pharmaceuticals taiwan report 2010

TaiwanPharma reportDecember 2010

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DECEMBER 2010 FOCUS REPORTS S2

Taiwan Report

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Taiwan: Pharma at the Tipping Point

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The Taiwanese pharmaceutical industry has reached a

crucial tipping point: After many years of building up an

impressive resource base, from world-class research

institutes, universities, and scientists to pharmaceutical

entrepreneurs and internationally competitive companies, the

industry is finally ready to take advantage of the wave of

enthusiasm and interest surrounding pharma and biotech that

is sweeping the nation. In March 2009, Taiwan’s current

president, Ying-jeou Ma, announced that healthcare and biotech

would be two of six sectors selected by the government to

bolster and diversify the Taiwanese economy. As the Taiwanese

pharmaceutical sector develops and strengthens, the world

holds its breath, waiting to see what is possible from this small

island nation.


S3 FOCUS REPORTS DECEMBER 2010

Taiwan Report

Several factors have led to this exciting momen-tum in Taiwan. The first

of these is the government’s drive to develop what it calls the country’s “biotech” sector. Perhaps a little confusingly, the term biotech is used by the Taiwanese government not only to describe biotechnolo-gy, but also traditional pharma and medical devices. This year the government announced its “Diamond Action Plan for Biotech Takeoff”, an ambi-tious plan to fill the gaps that are currently visible in Tai-wan’s pharmaceutical sector.

The minister in charge of this plan, Jin-fu Chang, ex-plains the government’s hopes for its implementation: “Tai-

wan has been trying to get involved in the biotechnology industry for decades and we have been trying to figure out the missing links. We think that translational medicine is one thing we should work more on. We have also been trying to form an FDA-like organization, which we now finally have. It is responsible for effective regulatory review and regional harmonization because so many companies here are looking to do busi-ness on the other side of the strait. We also need to have biotech clusters. We plan to have one in Nangang and we already have one in the south of Taiwan. These will work together with a superincuba-

tor center, which provides intellectual property help to the industry. Finally, the last piece is the megafund or bio venture capital fund. The government will contribute 40 percent and the remaining 60 percent will come from the private sector. The total size of the total fund will be $60 billion NT (US$18.7 billion).”

A comprehensive review of the strengths and weak-nesses of the Taiwanese bio-tech sector and the plan to aid its development is already well under way. Having re-alized that Taiwan’s level of basic research was already very high, the government has put a lot of effort into building the country’s trans-

lational capability, to move this basic research towards commercialization. One of the key institutes driving this activity is the Development Center for Biotechnology (DCB). Johnsee Lee is chair-man of DCB, and recently came to this position after many successful years as president of ITRI (Industrial Technology Research Insti-tute), one of Taiwan’s most important basic research in-stitutes. In this new role, he hopes to strengthen DCB as the second step in develop-ing a productive pharma-ceutical industry: “As DCB is playing the second leg in bridging basic research and commercialization, we need

Left to right: President Ma with Johnsee Lee, Chairman of the DCB, at the opening of Bio Taiwan 2010; Jin-fu Chang, Minister in Charge of Taiwan’s Diamond Action Plan for Biotech Takeoff; Chih-Liang Yaung, Minister of Health

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Taiwan Report

more international collabo-rations, good business teams, people who understand basic research, as well as the mar-ket and potential healthcare implications.”

The need for an improve-ment in Taiwan’s translational research capacity has not only been recognized by those in-stitutions solely concerned with the pharmaceutical sec-tor; rather, this is a train of thought present across the en-tire Taiwanese academic com-munity. Dr. Chi-huey Wong, president of Academia Sinica, the cornerstone of Taiwan’s basic research capacity, under-lines the importance of creat-ing this bridge between sci-ence and industry: “We need to build a capacity and capa-

bility to link basic research to industry. Many basic discov-eries are not getting translated into commercial opportuni-ties, so Taiwan needs to have a component there to identify the important early-stage dis-coveries and move them into

industry. In order to do this, the country needs to have a good investment team to iden-tify key projects, and good legislation in place to encour-age the translation into indus-try. The government’s Dia-mond Action Plan for Biotech

Takeoff was designed for such a purpose. It shows that we have a good understanding of the problem, and are trying to move in the right direction.” Wong believes that Taiwan’s current strategy of focusing on drug discovery is playing to the strengths of the country, but that a successful biotech industry can only be created when academia works hand in hand with industry: “Taiwan is very focused on discovery, and Big Pharma has more ex-perience in development; most Big Pharma companies have shifted their focus from early stage to development in recent years. Moving from discovery to development costs from US$300 million to US$1 bil-lion—60 percent percent of

Left to right: Chi-huey Wong, President, Academia Sinica; Jeff Wang, President, DCB



Taiwan Report

which is spent on marketing. Taiwan cannot afford to fo-cus on late-stage development in this moment of its indus-trial development; we lack the requisite experience and skill. Hence, collaboration is very important.”

As well as improving the level of translational re-search, another key element of the Executive Yuan’s Dia-mond Action Plan was the creation of a US-style Food and Drug Administration. In January 2010, four existing agencies were combined to create the Taiwan FDA (TFDA), a great achievement for the industry. However, because of Tai-wan’s unique political situation with China, creating an internationally rec-ognized agency was made a little more difficult. Jaw-jou Kang, director general

of the TFDA, explains that “Taiwan has a unique political situation that means it cannot join a lot of international orga-nizations, which makes it very difficult to communicate with other countries. The way that the TFDA has approached this problem is through bilateral co-operation—in April 2010 we signed a

memorandum of understand-ing with the TGA in Austra-lia for example. We also have exchanged letters with US, Switzerland, and EU for infor-mation exchange of medical devices. Further to Exchange of Letter, we established the Technical Cooperation Pro-gram with 12 Europe-notified bodies to share GMP inspec-tion reports as acceptable evi-dence for submitting Quality System Documentation appli-cations to the TFDA.” This

will speed up the approval process for many companies in Taiwan.

