What you need to know
Taiwan has a ways to go before it comes close to reaching the government's lofty biomedicine targets.
By Matthew Fulco
Taiwan’s biomedicine industry has many of the ingredients for success. The island has strong scientific talent, rich clinical-trial experience, abundant capital, a treasure trove of medical data (from the National Health Insurance system), information-technology expertise, and strong intellectual property rights protection bolstered by the recent passage of legislation to tighten patent safeguards for pharmaceuticals.
The Tsai Ing-wen (蔡英文) administration has signaled strong support for biomedicine by including it as one of the sectors in its 5+2 Industrial Innovation Plan, which aims to reduce Taiwan’s dependence on contract manufacturing and move the island up the global value chain. “The government wants to take advantage of Taiwan’s existing industrial foundation to help the country upgrade itself at a faster pace and become more competitive,” Tsai was quoted as saying by the Central News Agency in an October 2017 report.
Under 5+2, the government has set an ambitious target for biomedicine: by 2025 reach a production value exceeding NT$1 trillion (US$32.6 billion), develop and market 20 new drugs, introduce 80 new medical devices to the market, and cultivate a minimum of 10 “flagship health-service brands,” according to the Ministry of Economic Affairs (MOEA).
“The government’s goal is to transform Taiwan into an Asian biomedical hub,” says David Silver, president of Taipei-based Biotech East, a life science business and marketing consulting firm. To reach the government’s target, the biomedicine industry would need to grow three-fold in the next seven years. In 2016, its production value was NT$315 billion (US$10.3 billion), up from NT$298.6 billion a year earlier, according to MOEA data.
At the BioTaiwan Expo held in July, President Tsai highlighted the achievements of the local biomedicine industry over the past two years. Under the government’s guidance, Taiwan has established an incubator mechanism for biomedical startups, she said. Industry clusters have been established in Taipei, Hsinchu, Taichung, Tainan, and Kaohsiung.
To boost local investment in biomedicine, the government amended the Act for the Development of Biotech and New Pharmaceuticals Industry. The amended provisions “encourage more domestic enterprises to get involved in R&D for medical devices, new pharmaceuticals, and emerging biotech and pharmaceutical products with higher technical thresholds,” according to a summary of Tsai’s remarks published on the website of the Office of the President.
To reach the government’s target, the biomedicine industry would need to grow three-fold in the next seven years.
Within biomedicine, the government has a strong interest in the fast-growing precision medicine segment. Precision medicine refers to the customization of medical treatment based on an individual’s unique genetic code, living environment, and lifestyle. The state-backed Industrial Economics and Knowledge Center under the Industrial Technology Research Institute (ITRI) calculates that the global precision medicine market reached US$38.9 billion in 2015 and will grow to US$69.5 billion by 2020, according to a May Taipei Times report.
Later this year Taiwan is scheduled to reinforce the infrastructure by opening a new Biomedical Park in the Nangang district of Taipei.
In addition, in March ITRI announced plans to cooperate with pharmaceutical giant Merck Group of Germany to establish a Taiwan-Merck Biopharma R&D & Training Collaboration Program on ITRI’s Hsinchu campus. “By combining Taiwan’s professional talents and high-tech edge with Merck’s advanced technologies in biopharma manufacturing, we can create higher industrial value,” ITRI Executive Vice President C.T. Liu said in a press release. “Meanwhile, we will help Taiwan produce a new generation of biopharma products that comply with international standards and set a milestone for connecting to global communities.”
In the press release, Lin Chii-wann (林啟萬), General Director of ITRI”s Biomedical Technology and Device Research Laboratories, said that the program would establish validation and verification methods that meet global standards and offer training to strengthen Taiwan’s drug-manufacturing ability. Merck’s expertise in the production of antibody drug conjugates would support Taiwan’s precision-medicine drug development, Lin added.
Overall, the government is painting a rosy picture of biomedicine’s development in Taiwan. A January report by Taiwan Today, a government website, said the government’s efforts to transform Taiwan into a regional biomedical R&D hub “are paying handsome dividends.”
Citing government data, the report pointed out that the total revenue of Taiwan’s biomedical firms rose 4 percent annually in 2017 to reach NT$488.4 billion (US$16.52 billion). Revenue in the health and welfare, medical device and supplies, biotech applications, and pharmaceutical segments came to NT$162.5 billion, NT$146.3 billion, NT$97.7 billion, and NT$81.9 billion respectively. Investment in biomedicine increased 3.3 percent last year as investors put NT$52.6 billion into 118 new deals, the report noted.
