Biomedical industry receives major priority focus in Taiwan

Taiwan’s biomedical industry, comprising applied biotechnology, pharmaceuticals, medical devices and health and wellness, has been identified as a key sector for priority development. This includes it within the authority’s “5+2 Innovative Industries Plan” meant to accelerate the transformation of Taiwan’s industrial base. In 2016, the Taiwan government launched a policy initiative called the Biomedical Industry Innovation Program (BIIP). The Program is part of the “5+2 Innovative Industries Plan” derived from the three principles of “innovation, employment and allocation” embedded in the government’s blueprint for the next generation of industries in Taiwan.

The Program was jointly promoted by various ministries as well as industries, academia, research and medical circles to enhance health and wellness for citizens. In order to position the island as the hub of biomedical research and development (R&D) in the Asia-Pacific region, the BIIP has centered on the theme of “creating local, global and future links”. By 2025, the goal of the Program is to develop 20 new drugs and have 80 different high-value medical devices on the international market, creating an NT-trillion-dollar industry offering a wide range of quality products. Another goal of the BIIP is to establish at least 10 biotechnology and health-related flagship brands by encouraging local enterprises to acquire or establish strategic alliances with high-potential international biomedical companies, as well as to expand into global markets.

How has the progress of the biomedical industry been accelerated? A number of additional priorities — such as joining digital technology and regenerative medicine R&D — were incorporated into the plan in 2018. From this point, the development of the biomedical industry, along with the digital industries and the optimisation of Big Data resources for medical purposes, were linked together with the DIGI+ Plan and the AI Action Plan. Therefore, it is expected that Taiwan’s digital technology infrastructure will be leveraged to speed up the integration of technology and integration of medical data to build the island’s long term competitiveness while raising the health and wellbeing of the population.

The Growing Trend of Taiwan’s Biomedical Industry

An increasing number of local biomedical companies are emerging, teaming up with doctors and hospitals to develop new ways of assisting people to live longer and healthier lives. The following statistics show the growing trend of the local biomedical industry. 

In 2020, the turnover of Taiwan’s biomedical sector was NT$ 601.1 billion, an increase of 7.4% over 2019. The health & wellness sector accounted for the largest share of the market at NT$205.5 billion (34.2%), followed by the medical device sector NT$192.4 billion (32.0%), applied biotechnology NT$114.2 billion (19.0%) and pharmaceutical sector NT$89.0 (14.8%). Meanwhile, the biomedical industry investments reached NT$ 69.7 billion, a significant growth of 26.5% year-on-year. At the end of 2020, there were 124 over-the-counter (OTC) biomedical companies with revenues of NT$ 271.2 billion in Taiwan. In addition, 62 biomedical companies had been registered on the Emerging Stock Market and 18 biomedical companies had been registered on the Taipei Exchange (TPEx).

What are the reasons behind the expansion? The Development Center for Biotechnology (DCB) credited the expansion of the industry to a focus on targeted projects chosen by the local medical professional associations and companies. A stable financial framework featuring contributions from both foreign and domestic venture capital has also played a vital role in helping to fulfill the promise of the potential sector. Moreover, another reason for this achievement was attributed to Taiwan’s homegrown heavyweights in the information and communications technology (ICT) sector who extended their expertise to the biomedical industry. In addition, the digitalised patient data, which has been collected since the 1990s under Taiwan’s national health insurance program, has provided a great support to facilitate big data analysis and medical AI.

The Development of Taiwan’s Biomedical Industry

At present, Taiwan’s biomedical industry has three primary focuses—applied biotechnology, pharmaceuticals and medical devices. 

The applied biotechnology sector in Taiwan covers five main areas: agriculture, food biology, environment biotechnology, new biopharmaceuticals and contract services. The 2009 national plan for biotech development helped launch the sector, which has since doubled in revenue size to reach NT$114.2 billion in 2020. The main focus of the sector is on the development of new drugs and biologics. 

The scale of the sector is small, while the structure is fragmented. Almost 600 enterprises, mostly small and medium sized, are classified as biotechnology companies and their combined revenues were about NT$110 billion in 2020. Because of the small domestic market, local drug developers often work with the contract research organisations and pharma multinationals to develop high-end drugs and expand overseas. Taiwan has also established a niche in the area of oncology with several companies developing new cancer drugs.

