Strategic Positioning of Taiwan in the Global Biotechnology Value ...

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Dec 1, 2012 (4 years and 11 months ago)

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Strategic Positioning of Taiwan in the Global Biotechnology Value Chain

Yu-Shan Su
National Taiwan University, International Business Department, Taiwan

Abstract- The biotechnology industry has emerged rapidly
in recent years, especially after the completion of human genome
project. In the post-genome era, much more innovations and
applications have been created in the biotechnology industry
than any other industries. USA has not only led this industry,
but also built extensive collaborative networks to profit from
such innovation. We would like to discuss the strategic
positioning of Taiwan in the global biotechnology value chain.
Biotechnology firms in Taiwan could be categorized into
peripheral and core industries, respectively. The peripheral part
of the industry includes the firms stemming from the diagnosis
reagents and medical devices. They found niche points to enter
this new industry and generated profitable returns. The core
part of the industry referred to the firms with the capabilities of
developing new drugs. These start-up companies will be
important global partner and Asian hub in the global
biotechnology value chain.

I. OVERVIEW OF GLOBAL BIOTECHNOLOGY
INDUSTRY

Biotechnology industry has achieved many
technological breakthroughs in recent years. In general,
biotechnology could be categorized into three major areas:
bio-medical sector, bio-agriculture sector, and
bio-environmental sector. The bio-medical sector refers to
health-care and its related services including pharmaceuticals
and medical devices. Up to now, this is also the most
profitable sector of the biotechnology industry. The
bio-agriculture sector refers to biotechnological modifications
that can apply to agriculture, such as transgenic animals and
transgenic plants. The bioenvironmental sector refers to
environmental science such as oil-eating bacterial and
enzymes that could help recycle bio-resource and
bio-degradable materials. The biotechnology industry is on
the highest level of regulations all over the world. In USA, it
was regulated by the Food and Drug Administration, the
Environmental Protection Agency, and the Department of
Agriculture, respectively.
(I)
This paper only focuses on the
bio-medical sector.
Developments of biotechnology industry are still in the
early stage. It means that there are many opportunities and
potential markets. The biotechnology industry is a
capital-intensive, intellectual property-based and
knowledge-driven industry. Usually speaking, biotechnology
companies are formed by researchers holding patentable
technologies, then such startups are financed by venture
capitalists. Due to its regulatory requirements, this industry
typically has longer-term product developments than others.
Yet, it also has higher entry barriers than other counterparts to
be successful. Therefore, it entails (1) string patent protection,
(2) solid capital basis, (3) good project management, and (4)
effective strategy execution to obtain fast-track regulatory
approvals.
The global value chain of biotechnology industry
consists of basic research, applied research, integration &
development, production & manufacturing, testing &
validation, marketing & sales, and post-marketing services
(see Fig. 1), as in [1] [3] [4]. Cross-border value integration
and inter-firm collaboration are essential in building global
networks in the global value chain for this industry.




Figure 1: The Global Value Chain of the Biotechnology Industry
The profile of the global biotechnology and
pharmaceutical industry in year 2001 is shown on Table 1. (1)
Revenues: Pharmaceuticals sector was US$392 billion.
(2)

Medical devices sector was US$159 billion.
(3)
Biotechnology
sector was $49.9 billion.
(4)
(2) Growth rate (%):
Pharmaceuticals part was 12%.
(2)
Medical devices part was
7%.
(3)(5)
Biotechnology part was 20%.
(6)
(3) Research and
development (R&D) investment ratio (%): Pharmaceuticals
part was 18.
(7)
Medical devices part was 12.9.
(5)

Biotechnology part was 76.
(6)
(4) Market cap/ Revenue ratio:
Pharmaceuticals part was 15. Medical devices part was 7.
Biotechnology part was 40. In the year 2001, the estimated
global healthcare R&D expenditures were about US$70
billion.
(8)
Basic
Research
Applied
Research
Integration &
Development
Production &
Manufacturing
Testing &
Validation
Marketing
& Sales
Services
TABLE 1: 2001 GLOBAL BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRY PROFILE
Revenues (US billion) Growth Rate (%) R&D investment ratio (%) Market cap/ Revenue ratio
Pharmaceuticals 392 12 18 15
Medical Devises 159 7 12.9 7
Biotechnology 49.9 20 76 40