The cause of these issues in the in-ternational community is Taiwan’s re-lationship with China, which is some-thing of a double-edged sword: While it makes international collaboration and harmonization a delicate issue, it also

Left to right: Wayne Hsu, Managing Director, Chifu Trading; Warren Chen, Country Manager, Celgene Taiwan



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Taiwan Report

allows for Taiwan to act as a stepping stone to the vast Chinese market. On Sept. 11, the Economic Coopera-tion Framework Agreement (ECFA) came into effect. ECFA aims to reduce com-mercial barriers between the two countries and help to grow bilateral trade, which currently stands at US$110 billion. Although the strengthening of bilateral re-lations is a contentious issue in Taiwan, the general feeling among the pharmaceutical community is that it makes Taiwan a more attractive investment destination. No longer will the country be confined to its market size of 23 million consumers; com-panies operating in Taiwan will now have increasingly easier access to the 1.3 billion Chinese consumers waiting just across the strait.

For Taiwanese companies like Chifu Trading, China offers huge potential for growth. A family-run com-pany with a solid distribution business in Taiwan, Chifu is now looking to broaden its horizons to more challenging markets in Asia. As Wayne Hsu, managing director of

Chifu, explains, “Chifu can introduce a lot of products from Taiwan to China. A lot of Indian companies are afraid of going to China. Chifu can help them, and is already doing this. But the company is also helping Chi-nese companies to come to Taiwan. Chinese companies see Taiwan as an interesting market. They can also use it as a test market: Taiwan-ese people are perhaps more open and willing to spend more than Chinese patients.” For those with expertise in the Taiwanese market, the growing relationship with China offers a lot of opportu-nities—both countries speak the same language and the culture is remarkably similar, something very few can say when entering the Chinese market for the first time.

But it is not just domestic Taiwanese companies that see the potential for using Taiwan as a gateway to Chi-na. Warren Chen is country manager of Celgene Taiwan. Celgene arrived in Asia very recently, but is using its Tai-wanese operations in order to create a model to be replicat-ed across the continent. Chen

explains that “Celgene is only now embarking on a China strategy but the market there still has many questions. Not everything is in place yet, and guidelines and policies are not so clear. So we have to have a business model to copy in those areas where Chinese is spoken. I would like to copy

Taiwan’s experience to China, especially in medical develop-ment. Many Taiwanese doc-tors have Western education and experiences compared to Chinese doctors. We have many good ideas here. This is a very good opportunity for Celgene’s drug development.”

The aspect of the Dia-mond Action plan that is arguably the most ambitious is the planned creation of a US$18.7 billion venture capital fund, a collaboration between the government and private investors. Jeff Wang, president of DCB, explains how this will help the in-dustry to develop, and the role that DCB will take on once this capital has been injected into the industry: “Once the bio-venture capi-tal fund (one of the strategies

Left to right: Carol Cheng, COO of IRPMA; Wei-li Shao, General Manager, Eli Lilly Taiwan; Uwe Dalichow, General Manager, Bayer Schering Pharma Taiwan

Key export markets for Taiwan (courtesy of IBMI)



Taiwan Report

Roy Fan, general manager of Standard Chem. & Pharm., one of Taiwan’s leading generics manufacturers, spoke to Focus Reports about his plans for the internationalization of his company, and the successful work Standard has been doing in the US in collaboration with its sister company, Stason. For the full interview, please logon to www.Pharma.FocusReports.net.

I was very surprised to see a company called ‘Standard Chemical and Pharmaceutical’ ranked amongst the top three local players in Taiwan. It seems as though your company is far from standard. What is it about Standard Pharm that stops it from being just an average pharmaceutical company?

My father, the founder of the company, came up with the name. He believed that everything had to be done according to standards. It was my father’s belief that since we were involved in the business of people’s health, everything must be first up to standard, and then as a company we must exceed those standards. This is something we still believe today.

Why was the decision taken to internationalize the company?

Standard was faced with the problem that it could not sustain further growth in Taiwan. As a result, the company either had to move into branded generics or new drug development, or seek to internationalize. Standard resolved to look outside the Taiwanese market,

because generics are what we do best. The largest domestic pharmaceutical companies—Standard, CCPC, and Yung Shin—are traditional generics companies. Our large sales volumes come from generics, and to go into new drug development or biologics would take a fundamental change in our structure. Standard decided to go overseas,

and set its focus on the US, China, and Southeast Asia.

What are some benefits and activities of Standard’s strategic alliance with the US-based Stason Pharmaceuticals?

Standard and Stason are well-established companies, both in Asia and in North America, with their respective manufacturing and distribution infrastructures in place. By joining forces, the companies can rely on each other’s regional expertise, resources, and distribution channels, giving each entity the potential for a quick ramp-up when expanding into each other’s market. For instance, through its Texas locations (Austin and San Antonio), Stason has established a wide distribution network of 58

distributors throughout the United Sates and Canada, totaling over 1,300 inventory locations. Stason’s extensive distribution network, coupled with its sales personnel and telemarketers, offers a rapid and efficient way to distribute products.

Furthermore, Stason and Standard are collaborating on expanding their product portfolios with the acquisition and development of brands and innovative products such as new chemical entities (NCE) and orphan drugs. These novel products will be distributed in North America by Stason and in Asia by Standard, giving us the advantage of a two-prong strategy.

What are some of Standard and Stason’s future expansion plans?

We plan to open an office in Canada by early next year. Future expansion plans include offices in Europe and South America in the next 24 months. Continuing our push into Southeast Asia, we have tentatively selected Singapore for our fourth regional office. To broaden our global product portfolios, we will work with partners to codevelop and commercialize innovative products for specific markets. In the US, negotiations are under way to expand our sales and distribution group in Texas through merger and acquisition.

Roy Fan, General Manager, Standard Chem & Pharm

Left to right: Standard’s facility in Taiwan; Stason’s offices in the US

Don’t Judge a Book by its Cover (Or its Title)With a fiercely competitive spirit and grand ambitions that reach far beyond Taiwan, Standard is showing that it is far from the middle-of-the-road company its name implies



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in the Diamond Action Plan) starts operating, I expect that there will be a lot of startup companies forming with sev-eral potential blockbusters in their product pipelines. DCB would like to work closely with the bio-venture capital management teams in terms

of conducting due diligence studies and translational re-search for those startup com-panies.” Wang believes that it will only take four to five years for this type of activity to flourish. This is an indica-tion of the hopes that many in the industry are resting on

the rapid development of the Diamond Action Plan.

