A local focus for Australian company Evolution Surgical

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In the first of a new series, HealthDispatch is publishing profiles of emerging Australian medical technology companies. 

Evolution Surgical

In an ideal world, no one would need any of the products manufactured by Sydney-based MedTech SME, Evolution Surgical.

Yet for Australians with severe spine disease, acute injuries, debilitating pain, or cancer of the spine their products can be life-changing and life-saving.

Jack Lancaster, the company’s 32-year-old CEO who counts many of Australia’s leading neuro and orthopaedic surgeons as his customers, describes the role that this Australian-grown orthopaedic business plays in producing critical devices used in spine surgery.

“Evolution Surgical is unique in the Australian spine market as it operates across the full value chain – from design through to manufacture and distribution,” says Mr Lancaster.

“This means that the company can cater to Australian surgical preferences such as larger-sized implants, or custom instrumentation to suit the clinical preferences of Australian surgeons.

“Evolution Surgical develops and manufactures products with design input from Australian surgeons, to be used by Australian surgeons, for Australian patients.

“Companies based overseas catering for a global market aren’t able to tailor their products to the preferences of Australian customers in the same way.”

Mr Lancaster says the margins are not as strong for smaller Australian companies like Evolution Surgical as they are for its global competitors. Yet he believes there must be a place in the market for MedTech companies to exist solely to serve the Australian patient.

He says he is concerned about the potential impact of proposed changes to the Prostheses List.

“Evolution Surgical invests heavily in research and development – in fact, it is our biggest cost.

“If our revenue is cut, that is where we may have to consider reducing our budget. This would mean less innovation if we needed to stretch the life of products out longer.”

Mr Lancaster says he believes prostheses pricing should support access to a choice of high-quality technologies for patients seeking private health care.

“We believe Australian consumers with private health insurance want and deserve access to the best and latest products. I think many people with private health cover would be shocked to learn that access to technology is greater in the public than in the private system – they are paying a premium price but offered reduced portfolio of treatment options.”

He also stresses the potential for streamlining regulatory processes to deliver faster access to approved technologies for private patients.

“The TGA is one of the strictest, and best regulatory bodies in the world, but currently it’s often more prohibitive to get a new product on the Prostheses List than to get it approved by TGA.

“This means that consumers paying a premium price often don’t have access to the latest technology due to the extra hurdle and requirements of the Prostheses list; compared to public patients who can access any TGA approved product.”

Mr Lancaster says he urges caution on pricing reform to ensure it does not undermine Australia’s attractiveness as a leader in the introduction of new technologies.

“Currently, Australia is one of the first markets to receive products. This makes no sense based on our geography or population size, so it is mainly due to our stable pricing structure.

“If prostheses prices are driven down too far, international players won’t want to release their latest technologies here. This means that Australians will be at the back of the global queue for new and innovative devices.”

Mr Lancaster says the adoption of a diagnostic related groups funding model will incentivise providers to ask ‘what is the minimum level I can supply for this procedure?’

“This model would mean that smaller companies like ours, who exist solely to serve Australian surgeons and patients, will get priced out of the market. It really pulls the rug out from beneath us."

He also warns against any changes that could make Australia an attractive destination for poorer quality imports.

“If there is a reduction in price we would see a shift away from competing on quality to competing on cost and as a result, there will be an influx of low-quality devices coming to market.”

“This is not what Australian consumers want – particularly those paying premium prices for private health cover.

"The DRG model would be a race to the bottom – and the loser will be Australian patients. If we want private health care to deliver value to patients, we need to ensure that medical technology is properly funded.”