The trend in market capitalization from 1994-2002 is
shown on Table 2. It was booming in Year 2000. It was
increased from US$137.9 billion in 1999 to US$353.5 billion
in 2000. And, Year 2001 was US$330.8 billion. Year 2002
was US$225.0 billion.
(9)
Table 3 shows the global
biotechnology market structure by application: therapeutics
US$29.5 billion (59%), diagnostics US$6.1 billions (12%),
agriculture US$5.7 billion (12%), food US$4.3 billion (9%),
industrial US$2.5 billion (5%), and others US$1.9 billion
(4%).
(4)
Table 4 shows the global biotechnology market
structure by region: United States US$23.2 billion (46%),
Canada US$1.1 billion (2%), Latin America US$2.7 billion
(5%), Europe US$6.9 billion (14%), Japan US$11.5 billion
(23%), and Rest-of Asia US$4.5 billion (9%).
(4)


TABLE 2: MARKET CAPITALIZATION (UNIT: US BILLION)
Year 1994 1995 1996 1997 1998 1999 2000 2001 2002
$ 45.0 41.0 52.0 83.0 93.0 137.9 353.5 330.8 225.0

TABLE 3: 2001 GLOBAL BIOTECHNOLOGY MARKET STRUCTURE (BY APPLICATION)
Application Revenues (US Billion) Percentage of Total (%)
Therapeutics 29.5 59
Diagnostics 6.1 12
Agriculture 5.7 12
Food 4.3 9
Industrial 2.5 5
Others 1.9 4
Total 49.9 100

TABLE 4: 2001 GLOBAL BIOTECHNOLOGY MARKET STRUCTURE (BY REGION)
Region Revenues (US Billion) Percentage of Total (%)
United States 23.2 46
Canada 1.1 2
Latin America 2.7 5
Europe 6.9 14
Japan 11.5 23
Rest-of-Asia 4.5 9
Total 49.9 100

II. LEADING ROLE OF USA IN THE
BIOTECHNOLOGY INDUSTRY

Ever since the first biotechnology company i.e.
Genetech went initial public offering in 1980 in the USA,
USA has been in the leading role in this industry far from any
other country. Then the industry has evolved into a very
extensive collaborative network. The whole value chain for
product development has been integrated vertically, as in [2].
Biotechnology companies could be grouped into three types
in this aspect. The entire value chain has therefore become
more flexible and complete.
The first type is that companies can carry out entire
route by themselves. Traditionally, multinational
pharmaceutical companies have strong R&D capability and
complete integrated value chain for themselves, such as
Merck, Pfizer, and Bristol-Myers Squibb. The pharmaceutical
companies arise from Europe such as GlaxoSmithKline,
AstraZeneca, Aventis, Bayer, Roche also follow similar
pattern in this regards.
The second type is that biotechnology firms have their
niches in providing pipeline products to the big
pharmaceutical companies, and therefore to form strategic
alliances for join development. Examples were Genentech
with Eli Lilly (for human insuline) and Roche (for human
interferon), Biogen with Schering-Plough (for human
interferon) and SmithKline Beecham (for Hepatitis B Virus
vaccine). They outsource certain parts of the work to those
contract houses in order to stay focus on the drug
development. After the initial decoding of Human Genome,
there were biotech companies providing genomics
technological platform, such as Celera, Human Genome
Sciences. Other companies such as Affymetrix, Incyte,
Orchid and Hyseq, developed biochips to support in new drug
screening.
The third type is that firms specialized in certain portion
of the development process is so-called outsource
subcontractors. Contract Research Organization (CRO), such
as Quintiles and Covance, who conduct clinical research for
biotechnology and pharmaceutical companies has become
important in the industry gradually. Others like Qiagen have
specialized as Contract Manufacturing Organization (CMO)
besides originally being as research tools and reagents
provider.
The industry profiles of the USA in 2001 were as
following (Table 5): company numbers were 1,457, while 342
of them were public companies; revenues were US$28.5
billion; R&D expenditures were US$15.7 billion; sales were
US$20.7 billion; employee numbers were 19,1000.
(6)
The
numbers of profitable company in USA grew from 4 in 1992
to 29 in 1998. (Table 6)
(10)
The intellectual property played a
major role in this industry as indicated by the number of
patents during the 1989-1994 period (Table 7). Among them,
USA took 59%, European countries took 19%, Japan took
17%, and the rest took 5%.
(11)
This was part of the reason
why USA was so dominant in this industry.