HealtHcare in actionOne of the most remark-

able aspects of the Taiwanese healthcare system is its uni-versal insurance system. Paul Krugman, the 2008 Nobel

Laureate in economics, de-scribed it as one of the best healthcare insurance systems in the world. Taiwan’s inno-vative insurance system en-sures almost universal access to a healthcare system that enjoys an 80 percent approv-al rating from Taiwan’s citi-zens. However, this year will see the revision of the legisla-tion surrounding the system by the Bureau of National Health Insurance (BNHI) and Legislative Yuan. Tai-wan’s Minister of Health, Chih-liang Yaung, described the reasons that the NHI will soon be entering its second generation: “In any program you need to have some com-promise. Even 15 years after implementing the NHI we still have a lot of issues. For

Left to right: Albert Liou, Parexel International; Mark Yang, General Manager of Hospira Taiwan; Alex Chang, CPO Head and Country President, Novartis Taiwan



Taiwan Report

example, it is very difficult to increase the premium rate. There is one commission that decides the premium rate and another commission that de-cides the budget. So who is accountable? The Taiwanese healthcare system is one of the best in the world, but last year we had a $60 billion NT (US$1.88 billion) deficit. My predecessors were never able to adjust the premium rate—it is a very sensitive political issue. Because of Taiwan’s aging population, new drugs, and tech-nological advances, a premium increase is inevitable, yet raising the rate is po-litical suicide. Taiwan only spends 6 percent of its GDP on healthcare, yet we have very modern hospitals and a low premium rate, so it is inevitable that the country builds up a deficit.” By increas-ing healthcare expenditure from 6.2 percent to 7.5 percent of Taiwan’s GDP, Yaung hopes that current imbalances in the system will be addressed. Both the Department of Health and the BNHI are working closely with all stakehold-ers in the industry to ensure that the best possible legislative reforms take place in this second generation of the NHI.

The current system has caused con-cern in the pharmaceutical industry. In this single-payer system, the government sets the reimbursement price for drugs, hospitals then choose pharmaceutical

partners who can offer the biggest dis-counts. Based on these discounts, the BNHI conducts bi-annual price-volume surveys in order to make sure that their reimbursement levels accurately re-flect market prices. These price surveys have become known in the industry as “price cuts;” every time one has been conducted, significant revenues have been taken away for companies trying to market their drugs in Taiwan. This is a problem that will be addressed in the upcoming second generation of reforms. Carol Cheng, COO of the International Research-based Pharmaceutical Manu-facturers Association (IRPMA), says that “it is believed that change is crucial as the pharmaceutical industry has suf-fered considerably under current NHI policies. We are urging the government to amend the law, and shape a more rea-sonable environment. From the patient’s

perspective, this will improve the medication quality and in-crease the number of advanced drugs available to society.”

addreSSing tHe pricing iSSue

The 2009 price-volume survey took as much as 15 percent away from the price of some drugs, making it difficult for multinationals to plan a long-term strategy due to the unpredictability of the mar-ket. This has a knock-on effect

in convincing global headquarters that Taiwan is a country worthy of long-term investment—many companies simply do not know whether the next price cut will mean that it is no longer cost-effective to maintain a presence in the country.

“I am of the opinion that it is going to get worse before it gets better,” says Alex Chang, CPO head and country presi-dent of Novartis Taiwan, when talking about the situation for multinationals in the country. “I believe that there will be more price cuts to come in the next few years because the deficit is definitely an issue and it has not yet been decided whether increasing patient premiums is a politically viable move.” Although the current registration system means that it takes an average of two to three years for a product to take off in the market, after patent expiry MNCs are currently seeing a very slow dropoff in the sales of

Left to right: Thomas Willemsen, General Manager, GSK Taiwan; Eric Wang, General Manager, Novo Nordisk Taiwan



Taiwan Report

their drugs. The Taiwan-ese government wishes to see a quicker take-up of generic drugs in the market, but they are willing to compensate by increasing the speed of market access for in-novators. Chang finds some comfort in the fact that these issues are likely to be addressed in the second generation of the NHI reform: “It’s en-couraging to see clinical trials will also help accelerate product registration and gain a higher reimburse-ment price.” Novartis is the company with the most clinical trials currently ongoing in Taiwan, with over 55 studies ranging from Phase I to Phase III.

Uwe Dalichow, general manager of Bayer Schering Pharma Taiwan, be-

lieves that the second generation of healthcare reform is a “logical evo-lution” of the system. Despite the problems with the system faced by pharmaceutical play-ers in the country, he is still extremely positive about the healthcare situation: “Taiwan was able to establish some-thing extraordinary if you compare with not just Asian standards, but

even worldwide standards. You can see that the country is truly committed to providing healthcare not just to the elite, but to the entire population.”

Lilly is another company that sees the value of the Taiwanese market de-spite the price cuts. Wei-li Shao, general manager of Lilly Taiwan, explains that

Jo Shen, Founder, President & CEO, ScinoPharm

Scinopharm’s facilities



Taiwan Report

“Lilly is in an interesting position right now—around 90 percent of our sales are for our patent products. Our strat-egy, discipline around negotiations, and portfolio has enabled high growth over the last four years.” While other compa-nies in the market have struggled with the situation in Taiwan, Lilly’s product mix and business strategy have ensured that they grow a successful business in the country despite the unpredictable climate. Shao believes that his experi-ences in Taiwan have placed him well for international success in the future: “It used to be the belief that if you knew how to run the US business then you could run the global business. I don’t believe that to be true any more because, if anything, the US represents the tail of the reform situation. Then it became the belief that if you ran the EU business then you could run the global business. However, today the EU is in decline and there is a trend of research investment

being pulled out of the EU to different parts of the world. Now we’re shifting to a paradigm, which states that if you can run the business in Asia, you can run the global business. The combination of Asian experience with the fierce Eastern method of negotiation and politics is a requisite experience for any president or general manager.”

an aSian enigma—tHe taiwaneSe entrepreneurial Spirit

Taiwan’s flagship national pharma-ceutical companies have been quietly toiling away for the last few years, carv-ing themselves an impressive niche in se-lected international markets. Yung Shin is Taiwan’s No. 1 local pharmaceutical company, and has had a presence in the US since 1994 and in China and Ma-laysia since 1996. Currently around 50 percent of Yung Shin’s business comes from international markets, and in the years to come the company will look

to build up its relationships in markets with high entry barriers: Singapore, Malaysia, China, and Japan, capitaliz-ing on the experiences and expertise it has acquired in its 60 years of existence in Taiwan.