Meanwhile, pharmaceutical development is proceeding at a brisk pace in Taiwan, the report said. Three new “domestically engineered” drugs went on the Taiwan market last year, while 63 medicines under development entered clinical trials in Taiwan and globally. Fifty of those drugs have been approved by the U.S. Food and Drug Administration.
Room for improvement
Matt Lee, a veteran of the local biomedicine sector, takes a more nuanced view of the industry’s development here. To be sure, Taiwan has some promising young biomedicine firms, he says. Lee points out, for example, that Lin BioScience, established in 2016, has developed several new drugs to treat diseases for which existing treatment is insufficient. It was the first company to develop and have approved a drug (LBS-008) for the eye disease aged macular generation.
In the past year, LBS-008 received Orphan Drug Designation (ODD) for Stargardt disease – an inherited form of juvenile macular degeneration – from both the U.S. FDA and the European Medicine Agency (EMA). ODD grants special status to a drug or biological product to treat a rare disease or condition upon a sponsor’s request.
Lin BioScience’s second product, LBS-007, recently received ODD for Acute Lymphoma Leukemia from the U.S. FDA.
The government is painting a rosy picture of biomedicine’s development in Taiwan.
Lee notes that Lin BioScience was the only Taiwan biomedicine firm invited to showcase its products at J.P. Morgan’s Healthcare Conference this year, and was named by BioCentury (an important industry publication) as one of the world’s eight “Next Wave” biomedicine firms.
“Lin BioScience has an unprecedented level of international recognition for a Taiwanese biomedicine startup,” Lee says. “It’s the first time we have seen something like this with a local biomedicine firm.”
Less than a handful of biomedicine firms in Taiwan are working on new drugs per se, he observes, and most of those are still at early stage or even pre-clinical phases.
Some knowledgeable observers suggest that the 2016 OBI Pharma scandal has hurt the local biomedicine industry, dampening investor enthusiasm. The scandal, in which the company’s former chairman, Wong Chi-huey, was implicated in insider-trading charges, “cast a shadow” over the industry and highlighted regulatory shortcomings, according to a June report in Chemical & Engineering News.
Others cite political challenges for Taiwan’s biomedicine industry. “Taiwan has a lot of work to do to position itself in other people’s minds as a hub for biomedicine in Asia,” says someone close to the local biomedicine sector who spoke to Taiwan Business TOPICS on condition of anonymity. “The worsening cross-Strait relationship is going to make that harder.”
This expert notes that in the twilight of Ma Ying-jeou (馬英九)’s presidency, China’s Food and Drug Administration announced that clinical-trial data from four Taiwanese hospitals could be used to apply for drug permits in China. Taiwan’s Institute for Biotechnology and Medicine Industry hailed the announcement as a boon for the local biomedicine industry. The new policy would save money and time, reducing overlapping trials and speeding up the process of bringing new drugs to market, the Institute said.
“Many people in the [biomedicine] industry felt that Taiwan would benefit greatly from the policy,” the source says. “It would have been possible to do clinical trials in Taiwan, which is an easier process than China, and then use the data to develop drugs for a market of 1.4 billion people.”
After the Tsai administration took office in May 2016 and refused to endorse a “One China” policy, cross-Strait relations nosedived – and Beijing moved to freeze new cooperation initiatives with Taiwan.
At a conference in April, co-sponsored by AmCham Taipei, on the prospects for Taiwan to become a regional biomedical hub, government speakers stressed the importance of attracting participation by the leading multinational drug companies in the development of the industry.
But without the allure of the massive China market, it will be hard to convince global drug companies to prioritize new drug development in Taiwan, notes the above-mentioned expert. “The Taiwan market alone isn’t that appealing. It’s too small.”
Nevertheless, opportunities should exist for in-licensing and out-licensing arrangements with Taiwanese firms, and for expanding the already substantial amount of clinical trials conducted in Taiwan by multinational pharmaceutical companies. At the April conference, panelists comprising executives at foreign-invested pharmaceutical cited regulatory burdens in Taiwan that create a long time to market as well as low reimbursement prices for new drugs. They urged the government to make the investment environment more attractive by streamlining the approval and reimbursement process and providing more budget to cover innovative drugs to give Taiwan patients’ access to the latest medications.
The News Lens has been authorized to repost this article. The piece was first published by Taiwan Business TOPICS. (Taiwan Business TOPICS is published monthly by the American Chamber of Commerce in Taipei.)
TNL Editor: Nick Aspinwall (@Nick1Aspinwall)
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