TABLE 5: 2001 USA BIOTECHNOLOGY INDUSTRY STATISTICS
Number of Companies 1,457
Number of Public Companies 342
Revenues 28.5 (US billion)
R&D Expense 15.7 (US billion)
Sales 20.7 (US billion)
Employees 191,000

TABLE 6: 1992-1998 PROFITABLE BIOTECHNOLOGY COMPANIES IN USA
Year 1992 1993 1994 1995 1996 1997 1998
Number 4 5 5 7 8 10 29

TABLE 7: 1989-1994 DISTRIBUTION OF BIOTECHNOLOGY PATENTS
USA 59 %
Europe 19 %
Japan 17 %
Others 5 %
Total 100 %

The estimated revenues for USA biotechnology industry
in 2002 were US$20.43 billion (Table 8). Within them,
medical pharmaceuticals accounted for US$15 billion (73%),
medical diagnostics were US$2.9 billion (14%), agriculture
were US$1.4 billion (7%), specialty chemicals were US$0.75
billion (4%) and non-medical diagnostics were US$0.38
billion (2%).
(12)
Further more, a revenues forecast for the
year of 2012, medical pharmaceuticals will reach US$46.5
billion (yearly growth rate at 12%), medical diagnoses will
reach US$5.9 billion (yearly growth rate at 7%), agriculture
will reach US$5.7 billion (yearly growth rate at 15%),
specialty chemicals will reach US$2.8 billion (yearly growth
rate at 14%), non-medical diagnoses will reach US$0.9
billion (yearly growth rate at 9%). The total revenues of the
US biotech industry in 2012 will be $61.8 billion (yearly
growth rate at 12%).
(12)
Again, pharmaceutical sector account
for a majority of the market share of biotech with a
double-digit growth rate. Pharmaceutical industry is a
research-intensive industry in the US with an estimated R&D
expenditure around 17.7% of sales.
(7)
In terms of percentage,
biotech spends 76% of sales in R&D that is US$15.7 billion,
the highest among all industries.
((1))

TABLE 8: USA 2012 ESTIMATED BIOTECHNOLOGY INDUSTRY REVENUES (UNIT: US BILLION)
Product Type 2002 2012 2002-2012 Growth Rate (%)
Medical Pharmaceuticals 15 (73%) 46.5 (75%) 12%
Medical Diagnostics 2.9 (14%) 5.9 (10%) 7%
Agriculture 1.4 (7%) 5.7 (9%) 15%
Specialty Chemicals 0.75 (4%) 2.8 (5%) 14%
Non-Medical Diagnoses 0.38 (2%) 0.9 (1%) 9%
Total 20.43 (100%) 61.8 (100%) 12%