Yung Shin is one example of a Tai-wanese company whose top manage-ment benefitted from long years studying abroad before coming back to Taiwan to establish or take over their own business-es. Albert Liou, corporate vice president and general manager of the Asia Pacific region for Parexel, explains that “Taiwan produces a lot of good professional tal-ent. Many Taiwanese people have strong international educational credentials, especially from the United States. A lot of people choose to study overseas, and many of these people return to Taiwan once their studies are completed.” Liou counts this business experience as one of the main factors for choosing to estab-lish his company, Apex International, in

PharmaEssentia: The 30-Year Dream“In my mind,” says Ko-Chung Lin, founder, president, and CEO of PharmaEssentia, “the story of AstraZeneca was particularly striking: it shows you can start a very small company and grow it to play a major role in a 30-year time frame. Taiwan is capable of creating such a company, and it is our responsibility to try and make this happen.” He explains that the groundwork for the foundation of his company was laid in 1997, when Taiwanese government officials visited him and his team in the Boston area, and encouraged them to come back to Taiwan and found PharmaEssentia. The company grew from there.

“We have two groups of people at PharmaEssentia,” Lin explains: “Old men like myself, and then the young and well-educated people that work in the labs. They read papers and do research by themselves very well.” Despite Lin’s self-effacing explanation, it is his vision and his selection of founding partners that has driven PharmaEssentia’s development. Inspired by their experiences in the US with cutting-edge biotech companies such as Amgen and Biogen, their business model is well constructed and their science drives right to the heart of global demand. Through a combination

of chemistry and biology, revenue- and value-driving products, and with five molecules in the pipeline, Lin is hopeful that PharmaEssentia is destined for a profitable future: “These molecules are very big in terms of revenue on the market right now, namely alpha-interferon, beta-interferon, EPO, rh-GH, and GCSF. Every one is a billion-dollar molecule itself.”

Lin is convincing when he says, “Thirty to 50 years from now, PharmaEssentia could be huge.”

Ko Chung Lin, Founder, President & CEO of PharmaEssentia and his team



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Taiwan, which was eventually acquired by Parexel.

Mark Yang, general man-ager of Hospira Taiwan, acknowledges that his expe-riences in the US certainly helped him to fit seamlessly into the corporate culture of a multinational company op-erating in Taiwan, posturing that his American MBA pro-gram “enabled me to work with my colleagues in the US and Australia in a much more rationalized manner. We don’t have any difficulty communicating about new business models or business ideas or business language.” He also believes that there is another factor to his success, namely that “being born in Taiwan helped me to fit into

the local scene. I can work here without any barriers, unlike American-born Tai-wanese or Chinese people. Sometimes these people have difficulty integrating back into the Eastern culture.” Under Yang’s supervision,

Hospira has achieved incred-ible results since the company was spun off from Abbott in 2006—today the company has more than 90 percent market share in the fields of large volume infusion (LVI), devices and patient control

and analgesia (PCA) devices. Yang explains how Hospira achieved such success in Tai-wan: “We moved very ag-gressively. As part of Abbott we had around a 67 percent market share. When Hospira moved out under its own roof the company became more aggressive in this segment and fought for the accounts of our competitors. Hospira Taiwan’s sales revenues have grown to the point that the company here now competes with Big Pharma.”

Although many multina-tional companies in Taiwan employ local managers to run their business in the country, GSK is one company that has taken the decision to employ an expat as general manag-

Left to right: Chung Y Hsu, CEO of China Medical University Hospital; Ming-fong Chen, superintendent of National Taiwan University Hospital

Comprehensive Healthcare ServicesIntegration of Western and Chinese Medicine Advanced International Medical Center Sister Institution of MD Anderson Cancer Center Topnotch Research and Development

http://www.cmu.edu.twhttp://www.cmuh.cmu.edu.tw

Health

Compassion

Innovation

Excellence

中國醫藥大學暨醫療體系China Medical University and Healthcare System 中國醫藥大學暨醫療體系China Medical University and Healthcare System



Taiwan Report

er. Thomas Willemsen, vice president for the company, suggests that GSK “really needed someone to accelerate the transformation of GSK in Taiwan. Of course, my ex-perience in Asia was also a deciding factor. I’ve been in China for five years, and in Taiwan for five years, I speak Chinese and I have been working in the pharmaceu-tical industry for 12 years.” With his experience of the Chinese-speaking world, per-haps Willemsen should be counted more as a local than a foreigner in Taiwan.

One obvious advantage of employing a Taiwanese national in Taiwan is that it is far more likely that they will be committed to their country for the long term. A charge often leveled at the managers of smaller country affiliates is that they are only considering short-term strat-egies to propel them to the next market rather than be-ing concerned with the long-term growth of the affiliate. Today, Eric Wang is general manager of Novo Nordisk Taiwan, but has been work-ing at the affiliate since it was first established 16 years

ago. Wang believes that hav-ing this experience and per-spective has allowed him to grow the business in the way that Novo Nordisk aims for across the world: “We know that we should work better to help people with diabetes have better glycemic control. Once we meet we can work together on these problems, and because we are small company, we don’t have a lot of bureaucracy. My door is always open.” Although this long-term culture build-ing is not for everyone, Wang is perfectly at home at Novo Nordisk: “Most expat gen-eral managers would be very unhappy to pursue a long-term market strategy that was not focused on short-term performance. I want to stay here for longer, and pass on this sense of responsibility to my staff.”

ScinoPharm is one of Taiwan’s most interesting and innovative companies. Since 1997, the company has worked tirelessly to become one of the world’s leading players in the field of Active Pharmaceutical Ingredients (APIs), helping their custom-ers be first to market with

their generics. This was not an easy process for a Taiwanese company; finding investment at first proved difficult for Jo Shen, founder, president, and CEO of ScinoPharm. She explains: “ScinoPharm’s business model is that before the train comes into the sta-tion we are ready to jump. Initially this business model was incredibly foreign to lo-cal investors. The first dif-ficult concept for them was the role of GMP. They knew that GMP was important, but they did not fully understand that if an API manufacturing plant does not pass a GMP inspection from the US, then its APIs cannot be used for any customer who wants to sell their formulations in the US.” The importance of ad-

hering to intellectual property (IP) rights was also a key issue for the company: “Investors didn’t realize how powerful a skill it was to have that capa-bility, and to be able to enter a market wherever you have taken care of the patent issue, and conversely how a par-ticular patent situation can eliminate your chance of com-peting.” Despite agreeing to these two aspects of the busi-ness model, investors were still wary of ScinoPharm until the company started to break even, but now it is hailed as an unrivaled success in Taiwan. Shen explains that the com-pany’s international vision is what has driven the eventual growth and prosperity of the company: “For most local companies, their first market

