Asia Business Channel

Taiwan bets heavily on Biotech sector as a driver of economic growth

Biotech: The high-tech sector that has the East and West jostling for supremacy.


Written by Robert Kang

Following on from hosting Asia's biggest biotech expo last month, Taiwan is looking to confirm its position as one of the largest global players in the sector, while also hoping to be at the heart of wider international technological co-operation.

Last month, Taipei again played host to the annual BioTaiwan event, the territory's largest biotechnology expo. This time around, though, the event was considerably expanded and rebranded, with the Bioecology Innovation Organization (BIO), the biotechnology industry's Washington DC-headquartered trade body, coming together with the Taiwan Bio Industry Organization (Taiwan Bio), Taiwan's domestic trade association, to stage BIO Asia Taiwan.

Billed as the largest biotech exhibition and conference ever held in Asia, the event brought together 1,500 global experts for 45 forums across its five-day run. The exhibition component of the event, meanwhile, featured some 1,700 stands, with 600 companies represented across the show floor.

Welcoming attendees to the event, James Greenwood, BIO's President and Chief Executive, acknowledged the key role Taiwan plays in the biotechnology, semiconductor and health database sectors. He also shared his intention to ensure his organization works more closely with Taiwanese businesses in the future and his hope that such an arrangement would help drive innovation in the biotech sector across Asia.

Getting down more to specifics, Greenwood also identified three particular challenges confronting Taiwan's biotech sector – biosimilar drug manufacturing, healthcare budgets and protectionism.

Addressing the biosimilar drug issue first, Greenwood warned against the growing influence of those manufacturers in the sector actively campaigning to shorten patent terms. Outlining the consequences of any such move, he said it would inevitably lead to investment levels falling, and in turn a lack of future innovation.

Secondly, while welcoming declining health costs, he urged attendees to oppose any subsequent budget reductions, especially those that could adversely affect staff numbers and restrict R&D activity. Finally – and, perhaps, most topically – he turned his attention to protectionism, maintaining this would ultimately stifle innovation. Instead, he said, companies in Taiwan and beyond should be looking to build international ties, with global collaboration by far the best way forward.

As a sign of the significance of the biotechnology sector for Taiwan, Tsai Ing-wen, the territory's President, was also on hand to address delegates. In her opening remarks, she was at pains to emphasize Taiwan's commitment to the industry, while highlighting the fact that the market capitalization of the territory's listed biomedical companies is now in excess of NT$890.7 billion (US$28.7 billion).

She also noted that, of the world's 200 largest biotech companies, 14 are in Taiwan. This, she said, sees its biotechnology sector ranked number three in global terms and number one within Asia. This, she maintained, was largely down to its successful drug development programme, much of which involved international co-operation, and the several hundred clinical trials conducted within the territory on an annual basis.

Indeed, Tsai was far from overstating the case. According to the most recently available figures, Taiwan's biomedical industry was valued at NT$514.1 billion in 2018, a 5.5% year-on-year increase. For the same period, private investment totaled NT$55.2 billion, while the number of private investment projects rose to 133, up from 118 in 2017. According to projections by the Ministry of Economic Affairs, the domestic biotech industry should be worth more than NT$1 trillion by 2025.

The importance of the sector has long been recognised. In 2016, the launch of the 5+2 Industrial Innovation Program saw biotechnology designated as a priority industry. In November of that year, four strategic goals were officially adopted – perfecting the ecosystem, consolidating innovation clusters, connecting with global market resources and driving key sectors.

In order to help deliver on this, a number of additional priorities – including embracing digital technology and regenerative medicine R&D – were incorporated into the plan in 2018. From this point, the development of the biotechnology sector, along with the digital industries and the optimization of Big Data resources for medical purposes, fell within the remits of the DIGI+ (Innovative Economic Development) Plan and the AI Action Plan.

With the aim of making better use of the available resources, it was also agreed to establish three industry clusters – the Nangang New Drugs Research Cluster, the Hsinchu Biomedical Industry Cluster and the Central-Southern Biotech Industry Cluster. The first of these to come to fruition was a biotech research park in Nangang, with its October 2018 inauguration seen as bringing Taiwan a step closer to establishing itself as Asia's key biotech R&D hub.

At present, Taiwan's biotech industry has three primary focuses – drug production, applied biotech and, with the highest level of output, the production of medical equipment. In terms of the latter, figures from the Industrial Economics and Knowledge Center (IEK), a Taipei-based government research body, show that the value of Taiwan's medical-equipment production exceeded NT$109 billion in 2018, with contact lenses and high-end catheters being the primary growth drivers. For 2019, output is expected to exceed NT$120.66 billion in value terms.

In terms of drug production, the Development Center for Biotechnology, the government body that oversees the sector, estimates the total output value for 2018 was NT$72.45 billion. This figure incorporates both the reduction in capacity occasioned by the imposition of the Good Manufacturing Practice (GMP) standards by the Pharmaceutical Inspection Co-operation Scheme (PIC/S), as well as the steady growth in exports to the US, China and Japan. Furthermore, IEK data shows that the total output value of Taiwan's biomedical industry – including active pharmaceutical ingredients, small molecule drugs and bio-preparations – increased by 3.2% in 2018 year-on-year. With a further rise of 2% anticipated in 2019, this will bring the sector's total output value to NT$63.35 billion.

As a further sign of the robust nature of the sector, 120 biotech companies are now listed in Taiwan, representing a combined 2018 turnover of NT$252.4 billion, an 11% year-on-year rise. Of these, 18 command a combined market value of more than NT$10 billion, with their activities spanning a variety of fields, including drug production and the manufacture of healthcare products and medical equipment.

In terms of market capitalization, TCI – a Taipei-based multi-product conglomerate established in 1980 – heads the list. Among its product portfolio are health foods, performance / energy drinks, hygiene masks and cosmetic items, all of which are being widely exported. The company is now believed to be looking to move into the cell therapy field, with a Good Tissue Practice (GTP) lab also said to feature in its expansion plans.

Second on the list is TaiMed Biologics – a Taipei-headquartered biotech business founded in 2007 – which owns the patent for TMB-355 (Trogarzo), an anti-AIDS drug. Due to a surge in the number of patients prescribed Trogarzo in the first six months of this year, the company's turnover is said to be set for a six-fold increase.

In another sign of the health of Taiwan's biotech sector, it is believed a number of its biggest players are considering listing on the Hong Kong Stock Exchange. Since April 2018, a regulatory change has allowed pre-revenue biotech companies to seek a listing on Hong Kong's main board, a development that has made the city the world's second-largest biotech listing center, after New York.

 Editors Note:

 Robert Kang, Special Correspondent, for the Hong Kong Trade Development Council (HKTDC), wrote this article.
 All content rights are solely those of the HKTDC and we republish this article by kind permission of the HKTDC.
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