III. OVERVIEW OF BIOTECHNOLOGY INDUSTRY IN
TAIWAN

We would like to position Taiwan to be an indispensable
global partner and Asian hub for biotechnology industry
development. The roles of Taiwan in this industry are (1) the
R&D and clinical center of Asian multiple disease, (2) the
scaling base of biotechnology and pharmaceuticals, (3) the
applied production center of medical engineering, (4) the
technology center of Asian agriculture products, and (5) the
core center of Asian bio-medical venture investment, as in
[1].
Taiwan lack R&D in the pharmaceutical industry in the
past. Due to the emerging biotechnology, our scientists
believe this is the only opportunity to develop R&D in the
pharmaceutical industry. There are two directions for
developing, as in [1]. One is innovation-driven biotechnology
industry. The other is niche-driven precision manufacturing
biotechnology industry.
The collaboration between upstream and downstream of
industrial value chain in Taiwan: (1) For upstream, it refers to
basic research that includes National Science Council,
Academia Sinica, and universities, and clinical research that
include hospital, medical school, National Health Research
Institutes, and clinical research institutions. (2) For middle
stream, it refers to applied research and development
(including technology adoption and technology transfer),
which includes Ministry of Economic Affairs, Department of
Health, Development Center for Biotechnology, and ITRI
Biomedical Engineering Center. (3) For downstream, it refers
commercialization, which includes all biotechnology firms of
clustering industrial sectors (e.g. Hsinchu Science Park etc.,),
as in [1] [6].
Taiwan and USA have very different market structure.
Total USA revenues are US$20.43 billion in 2002, among
which medical pharmaceuticals take 73%, medical diagnosis
take 14 % and all the others (including agriculture,
non-medical diagnosis, and special use) take 13% (Table 8).
In contrast, total Taiwan revenues are NT$17 billion in 1998
(Table 9). Among this pie, medical pharmaceuticals and
specialty chemistry take just 30%. And Food sector take 43%
and agriculture take 6%. Service and all others take 20%.
Nevertheless, we focus on medical part.

TABLE 9: 1998 MARKET STRUCTURES IN TERMS OF REVENUES OF TAIWAN BIOTECHNOLOGY INDUSTRY
Medical pharmaceuticals & Special Chemistry 30 %
Food 43 %
Agriculture 6 %
Services 9 %
Others 12 %
Total (NT $ 17 billion) 100 %

Total revenues of biomedical part of Taiwan in 2001 are
NT$100.9 billion (Table 10). In this structure:
pharmaceuticals take NT$43.1 billion (43%); medical devices
take NT$27 billion (27%); Chinese medicine take NT$4.2
billion (4%); Active pharmaceutical ingredients take NT$41
billion (4%); and emerging biotechnology take NT$22.5
billion (22%). Emerging biotechnologies include genes,
pharmaceuticals, diagnostics, agriculture biotechnology,
protein drugs, biotechnology R&D services, bioinformatics,
etc.
(13)

TABLE 10: 2001 TAIWAN BIOTECHNOLOGY INDUSTRY REVENUES (NT BILLION)
Pharmaceuticals 43.1 43 %
Medical Devises 27 27 %
Chinese Medicine 4.2 4 %
Active Pharmaceutical Ingredients 4.1 4 %
Emerging Biotechnology 22.5 22 %
Total 100.9 100 %

A. Industrial Developments in the Past
The two firms, Lifeguard and General Biologicals,
represented typical biotechnology firms in the first generation.
They only focus on the local market of liver disease, and
therefore their development seems to be limited. Now,
Lifeguard is closed, and revenues of General Biologicals only
possess about NT 100 million dollars.

B. Industrial Developments at Present
Similar to IC industry in Taiwan, biotechnology industry
development also stared from the peripheral business at the
early stage. Then it developed into core business gradually.
Taiwanese listing firms are introduced first and these firms
are categorized into core and peripheral industry respectively.
The peripheral field of the industry includes firms stemming
from the diagnosis reagents and medical devices. They found
a niche point to enter this new industry and generated
profitable return. The core component of the industry refers
to firms with the capabilities of developing new drugs. These
start-up companies will make Taiwan an important global
partner and Asian hub in the global value chain of
biotechnology industry.

1) Publicly-Listed Biotechnology-Related Firms in
Taiwan
All listing firms about broad definitions of
biotechnology and pharmaceutical industry in Taiwan are in
the following tables. Some companies are registered in the
Taiwan Stock Exchange (TSE) market (Table 11), and the
others are in the Over The Counter (OTC) market (Table 12).
(14)