Left to right: Chang-hai Tsai, Chairman of China Medical University; Cheng-ho Tsai, Superintendent of Mackay Memorial Hospital



Taiwan Report

view is Southeast Asia or Chi-na, and yet there is a smaller group today trying to aspire above this and penetrate regu-lated markets. In those cases there is still a lot for these companies to do to fully un-derstand the patent situation and GMP requirements. Both of those things require invest-ment. Right from the begin-ning ScinoPharm’s business model was that the world was our market—there is no rea-son why being registered in Taiwan means you can only

look at Asian markets. Our major market has always been the top tier, the most regulat-ed markets: the US and West-ern Europe.”

clinical trialS? all SmileS

A surprising fact about Taiwan is that it has become something of a hub in Asia for late-phase clinical tri-als. The NIH reports that in 2009, Taiwan conducted 1,574 clinical trials, more than China (1,427), India

(1,143), Korea (1,510), and Japan (1,337). Alex Chang of Novartis Taiwan explains why so many MNCs are ready to conduct trials here: “Regulation has become very friendly—clinical trial ap-proval takes a maximum of three months to get. This is still longer than South Korea, but much better than China. The government is ready, in-frastructure is ready, 99 per-cent of hospitals are ready, CROs are ready, and patients are ready.” However, by far

the majority of these trials are Phase III: companies use late-phase trials as a way to gain speedier market access. As president of Academia Si-nica Chi-huey Wong puts it: “We need to encourage these companies to look to Tai-wan as a locale for conduct-ing more early-phase trials. This is where Taiwan’s real strengths lie.”

In many respects the “fa-ther” of Taiwan’s clinical trial success, Albert Liou, founder of Apex International (later

Created by Stanley Chang, a surgeon with many years of clinical experience in re-search, service, and medical education, Medigen Biotech Corp., (Medigen) had a simple mandate from day one: to provide pharmaceutical solu-tions for patients whose medi-cal needs were not currently being fully addressed. In the best tradition of specialty pharma, Dr. Chang saw a huge problem in Taiwan and other Asian countries with liver cancer, and decided that Medigen would work to find solutions to this problem. As he explains, “Although there were a number of drugs that could be used for treating different kinds of cancer, none of them could be used for treating the liver. Until now, liver cancer treatment remains an unmet medical need. My aim at the time was to help those people if possible.” By partnering with an Australian biotech company, Medigen gained access to PI-88 clinical development, a drug designed to combat liver cancer. The company joined PI-88 development at the preclinical stage, and adopted a very innovative method for its Phase II development on liver cancer: “We didn’t just look at 20 or 30 patients to see the proof of concept in Phase II studies. We preferred to have comparative studies to test the efficacy of a drug, so our Phase II de-

sign at the time included up to 340 patients. The results were promising. Tumor recurrence improved by 26% per-cent at the end of one year and the time to recurrence was extended by 78 percent between the control and study groups. What is even more encouraging was that the therapeutic benefits of PI-88 had been persisted up to a three-year followup.” It was these impressive results that Medigen submitted for a Special Protocol Assess-ment (SPA) for global Phase III study to the US FDA at the end of August 2010.

Medigen chose to enter the NAT (Nucleic Acid Testing) market in China in order to bring in the revenues needed to develop PI-88. This sector is a very promising one, experiencing double-digit growth for the last five years. By bringing the original technology from the US, Medigen has added value to its offering by integrating the highest levels of Taiwanese precision engineering. This project has been very successful in China, as Dr. Chang reveals. “This combination was presented to China, and the Chi-nese government has now decided to open up the blood bank market. It is a huge market. Medigen is now one of the key players in China along with Roche and Novartis.”

Despite the unprecedented growth and success of the NAT market in China, Dr. Chang is keen to stress that at its core, Medigen wants to be a specialty pharma company, helping those around the world that need help the most: “We want to make Medigen the leading liver-focused pharma company in the world. As long as we can beat liver cancer, we stand a chance of becoming one of the world-class players, because liver cancer is the most important cancer in China as well.”

Stanley Chang, Chairman of Medigen Biotech

Medigen: Taiwan’s Drug Development Pioneer



Taiwan Report

acquired by Parexel, for whom Liou is corporate vice president and general manag-er of the Asia Pacific region), is keen to stress that moving to early-phase clinical trials will not be the only challenge that Taiwan will face in the years to come. “Although the clinical research environment has a good level of quality, Taiwan is still small in terms of size. Out of the 100 hos-pitals that are involved in clinical studies, only the top 20 are prominent enough to attract global clinical trials. The other 80 hospitals in the country are just beginning to become aware of or involved in clinical research, and so are less experienced.”

The room for growth may

come as a surprise to those looking at the 2009 figures for clinical trials conducted in the country, but the Tai-wanese government has rec-ognized the potential for de-veloping this sector into one of the country’s key industrial strengths. By creating the title of “Centers of Excellence” for those hospitals and medi-cal centers that excelled early and provided incentives for others to reach this position, the Taiwanese government is hoping that more institutes will look to clinical trials as a source of profit and a way to bring the latest medical innovations to their patients. The natural result of this will be more foreign investment coming into Taiwan from Big

Pharma. Liou sums it up by saying, “A key factor in at-tracting clinical trials to Tai-wan is that quality data can be collected in the market, coupled with other benefits such as fast recruitment and overall efficiency.”

“For drug companies,” says Chung Y Hsu, CEO of China Medical University Hospital (CMUH), one of Taiwan’s Centers of Excel-lence for clinical trials, “the most important aspect of any clinical study comes down to one sentence: Time is mon-ey.” Hsu holds to the philoso-phy that Taiwanese hospitals need to be as compliant as possible with pharmaceutical companies in order to attract both their customers and their trust. “These relation-ships are not built through sales and marketing depart-ments, but rather through a hospital’s track record. When we enroll the patients at very good speeds, then the compa-ny has a good experience with

JM Chang, CEO of Pharma Power Biotec



Taiwan Report

us. The next time we collabo-rate, we are able to stream-line our procedures because of our working experience, which makes the experience of working with CMUH get better every time. We let our performance speak for itself.”