Taiwan’s pharmaceutical sector encompasses a broad range of related products, including small molecule drugs, biologics, active pharmaceutical ingredients (APIs) and Chinese herbal medicine. The total domestic market (including imports) for pharmaceuticals was worth NT$89 billion in 2020. Sales of chemical drugs and APIs account for the majority of the market, with 30% of demand fulfilled by local drug makers, mostly for APIs and finished drug formulations and the rest supplied by large and growing imports of innovative drugs. 

Taiwan is the seventh largest pharmaceutical drug market in the Asia-Pacific region and a net importer of pharmaceuticals. Its attraction to multinational drug makers is supported by high drug spending per capita, representing a large and growing demand for chronic disease treatment as the population of Taiwan is aging rapidly. Most Taiwanese drug manufacturers still target the development of generic versions of existing compounds, although some have started pursuing the creation of more added-value products through the development and application of new formulation or delivery techniques. 

Taiwan’s medical device sector includes a wide range of equipment and products used for diagnosis or therapy in patients. These are broadly classified into five categories: diagnosis and monitoring; surgery and treatment; in vitro diagnosis; assistance and compensatory; and other medical devices. Taiwan is a world leader in a number of products, including contact lenses, blood glucose and pressure meters, electronic thermometers and electric wheelchairs. The total local market (including imports) for medical devices was worth NT$192 billion in 2020. Due to the small size of the market, local medical device makers rely on exports for around 60% of their revenues, mostly for mid-to-low-end medical equipment and contracted manufacturing for multinational enterprises. On the other hand, Taiwan is highly dependent on imports for some 60% of domestic demand, mostly for high-end surgical, therapeutic and medical imaging devices used in hospitals and supplied from the US, Europe and Japan. 

Further steady growth in the sector is expected in the coming years mainly due to Taiwan’s growing elderly population and related higher demand for healthcare products and services, as well as the government’s policy support for more higher-value medical device manufacturing. Taiwan has announced the new “Medical Devices Act” to establish a system to effectively regulate medical devices throughout the medical device life cycle, marking a new start for medical device management in Taiwan. 

“Taiwan-specific” Regulations

The most commonly heard complaint about the local biomedical industry is the continued existence of certain “Taiwan-specific” regulations that restrain international marketing and development, as well as restrictions on financing that diminish venture capital investment. The regulatory environment—not only in terms of drugs, but in terms of IP, investment and IPOs—has to be internationally harmonised with other countries; otherwise, there’s a big gap, according to Chairman Johnsee Lee of the Biotech Innovation Organization Taiwan. 

On the other hand, the Director-General Shou-mei Wu of Taiwan Food and Drug Administration (TFDA) said that Taiwan will continue to follow international trends and work to harmonise with international regulations and reduce regulatory barriers that Taiwanese biomedical companies face when they attempt to compete in the international market. 

The Emerging Opportunity of Digital Health

In Taiwan, the digital health trend is drawing great attention to the businesses and new startups operating at the intersection of technology and medical science. A growing number of the island’s renowned hi-tech companies are diversifying into the biomedical industry with the aim of transforming the healthcare system on the island. The focus is on integrating advanced technologies with the latest medical applications to enable connected and smart healthcare. This development is expected to have a synergistic impact on Taiwan’s emerging biomedical industry. Because Taiwan has established strengths in ICT and manufacturing, as well as having one of the best healthcare systems and the largest medical databases in the world, it is particularly well-equipped to lead the development of innovative products and solutions across the whole digital-health ecosystem, as can be seen in some examples shown below.

For example, the world’s leading electronics manufacturer Hon Hai Precision Industry Co. is the main financier for the National Taiwan University’s (NTU) Cancer Center, which is working on a high-precision treatment using protons to treat tumors. Another big name in the ICT industry is Acer who partnered with MediaTek to form the “Asia IoT Alliance”, which leverages the Internet of Things to create biomedical breakthroughs such as remote health centers that provide cloud-based services for chronically ill people.  The China Medical University Hospital in Taiwan has collaborated with EverFortune AI, a local medical AI startup, to develop a variety of medical AI-assisted applications. The Industrial Technology Research Institute (ITRI), a government-sponsored R&D organisation, collaborated with three major hospitals to develop an AI-based diagnosis system for the early detection of diabetic retinopathy. 

What is the next stage for the development of the biomedical industry in Taiwan?  Key technologies such as AI, IoT/5G, information security and blockchains will be introduced by the local authority and private sectors. Taiwan’s unique international hardware manufacturing ecosystem will also be bonded with its complete domestic ICT industry chain to drive industrial growth and cross-domain innovation.