Importing goods into Australia under the Therapeutic Goods Administration

THE RISKS OF APPOINTING A DISTRIBUTOR AS SPONSOR AND HOW TO STRUCTURE TGA COMPLIANCE THE SMART WAY

In Australia, all therapeutic goods must be approved by the TGA before importation or sale, and a local sponsor is required to manage compliance and hold approvals.

While using a distributor as sponsor may seem practical, it often results in loss of control over product registration, regulatory handling and market continuity—highlighting why foreign manufacturers should consider owning the sponsorship through an Australian subsidiary.

VIDEO SCRIPT

Today we’re in Albania on the Albanian Riviera in a small coastal village called Vuno. I would like to talk briefly today about some requirements for foreign businesses wishing to import goods which are classified as therapeutic goods and fall under the oversight of the Therapeutic Goods Administration, or the TGA as we call it here.

All goods classified as therapeutic must be approved by the TGA before they can be sold in Australia, and even before they can be imported into Australia. Therapeutic goods cover a very wide range of products. They include traditional medicines, alternative medicines, some cosmetics, vitamins, minerals, herbal and aromatherapy products and medical devices. Medical devices themselves range from sticky plasters or band aids through to products such as pacemakers, artificial hips and contact lenses. The process for approval, depending on the product, is quite rigorous and can include a requirement that the factory where the goods are manufactured be inspected and approved.

Any foreign business who wants to import therapeutic goods into Australia requires a local sponsor for the products. A local sponsor is responsible in Australia for the importation or arranging for the importation of the goods into Australia and is responsible for applying to the TGA to have the therapeutic goods included on the Australian Register of Therapeutic Goods before they can be sold in Australia.

The sponsor must be an Australian resident. Importantly, that can either be a person or an Australian incorporated body. The sponsor has fairly onerous ongoing legislative requirements to fulfil under the Therapeutic Goods Act. These include:

• Allowing the TGA to enter and inspect the premises, including outside of Australia, where the goods or devices are manufactured or located.
• Delivering samples to the TGA on request.
• Ensuring that the TGA has access to all technical documentation that demonstrates compliance with the relevant standards and obligation to provide information requested by the TGA within the TGA’s timeframes.
• Ensuring that any advertising material relating to the goods complies with the regulatory requirements.
• Reporting details of incidents, performance issues and any adverse events that occurred with the product in another country if the product was involved in the same batch or production run that was supplied in Australia.
• Taking corrective action where necessary, including being responsible for recalls and informing the public about any issues as needed and maintaining distribution records for the products supplied in Australia.

You can see that the sponsor is in a position of great power in respect to the TGA. In the last five to ten years, I’ve come across quite a few businesses who have appointed their local agent to be the Australian sponsor of the goods that they wish to import and distribute in Australia. This might seem like a cheap, easy and practical option. However, it is important to understand that it is the Australian sponsor and not the foreign manufacturer who holds the relevant TGA approval that permits the importation of the goods into Australia.

I have repeatedly seen difficulties arising in the relationship between the Australian distributor and the foreign business who is actually the owner of the goods. This has then caused problems with the sponsorship of the goods. As the sponsor controls the relationship and approvals with the TGA, it is the only entity who has the power to deal with the TGA and the sponsorship. This includes cancelling the sponsorship and removing the goods from the TGA register. It also includes having control over the details of the recipes and the chemicals used in the products.

There are three particular scenarios where I’ve commonly seen this become an issue:

1. Where the sponsor is a disgruntled employee who leaves unhappily for whatever reason, cancelling the sponsorship at the same time.
2. The sponsor is the local Australian distributor and difficulties have arisen in the relationship which have then impacted the sponsorship and the registration of the goods with the TGA.
3. Finally, there’s a complaint made to the TGA about the product and the control of how that complaint is dealt with is in the hands of the Australian sponsor and not the manufacturer and this has led to difficulties down the track where the distributor has made certain representations to the TGA without the manufacturer’s knowledge.

For this reason, I typically recommend that an Australian corporate entity owned and operated by the foreign parent company is set up to hold the TGA sponsorship. While there are some costs associated with that and you need to have an Australian resident director, this keeps the sponsorship within the control of the foreign owned parent company. Directors can easily be removed from a company without affecting the sponsorship.

 

If you have any questions about the importation of goods into Australia that fall under the oversight of the TGA or more generally, please do not hesitate to contact me.

 

Particularly if you’ve had a dispute with your Australian dispenser or there’s one brewing. I would be happy to give you advice on either how to best set up your corporate structure within Australia to avoid issues, or if you have an existing issue, to partner with you to help you resolve an existing dispute.