TABLE 11: BIOTECHNOLOGY-RELATED FIRMS LISTED IN THE TSE MARKET
Company Major Product Registered
Capital (NT$ M)
EPS NT$/Share
(2000)
EPS NT$/Share
(2001)
China Chemical Antibiotics and Drugs 2510 .04 0
Everlight Chemical Active Pharmaceutical Ingredients of Prostaglandin 3740 0.43 0.53
Yung Shin Pharm Generic Drugs 2420 1.83 2.3
Standard Chemical Generic Drugs 1090 1.04 1.19
Pisiang Machinery Automatic Wheel Chair 1,280 3.5 1.5
Apex Biotechnology Blood Glucose and Blood Uric Acid Monitoring
System
399 2.72 3.41
Maywufa Hair Beauty Products and Medical Logistic Service 653 0.55 1.39
TABLE 12: PUBLICLY-LISTED BIOTECHNOLOGY-RELATED FIRMS LISTED IN THE OTC MARKET
Company Major Product Registered
Capital (NT$ M)
EPS NT$/Share
(2000)
EPS NT$/Share
(2001)
Yung Zip Chemical Active Pharmaceutical Ingredients of Herbs 330 0.42 0.6
Microlife Digital Clinical Thermometer 706 3.92 5.16
Enfield Medical Medical Equipments and related Materials
Distributor
431 3.03 6.74
TTY Biopharma Liposomal Drug Delivery System 371 1.71 3.63
Apex Medical Patient Care Products 331 1.39 2.34
Bioteque Medical Disposable Products 436 1.26 1.37
PhytoHealth New Drug Development and Discovery 250 -1.35 -1.39
Chi Sheng Oral and Injection Preparations 320 0.76 0.73
Sinphar Parma Drugs, Healthy Food and Health Care Products 480 1.04 1.44
Medicine Shoppe Medical Distributor 230 1.38 1.44
Walton Pharm Medical E-Commerce 260 0.24 0

Some listing firms, such as China Chemical, Everlight
Chemical, Yung Shin Pharm, Standard Chemical, Yung Zip
Chemical, Chi Sheng, Sinphar Parma, are traditional
pharmaceutical company, they thus don’t match our
definition for the biotechnology firms. Among them, China
Chemical, Yung Shin Pharm, and Standard Chemical are big
three pharmaceutical companies in Taiwan. In addition,
Maywufa, Medicine Shoppe, and Walton Pharm are medical
distributor. They also don’t match our definition for the
biotechnology firms. Again, Medical Disposable Products of
Bioteque doesn’t match our definition, either.
Overall, some listing firms, such as Pisiang Machinery,
Apex Biotechnology, Microlife, Enfield Medical, and Apex
Medical are categorized into the peripheral field of the
industry. TTY Biopharma and PhytoHealth perform the
capabilities of developing new drugs are categorized to the
core component of the industry.

2) Biotechnology Peripheral Industry in Taiwan
The part of medical devices and diagnosis reagents are
characterized in the periphery of the industry. It’s not the
highest profitable and scaling market, but it’s a niche market.
Every product line has its own level of market share and
revenues (Table 13).
(14)
Especially, all firms in the peripheral
field of the industry are listing.

TABLE 13: BIOTECHNOLOGY PERIPHERAL INDUSTRY IN TAIWAN
Company Major Product Registered
Capital (NT$
M)
EPS NT$/Share
(2000)
EPS NT$/Share
(2001)
Apex Biotechnology Blood Glucose and Blood Uric Acid Monitoring
System
399 2.72 3.41
Microlife Digital Clinical Thermometer 706 3.92 5.16
Pisiang Machinery Automatic Wheel Chair 1,280 3.5 1.5
Enfield Medical Medical Equipments and related Materials Distributor 431 3.03 6.74
Apex Medical Patient Care Products 331 1.39 2.34

3) Biotechnology Core Industry in Taiwan
We know that pharmaceuticals always get the biggest
pie in this area. We can say all firms about involving the
process of new drug discovery are in the core of the industry.
This part is the highest risk but biggest return. Every firm in
this area should have their core competence. In the core of the
industry, Taiwan’s firms compete with global firms. This is an
R&D game (Table 14).
(14) (15)