CMU Hospital, or “health-care system,” is part of the China Medical University complex. Chairman of both China Medical University and CMU Healthcare System’s Chang-hai Tsai explains the origins of the organization: “CMU, as China implies, was

funded initially for traditional Chinese medicine (TCM). It has become a medical univer-sity with balanced advances on both TCM and Western medicine. With emerging emphasis on alternative and complementary medicine in Western countries and devel-opment of novel drugs from natural products, CMU is in a unique position in the new era of pharmaceutical R&D.”

Mackay Memorial Hos-pital is a Christian hospital constructed 130 years ago in memory of Dr. Mackay,

a Canadian who came to Taiwan to preach Christi-anity, and today is one of Taiwan’s largest centers of excellence for clinical trials. Its superintendent, Cheng-ho Tsai, believes that Mackay Memorial needs to keep in-novation high in order to compete with Taiwan’s other centers of excellence and therefore win more business with pharmaceutical part-ners. “In the recent years, Mackay has not only spent a lot on research and develop-ment (about 3 percent of the total revenues, or US$10 mil-lion), but it also established the first hospital-based in-cubator center in Taiwan. By fostering collaboration with the industry, Mackay encourages the innovation results to be shared mutually in rapid ways. By providing a mature clinical trial environ-ment, Mackay helps the big scale pharmaceutical indus-try to develop new drugs and also helps small-scale and new innovative enterprises

to conduct clinical trials rap-idly and safely.” The hospital also provides eight laborato-ries to the industry in order to research cell therapy, and plans to establish 10 Good Tissue Practice (GTP) labo-ratories in accordance with American and European specifications, in which can-cer vaccine and stem cell re-search can take place.

According to the super-intendent of the National Taiwan University Hospital, (NTUH) Ming-fong Chen, remaining a center of excel-lence for clinical trials re-quires the optimal combina-tion of various factors: proof of its competency, an infra-structure fit for purpose, hav-ing the best people and exper-tise, and, above all, access to the latest innovations. Chen believes that it is NTUH’s “level of innovation that al-lows us today to stand up as a Center of Excellence for clin-ical trials”. He believes that in the next 10 years, NTUH will outgrow the Taiwanese

Left to right: CY Huang, President & CEO, NatureWise; Alex Liu, Chairman, Golden Biotechnology



Taiwan Report

market and become one of the leading medical centres in the Asia Pacific region. His strategy in order to achieve this is to look to the potential of China.

Chen echoes many of the key decision-makers in Tai-wan in his vision for future collaboration with China: “If innovation comes from Taiwan and is protected by patents, then it can be sold worldwide and China would become our closest and big-gest market.” Through part-nerships with Chinese hospi-tals, Chen hopes that NTUH will be able to take advantage of this trend in the years to come. If harmonization of clinical trials between the two countries comes as a result of

ECFA, the Taiwanese clinical trial market will be thrown wide open, and it is Taiwan’s key healthcare personalities that are leading the way in preparing for this. As Johnsee Lee puts it, “If we can lever-age China, this will allow us to expand into a larger market and bring more opportunities for biotechnology, pharma-ceuticals, medical devices, and healthcare in general.”

taiwaneSe innovation: botH buSineSS and Science

When looking for answers as to why the Taiwanese bio-tech industry has yet to pro-duce a single internationally approved drug, many in the industry point to the fact

that the investment climate over the last three decades evolved in a significantly dif-ferent way to that of the US, despite the best hopes and intentions of the Taiwanese government. Back in the ear-ly 1980s, when the Executive

Yuan first selected biotech as a key industrial driver for di-versifying Taiwan’s economy, it looked to the US model and tried its best to emulate it, setting up biotech clusters and encouraging venture cap-italists to invest in promising startups.

However, after years of investing in the Taiwan-ese ICT sector with its fast rates of return and rapid climb to global hegemony, investors were put off by the slow cooking times and high dropoff rates they found in Taiwan’s fledgling biotech industry. Taiwanese biotech companies were forced to in-novate to survive, and as a result a very different model began to emerge in Taiwan.

Peter Tsai, President of Orient Europharma



Taiwan Report

JM Chang, CEO of Pharma Power Biotec, explains his company’s business model, and the way it has allowed his company to continue to focus

on its primary goal: “Many biotech companies are found-ed on the idea of a novel and niche technology, but after burning through their initial

capital they can often simply disappear. Pharma Power Biotec aimed to avoid this situation, and create a sus-tainable business model that would ensure the company’s continued growth. There-fore, we focused on creating a revenue-driving business segment, using our drug de-livery system to produce dia-betic medicine. In this way, our company is able to gain revenues, while simultane-ously developing our Radion PDT (photodynamic therapy) product for the treatment of early-stage oral cancer. By using this business model, we can work on treating this disease while continuing to improve our company.” The company has introduced a

line of health foods that will continue to bring in revenues while the Radion PDT prod-uct finishes development.

Another unique aspect of Taiwan’s biotech industry is the number of companies focused on developing drugs for the Western market from compounds that have been used for centuries in tradi-tional Chinese medicine. By bringing these compounds into a Westernized R&D process, biotech companies can drive revenues by dis-tributing them in existing TCM markets like Taiwan and China, and simultane-ously develop compounds for Western biotech drugs. NatureWise Biotech & Medi-cals Corp. is one company

Mackay Memorial Hospital in Taipei

Mackay Memorial HospitalNo. 92, Sec. 2, Zhongshan N. Rd., Zhongshan Dist., Taipei City 10449, Taiwan.Tel: +886-2-2543-3535 Fax: +886-2-2543-3642 Website: http://www.mmh.org.tw/

Mackay Memorial Hospital“Passion, Cooperation, Innovation and Excellence”

We engage in research in the biological sciences and focus on seven research fields, including human genetics, vascular medicine, cancer and immune medicine, mitochondrial medicine, stem cell and regeneration medicine, translational medicine and geriatrics. We also participate in multidisciplinary cooperation with technology-based universities to maintain professional excellence and to ensure continuous innovation and development.



Taiwan Report

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Taiwan Report

following just such a path. Working on an HDAC inhib-itor to rival SAHA (the first of its kind to be approved by the US FDA), NatureWise is hoping to tackle the global problem of neurodegenera-tive diseases using traditional Chinese remedies. “Because our products come from na-ture, we have incorporated our products into dietary supplements in order to build the company’s revenues while we wait for drug approval,” explains Chung Yang Huang, president and CEO of Na-tureWise.

