In our annual industry survey, half our respondents disagreed that continued buy-overs of Australian firms by Chinese and other Asian companies was good for the industry.
Only 16.7% agreed that continued acquisition would benefit the industry, while a substantial number (33.3%) were unsure if such a development had led to positive impact.
In the past few years, Chinese investors have been pumping huge amounts of money into Australian supplement firms. They invested A$2.55bn, A$1.35bn and A$1.58bn in 2015, 2016 and 2017 respectively.
The biggest deal so far was worth $1.69bn, with Biostime (now known as Health & Happiness) buying over Australian vitamin and supplement giant Swisse two years ago.
A string of high-profile acquisitions have followed since.
In January this year, China supplement giant BY-HEALTH bought over Australia probiotic firm Life-Space Group for $690m. Three months later, two Chinese private equity firms, JIC Investments and Tamar Alliance Fund, bought a majority stake in Australian vitamin manufacturer Nature's Care for a reported A$800m.
KPMG analysts forecast that Chinese investment into Australian health firms will continue to rise, as China's healthcare system matures and its population ages.
"As China's aged care industry develops and its healthcare service delivery sector matures, there will be a greater need for these high quality products and services, and more demand for the businesses providing them.
"Australia is becoming a highly sought after destination for healthcare investment due to the expertise of health professionals, availability of cutting-edge technology and high regulatory standards."
However, they also noted that there are only a small number of Australian supplement producers who have the capacity to harness growing international demand, which might change the direction of Chinese investments.
Elsewhere, our survey found that clarification over China's e-commerce regulations were viewed in a positive light in Australia and New Zealand.
48% of our respondents agreed that the clarification had improved their businesses, while 23% disagreed.
Earlier on, there had been widespread uncertainty about China's e-commerce rules. Chinese officials had initially planned to introduce more stringent rules, before deciding to keep the current system in place until January next year.
As such, many goods, including those bought by China daigou shoppers, will still be regarded as personal trade, rather than for commercial distribution, allowing overseas firms to bypass complex local registration requirements.
While China's online shopping scene is teeming with business, our respondents painted a different picture of e-commerce in Australia and New Zealand.
Less than half (48%) felt e-commerce offered the most opportunities for their businesses in the two countries. Some said e-commerce would steer the futures of trade, while some commented that e-commerce would work in the long term.
A total of 23% disagreed that e-commerce was the best sales outlet, while another 29% were still unable to weigh its pros and cons.
TGA and product innovation
Respondents remained divided on the impact of the new Therapeutic Goods Administration (TGA) regulations. While 41.7% said the new TGA regulations would encourage more product innovation, 40% admitted they were unsure.
Under the new system, companies that invest in innovation and research will enjoy a two-year period of market exclusivity for newly approved ingredients.
Carl Gibson, CEO of trade body Complementary Medicines Australia, said that the goal of the new system was "to encourage and reward greater investment in research and development by industry, and be an incentive to further expand the clinical research base for complementary medicines, enabling Australian companies to expand business opportunities".