The CSIRO is warning that slow and outdated regulation is holding back Australia's medical technology and pharmaceutical industry, and it risks losing work to countries with more "agile" systems in place.

Key points: CSIRO suggests allowing product testing before going through formal regulatory approvals

CSIRO suggests allowing product testing before going through formal regulatory approvals Says "next-generation technologies", such as customised implants, should be available through public, private health channels

Says "next-generation technologies", such as customised implants, should be available through public, private health channels Despite sector decline, industry confident more investment is being attracted

The organisation has produced a roadmap for the future of the $4.4-billion industry, which currently employs 48,000 Australians.

"Australia rates very high on innovation and discovery and sadly we're almost on the bottom of the developed world with regards to translation of that into commercial success," CSIRO health and biosecurity director Rob Grenfell said.

He said taking innovations such as 3D-printed skull implants or targeted chemotherapy drugs through extensive trials could be incredibly expensive and slow in Australia, compared to in other countries.

"To give you an example, we have recently licensed a bowel cancer sensing test, which of course is very, very accurate for detecting recurrent bowel cancer," he said.

"We've managed to license this in the US and it's being now marketed through the largest pathology company in the world, yet we're still taking it through the pathways of our own regulatory system."

Dr Grenfell said the CSIRO acknowledged the importance of a "robust" regulatory system, to protect patients and maintain quality, but it could be more streamlined.

Cut testing red tape: CSIRO

The roadmap suggested companies be allowed to test certain products before going through the complex process of formal approvals, in what is known as a "regulatory sandbox".

It also called for changes so next-generation devices, like customised implants or bionics, can be readily available through public health care and private insurance.

"Regulation of new technologies is a very tough one for regulators. They haven't been very nimble or able to move and Australia's regulation system is your case in point," Dr Grenfall said.

"So we're finding a lot of technologies are being taken offshore because of the environment not being too favourable to get it to market here."

But CSIRO manufacturing director Keith McLean said the future possibilities were exciting if the right settings were put in place.

"What we're really trying to do here is create the jobs and the technologies of the future, create exports for Australia, you know our market in this space," he said.

"The internal market isn't big enough so we need to actually be globally connected if we're going to make a difference."

Four key areas of focus

The CSIRO's roadmap recommends the industry, which ranges from implantable devices to digital health records, should focus on growing four priority areas:

1. Smart devices, implants and bionics 2. Accelerated development of pharmaceuticals 3. Manufacturing high-value pharmaceuticals 4. Diagnostic and data products and services

"There's a lot of data generated in the healthcare system generated at the moment, and that data is often not well connected," Dr McLean said.

"It's often poorly interpreted and so there's really opportunity if you can pull that data together, do that in a way that gives people confidence around their privacy and cybersecurity, we can interrogate that data and help use that to develop new technologies that are going to improve people's health outcomes."

Investment progress despite sector decline

A separate report by the centre set up to promote growth in the industry, MTPConnect, found the value of the sector declined between 2010 and 2015.

But MTPConnect CEO Sue MacLeman said progress was being made in attracting investment and reducing red tape, and the industry had made optimistic predictions about its future.

"We said an additional $18 billion to the economy over this 10-year period, 28,000 new jobs in the sector, and they're smart innovative jobs for the future — that really will set up Australia in a competitive place," she said.

"And 200 new companies that really can drive the commercialisation of those technologies to the global stage."

The Federal Government has already invested $250 million in a biomedical translation fund, to help commercialise research, and the CSIRO said state governments were also playing their part.

But the roadmap also called for more to be done to coordinate private investment, to train appropriately skilled staff, and to improve internet speeds and accessibility.