However, he believes that in an ideal world, TCM and Western medicine should be separated by different regu-lations. “Many East Asian governments including Tai-wan have tried to make TCM compatible with FDA regulations. This only serves to slow down the release of medicine and is not good for the industry. In order to make TCM a successful but regulated industry, the countries where it is stron-gest need to create their own regulations, and lead the world in creating a structure where Eastern methods can

flourish and thrive.”“In 2002, I was invited

by a group of scientists to build up a new company, the purpose of which would be to screen new candidates for cancer therapies—new leads and new drugs,” ex-plains Alex Liu, chairman of Golden Biotechnology. Liu decided to focus his at-tentions on antrodia cam-phorata, a fungus unique to Taiwan that was known in traditional herbal medicine for having anticancer prop-erties. However, after sev-eral years of development, he was surprised to find that the international reaction to herbal extracts was not what he hoped it would be. “We

presented our findings to BioTokyo that year. We were surprised to find out that the reaction to our research in Ja-pan was very different from what we had experienced in Taiwan—biotechnologists in other countries were simply not excited by herbal medici-nal extracts. I realized that without a compound, there was no point in continuing.” So Liu turned his attentions to developing a drug from the fungus that was more in tune with traditional Western medicine. Golden Biotech’s new cGMP facility allows for production of this new compound, but also allows the company to take advan-tage of the large market for the traditional herbal extract that exists not just in Taiwan and China, but increasingly in Western markets such as the US and Europe. “My strategy has always been to find a way as early as possi-ble to make a profit from this discovery, while still pursu-ing high scientific goals. This facility design enables Gold-en Biotech to produce a semi-purified extract to be turned into a health food and also a purified compound for the

clinical trial. Every product has its own market. We have put all our energy into this product, and it is beneficial to cancer patients.”

Jen Chen, general man-ager of Genovate Biotech-nology, wanted to get his strategy right from the very beginning. On coming back from the US and forming Genovate in 1995, he made sure that the initial investors in the company would have to be well chosen in order to make sure that the business model was a success. “Geno-vate has three types of share-holders,” explains Chen. “Each is crucial for the suc-cessful development of the company. The first of these is the government, as we know that for a pharma company to be successful, regulatory synchronization is the key. You have to work with the government to make sure that regulatory issues can be managed.

“I also thought it was nec-essary to have successful pri-vate Taiwanese business in-volved at a shareholder level. Taiwanese people are partic-ularly business-oriented, and have had great successes with

Mark Lee, Vice Chairman of Morris Enterprise



Taiwan Report

high-tech products over the years. I wanted to learn how to become a good OEM, and how to turn it into a profit-able business. Biotech in a global sense is not a profit-able business. Having these business minds on board was key to discovering the best way to run a biotech com-pany that was also profitable while it was in its develop-ment stage.

“The third key sharehold-er is US biotech. No matter what happens in the Asian biotech sector, people will always look at the US as the golden standard. In Taiwan, 16 of the top 20 companies are multinationals. This is not because they make generics better than local companies, but because people still have the preference to buy import-ed generics from well-known brand companies rather than from local companies.”

From these firm begin-nings, Genovate has grown into a player for all segments of the market. As well as working on new drug dis-covery, the business also in-volves itself in OEM, sales and marketing, and clinical trials, truly taking the best of everything that Taiwan has to offer.

taiwan’S diStributorS: Striding over boundarieS

As a result of ECFA, the impending review of Tai-wan’s national health insur-ance system, and the coun-try’s growing importance as a clinical trial hub, the interest from multinational companies in the country is on the rise. However, with a

market size of 23 million, it is inevitable that some phar-maceutical companies are willing to market their drugs in Taiwan, but not willing to establish their own opera-tions in the country. Mark Lee, vice chairman of Mor-ris Enterprise, one of Tai-wan’s leading distributors, explains the advantages of choosing a Taiwanese dis-tributor over entering what can be a very challenging business landscape alone: “The price of pharmaceu-ticals had been cut by the government year on year and this has been constantly shifting the landscape for distributors and pharma companies in Taiwan. Here

at Morris Enterprise, we have a very good relation-ship with the decision mak-ers in a lot of hospitals. Due to compliance with the SOPs and our familiarity with all the procedures, we make the registration and bidding pro-cess run a lot more smoothly than our competitors.”

In order to further grow their business, Morris has chosen to diversify its product lines. Today their business is still 85 percent pharmaceu-ticals (as the management team within the company predominantly has expertise in this field), but Lee explains how Morris’ nutraceutical and cosmoceutical business is complementary to this: “We

work with a lot of hospitals already, and the same man-agement groups in hospitals also deal with nutraceuticals and cosmoceuticals. We still work with the same group of people and capitalize on this expertise.”

Orient Europharma (OEP) has turned the distribution model on its head, as Peter Tsai, the company’s founder and president explains: “Dis-tribution is a tricky job. If you are unsuccessful in mar-keting a particular product, the licensor is disappointed in the work you do; if you are successful, then the com-pany starts to think that they should enter the market them-selves. As a result, OEP also

“Sometimes being a distributor feels like being a babysit-ter,” says Louis Chiang, president of Giddi Pharma. “You help a child to grow and then when it has grown up the parents get it back, and you have to find another baby to take care of. We know there will be a day when we have grown the child very well, and the parents will take it back, but we are very happy to see these children grow well and successfully. That’s the reality, the fate of the distributor. All we can do is try to build a reputation for being a good babysitter.”

Giddi Pharma is a Taiwanese distributor whose main prin-cipals are specialty pharma companies such as Genzyme, for whom Giddi distributes 13 products in the Taiwan-ese market. Like many Taiwanese distributors, Giddi is looking to diversify its service offering in order to grow its business in a comparatively small market. Spotting the trend for an increasing number of drugs to be marketed towards self-pay markets due to the increased purchasing power of the Taiwanese population, and their desire to have access to the most innovative drugs on the market, Giddi has focused its attentions here: “The self-pay market is growing in Taiwan, and we have made sure not to miss this opportunity. We have seen that the industry is moving in that direction, because while the government continues to cap budgets and stick to reference prices, technology continues to grow and develop. A point will be reached where people want good products and are willing to pay the difference. This is why we wanted to incorporate these products into our product line.”

