TGA approval process for overseas manufacturers

Many overseas manufacturers are surprised by Australia’s broad view of what is a therapeutic product in need of regulatory approval. Essentially, if your product makes a health claim, it must be:

1. Approved by Australia’s Therapeutic Goods Administration (TGA)
2. Entered on the Australian Register of Therapeutic Goods (ARTG)

Only once these two things have been done can the product be imported into and sold in Australia.

What products need TGA approval?

It’s impossible to present an exhaustive list of products that need TGA approval before you can sell them in Australia. Whether your product needs TGA approval depends on what claims you make about the benefits of your product. Two products might be almost identical, but only one needs approval — the one that makes health claims.

Examples of products that need TGA approval include:

• Medical devices and medicines
• Complementary medicines
• Vitamins
• Sunblocks
• Rehabilitation aids
• Adhesive bandages
• Some types of cosmetics and disinfectants

However, that list is far from complete because the regulation is triggered by health claims, not categories of products.

To know whether your product needs approval, you should take expert advice on whether the claims you make about the product bring the product within the TGA’s scope. You don’t want to have your product in front of Australian customers only to be seized by the TGA because it isn’t approved.

We have more comprehensive information in our free guide to entering the Australian market confidently when your products need TGA approval.

What to do if your product needs TGA approval

If your product is one of the many that requires TGA approval, you’ll need an Australian sponsor to apply for the approval. The TGA requires products to have an Australian sponsor so there is someone in Australia:

• For the TGA to work with
• Who can be held responsible for the product

Your Australian sponsor can be:

1. Your distributor
2. An Australian company owned 100 per cent by you
3. Another Australian person or company

The requirement for a sponsor is not intended to make it hard to do business in Australia, so sponsorship isn’t difficult to arrange. However, if you don’t set up the sponsorship arrangement carefully, you can give the sponsor significantly more power than you might intend.

The critical considerations in structuring a sponsorship agreement are discussed in detail in our free guide to entering the Australian market confidently when your products need TGA approval.

Who can sponsor a product with Australia’s TGA?

The most common sponsorship options for manufacturers exporting products to Australia are:

1. Arranging for your distributor to be your sponsor
2. Establishing an Australian subsidiary to be your sponsor

New entrants to the Australian market are often attracted to the first option, giving their distributor the sponsorship. They think this will be simpler, less onerous and less expensive than setting up an Australian subsidiary. This is why caution is advised in selecting the right option for the long term.

Option 1. Your distributor sponsors your product with the TGA

Distributors are generally open to operating as product sponsors. That can make the distributor seem like the easiest choice for a sponsor. However, if you rely on your distributor to sponsor your product with the TGA, you’re counting on your distributor:

1. To do the right things to get TGA approval without avoidable delay
2. To deal with the TGA appropriately on an ongoing basis, including in the event of any adverse reaction, complaints or if a recall is ordered
3. To keep secret your valuable confidential information, such as your product’s composition

If your Australian distributor is to be your sponsor with the TGA, your distribution agreement should cover that sponsorship. In particular, you need to be aware of:

1. The considerable power such an arrangement gives your distributor in the event you have a dispute
2. The role your distributor will play in the event of an adverse reaction or recall

Overseas manufacturers are often unaware of the potentially costly pitfalls of giving a distributor too much responsibility for their product. Manufacturers don’t realise how little control they have once a distributor is also a sponsor.

The risks (and ideas for mitigating them) are laid out in our free guide to entering the Australian market confidently when your products need TGA approval.

Option 2. You establish an Australian subsidiary as the sponsor

You can establish your own Australian company to act as your sponsor with the TGA. Establishing an Australian company avoids the risks associated with giving someone else control over:

1. Your product’s Australian approvals,
2. Your valuable confidential information
3. Your brand reputation.

Forming an Australian company to hold your TGA approvals will not affect your ability to appoint an Australian distributor. It doesn’t mean you need to trade through that company. A subsidiary can be set up to do nothing more than hold your sponsorship.

Setting up your own subsidiary to hold your product registrations with the TGA directly is simply a cost-effective way to maintain complete control of your product in Australia.

Option 3. A middle way to sponsorship

We have established a registration-holding company13 for the convenience of clients who:

1. Don’t want the risks that come from giving a distributor all the power of a sponsor
2. Are not yet ready to establish an Australian subsidiary

For these clients, we have created an entity to act as their Australian sponsor14. If you choose to go down this route, you, your lawyer and your sponsor can always act as one team. We can work together on every decision in:

• Applying to the TGA for product approval
• Submitting information to the TGA after approval, e.g. in the event of a complaint
• Issuing public statements and communicating with customers

As with any sponsor, the entity will have legal obligations as your product’s sponsor. The entity must meet those obligations, but working this way:

1. You don’t give your distributor additional leverage in the event of a dispute
2. You’ll be consulted on every submission to the TGA, so you can be sure the information is correct
3. As your lawyers, we can be sure information provided to the TGA never damages your interests in the event of litigation, if that was unavoidable
4. You’ll have full input into any public statements that need to be made

Entering an exciting market

The Australian market is as receptive as any in the global economy to the benefits of imported products, from cosmetics to million-dollar manufacturing machinery. We have a mature market and an established, transparent legal framework. The TGA wants to give approvals where it can, and the need for sponsorship is not meant to keep exporters out of this vibrant market.

This post gives you a general view of what is involved with getting TGA approval. However, the situation can change at any time. You should not, therefore, rely on this article as specific to your situation, current or exhaustive.

We are happy if this article has helped you but downloading or reading this doesn’t create a solicitor and client relationship. Instead, we would welcome the chance to talk to you to see if forming that relationship would be appropriate in your situation.

At Argyll Law, we bring decades of experience in law, including many years helping companies outside Australia set up their businesses on the firmest footing. And if you need TGA approval, we know how to set up your sponsorship in a way that gives you the most autonomy and protection. And that relationship continues with us providing ongoing advice and support on the ground in Australia.