there, leading to consumers who are increasingly health aware to look to overseas manufacturers for nutraceutical products that they consider to be safe. 

Australia’s regulatory system is one of the world’s toughest—if not the most exacting of all—and that alone gives the country a distinct advantage as Asian demand goes gangbusters.

I’ve just come back from Supply Side West in Las Vegas and I’ve even been speaking to companies who now want to operate through Australia because they understand that the Therapeutic Goods Administration [TGA, the regulator] is much stricter than their own FDA​,” says Gibson. 

Indeed, he reveals that three American companies have already been looking to distribute to Asia through Australia’s regulatory system, though he isn’t able to say which ones for the time being. 

Next on the burgeoning Asian horizon could be India, with which Australia is at the very early stages of negotiating a free-trade agreement, following deals with China and South Korea, as well as the Trans-Pacific Partnership, which was recently agreed by 12 Pacific Rim nations.

They need quality products there and Australia can satisfy that need. You're giving them access to highly regulated complementary medicines which India hasn’t had before​,” says Gibson.  

Last year, we described the environment as the race to the bottom. I actually optimistically viewed these trade agreements as driving the manufacturing quality and quantity of products further up. Consumers in India will want and expect a higher level of quality and efficacy in their products going forward​.”

If an agreement is eventually signed with India, a highly protected market filled with its own systems and nuances, there will be much work for Australian companies to do before they can enter it. Tariffs must be right, as must be the business environment before CMA can endorse doing business there. Though the way that many businesses have adapted to the east Asian market will be encouraging.

This is something Australian companies will have to develop. You have to develop your business strategy into the local psyche​,” says Gibson.

On the home front, companies still have challenges in spite of their successes to the north. The scarcity of products on shelves will tax manufacturing capacity, and observers believe meeting the increased demand will be essential over coming months.

The government’s plans to reduce red tape in the industry as part of ex-Prime Minister Tony Abbott’s review of regulatory bureaucracy already appears to be bearing fruit—even before the review has even been completed. 

The industry has begun to see some new ingredient approvals, with CMA working closely with TGA to recognise ingredients that may not previously have been on the register, or not been able to be used by Australian brands. 

This is certainly a departure for the Australian regulatory system. To get an ingredient on the register has traditionally been a long, onerous and expensive task, leading to a stifling of new ingredient activity. 

These recent actions have been a good start. If we could see more events like this taking place, whereby TGA recognises that new ingredients being available in other very similar markets like Canada and Europe, that are equally tightly regulated, then that can only be good for industry​,” says Gibson. 

It should also benefit innovation, for which investment has been lacking in recent years. Gibson sighs when he says wryly that it is still “business as usual​” with the National Health and Medical Research Council (NHMRC), which allocates funds for public sector studies. 

The complementary health industry has been demanding a change in the NHMRC’s approach towards research in preventative medicine, when its focus has often been concentrated on pharmaceuticals. However, Gibson is “heartened​” that the council has appointed a new chief executive, Anne Kelso, who he hopes will send more research dollars in the direction of complementary medicines. Indeed, Professor Kelso is a strong advocate of investigator-led research.

Gibson expects to stay focused over the next 12 months on campaigning for greater research allocations from the NHMRC and pushing for more deregulation from a government led by a new prime minister, after Abbott was dethroned by his own party—a move the CMA chief executive doesn’t believe will have much impact on the industry he represents.

We are hoping that the expert panel on deregulation will make its recommendations to ministers so we are looking forward to working closely with the government on delivering those regulations to take out some of the needless bureaucracy and make it easier for companies to advertise and promote their products​,” says Gibson. 

We have an increased budget submission, which will be ready next month, so we can start the rounds down the road on the hill in Canberra to also encourage the government to invest in research and development​.”

Even in a positive environment providing the backdrop for this year’s CMA annual conference, “for an advocacy organisation, our work is never done​,” says Gibson.

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