Louis Chiang, President of Giddi Pharma

Giddi Pharma: Putting the Special into Specialty Pharma



Taiwan Report

needs to develop its own products, and these will come through our expertise and capabilities in new formulation.” To tackle this issue, Orient Europharma moved away from the traditional model of distribution and established Orient Pharma (OP), “the manufacturing arm of the company.” A new plant was built, and today OP works to develop new for-mulations, delivery systems, and indica-tions in collaboration with its partners “that do not have manufacturing facili-ties of their own. We manufacture for them as well as promote the products in our own territory. The current example is that we are working with DURECT in the US, who will market the drugs in their country but will rely on us for high-quality manufacturing.” By invest-ing more deeply into the value chain, OEP are actually strengthening their traditional business of distribution, as Tsai explains: “The new plant gives OEP

the capability to create a synergistic ef-fect as we begin to harmonize our com-pany product portfolios throughout the Southeast Asian regions where we are present. This gives us an advantage when we want to license in new products, as we can show our partner the capabilities that OEP has.”

FigHt For your (intellectual property) rigHtS

“There has been a marked improve-ment in intellectual property enforce-ment here over the last few years,” says Mei-hua Wang, director general of Taiwan’s Intellectual Property Office, which operates under the Ministry of Economic Affairs. “Last year the coun-try was taken off the USTR Special 301 Report, which is a very positive response from the United States, and proves that they appreciate the efforts that have been made here to enhance IP protection.”

For those that only know of China’s poor record for the protection of intel-lectual property rights (IPR), it might be easy to assume that Taiwan is equally lax about IP regulations. However, this is far from the case. Wang explains that “for the Taiwanese government, intellectual property rights are very important, as they are one of the key factors to attract-ing foreign investment. As a result, for a number of years they have been focused on improving the overall IP environ-ment in Taiwan. The Taiwan Intellectual Property Office (TIPO) was established in 1999 in order to centralize the govern-ment’s efforts to improve IP regulation and enforcement.” The achievement of being taken off the USTR Special 301 Report is recognition of the work that has been done to improve the IP situa-tion in Taiwan.

Wang is keen to stress that “Taiwan’s President and ministers fully understand



Taiwan Report

that high IP protection is very impor-tant for attracting foreign investment, so they asked TIPO to strengthen IP protection. Also, for the last 10 years, Taiwan has faced pressure from both the US and Japan to take this action. Be-cause Taiwan’s main industries are fo-cused on innovation and R&D, it knows that if you want to internationalize your business, you must have a high-quality

patent and promote your trademark, so Taiwan also saw the need to change as a result of its industry. The country also sincerely wants to take care of this is-sue. Coordination and collaboration be-tween agencies is very difficult, but by assuming this role TIPO understands that these things have to be done well.”

Pressure from both national and in-ternational businesses to bring Taiwan towards a culture of respect for intel-lectual property has combined with the government’s ambition to make Taiwan a reputable place for investment in a way that has so far proved to be a suc-cess. TIPO’s creation was the first vital step in this process, but that does not mean that their work is finished.

TIPO is working to make sure that those industries that rely on IP rights, such as the pharmaceutical industry, are fully satisfied with Taiwan’s legislative stance. Earlier in 2010, TIPO submit-ted a revised draft of the Patent Law to the country’s Legislative Yuan that contained several articles relating to the pharmaceutical industry, addressing the issues of both local and multinational companies. Through a series of con-sultations with stakeholders within the pharmaceutical industry, TIPO worked

to create a list of topics that needed to be addressed in the new patent law, such as patent expiry, linkage, and extension. In order to draft the law, the IP office ex-amined existing legislation from across the world—Europe, the US, Japan, and China—and believe they came up with a solution that was fair for all. As Wang says, “We took care of this article by taking a very neutral stance. Now that

we are competing with many countries, especially with Mainland China, Tai-wan needs to have a good IP protection environment, which will give us the power and the advantage to compete with other countries. This is happening today, and we have already achieved a great deal.”

“The establishment of the Intellec-tual Property Office was a milestone in Taiwan’s history of Intellectual Property protection, especially in the field of pat-ents,” says Fred Yen, managing partner of Tai E International Patent and Law Office. “Before the establishment of TIPO, patents and trademarks were the responsibility of a small governmen-tal department. But after its creation, IP matters like patents and trademarks have become a major business for our government, and contribute significant-ly to state revenues every year.”

Yen explains that until recently, the pharmaceutical and biotech industries did not account for a particularly large portion of his business. However, he be-lieves the situation has recently begun to change. “We have observed a definite improvement in the state of the industry over the last 30 years. Originally, Tai-wan looked to the successes of the US

biotech sector, and tried to use it as a model for development of the industry in Taiwan, by establishing clusters of biotech companies. But it was not very successful, because the companies here did not manage to survive alone. A sup-porting structure was needed, which in-cluded aspects such as IP, a supportive banking system, legislation, and govern-mental measures.”

However, in the pharmaceutical sector, nine out of every 10 companies working with Tai E are multinational companies. “Multinational pharmaceu-tical companies work with Tai E because they need to file patents in Taiwan, for instance, in order to secure their drug prices with the one major buyer here in Taiwan—the administration.” By work-ing with local companies such as Tai E, international clients guarantee that they have a company that will fully un-derstand the local patent specifications, making their registration processes smoother and easier.

On first inspection, the fact that a drug has not yet been successfully devel-oped in Taiwan might lead those view-ing the market to the conclusion that the country’s pharmaceutical market is not particularly dynamic. This is far from the case. Those with a more inti-mate knowledge of the pharmaceuti-cal and biopharmaceutical industry in the country understand that this is the moment where Taiwan can succeed in distinguishing itself from its Southeast Asian neighbors. A number of factors support this conclusion—the growing relationship with China is top of this list—but the fact that the Taiwanese biotech sector has developed in such an idiosyncratic way that it seems to sup-port the argument that whether or not the government’s plans for the develop-ment of the biotech sector bear fruit, it will not be long before Taiwan makes a name for itself in new drug development and become a key agent in the rising im-portance of Asia in the modern pharma-ceutical landscape.

“Distribution is a tricky job. If you are unsuccessful in marketing a particular product, the licensor is disappointed in the work you do; if you are successful, then the company starts to think that they should enter the market themselves.”

— Peter Tsai, founder and president of Orient Europharma

email: [email protected]

pharmaceuticals taiwan report 2010

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