TABLE 14: BIOTECHNOLOGY CORE INDUSTRY IN TAIWAN
Company Major Product Registered
Capital (NT$
M)
EPS NT$/Share
(2000)
EPS NT$/Share
(2001)
Vita Genomics SNPs Database, Bioinformatics, New Drug
Discovery
2,388 N/A 0.01
TaiGen Biotechnology Oncology and Anti-inflammatory Drug Discovery 1,333 N/A N/A
AbGenomics Therapeutical Antibodies and Diagnostics
Antibodies
545 N/A -1.45
ADImmune Japanese Encephalitis Vaccine, Tetanus Toxoid and
Influenza Vaccine
758 N/A N/A
UBI Asia Peptide Vaccine, Mouth and Foot Disease Vaccine 847 N/A N/A
TTY Biopharma Liposomal Drug Delivery System 371 1.71 3.63
PhytoHealth New Drug Development and Discovery 250 -1.35 -1.39
Genovate Biotech Contract Research Organization and Innovative
New Drug Development
875 -0.89 -0.57

4) Biotechnology beyond the Core and Peripheral
Industry in Taiwan
CMO and CRO are beyond the core and peripheral
industry. CMO is an original equipment manufacture for
pharmaceuticals, and CRO is a contractor who conducts
clinical research for biotech and pharmaceutical companies.
These outsource contractors with low costs and profitable
returns are emerging stars in this field. Table 15 shows two
examples.
(14) (15)

TABLE 15: BIOTECHNOLOGY BEYOND THE CORE AND PERIPHERAL INDUSTRY IN TAIWAN
Company Major Product Registered Capital
(NT$ M)
EPS NT$/Share
(2000)
EPS NT$/Share
(2001)
Scinopharma Taiwan Active Pharmaceutical Ingredients Contract
Manufacturer
3,700 N/A N/A
Genovate Biotech Contract Research Organization and Innovative
New Drug Development
875 -0.89 -0.57

C. Industrial Developments in the Future
We need to make a right policy decision to capitalize on
the potential of genomics and biotechnology to reduce
inequities in global health, especially in Asia. Ultimately, it
will be necessary to crystallize the many lessons learned from
a format that is easily digested. The effort should bring
nations together to alleviate suspicion, facilitate dialogue,
build trust, build up consensuses and agree on good practice
guidelines. Companies in Taiwan should harmonize the
approach toward the application of genomics and
biotechnology to solve major human health problems.
What’s the future of Taiwan’s biotechnology firms? The
SWOT analysis is as following:
(1) Strength: Taiwan’s government pays much attention for
this industry. Two national research programs are
currently established in Taiwan: National Research
Program for Genomic Medicine, and National Science
and Technology Program in Pharmaceuticals and
Biotechnology. Biotechnology industry is in the list of
Big-Five Emerging Technology Industries Promotion
Project in which our government will subsidy or give
these companies tax benefit. The biotechnology industry
is also included in the latest “Two-Trillion Double-Stars”
Industries Promotion Project (total NT$1,500 billion in
five years) this June. Some important medical
information special to Chinese has accumulated such as
hepatitis, nasopharyngeal carcinoma, and liver cancer, etc.
In addition, scale of clinical labs, new drugs and herbal
medicines have primary outcome.
Furthermore, whole Asian area follows the regulation of
new drug application of Food and Drug Administration
of the United State. Especially, Taiwan builds the
national health insurance (NHI) system, which
implements all-resident heath insurance project, so NHI
owns the very detail database of Taiwan inhabitant health
database. Taiwan has also established complete
information technology and telecommunication
infrastructures. More important, the emerging firms’
managements process entrepreneurship and have
sufficient capitals and excellent high-educated scientists
in life science field.
(2) Weakness: Lack of experienced R&D leader is the
weakest point for developing biotechnology industry in
Taiwan. Short of professional venture capital investors in
biotechnology is also a problem for the star-up
companies. More important, the protection of intellectual
property is not as powerful as that in USA. Besides,
internal markets are too small, pharmaceutical companies
are not scalable, and biotechnology clusters are not
complete formed.
(3) Opportunity: Biotechnology industry is an emerging
industry. Especially after human genome decoding, all
are at the same starting point of competition. In addition,
the infrastructures of information technology in Taiwan
are advanced and completed, that can assist to build the
infrastructure of biotechnology and bioinformatics and
then help screening the targets of new drugs. Moreover,
the grant China area is the potential markets for Taiwan’s
industry theoretically. Therefore, this united market can
support to establish its own standard for the
individualized medicine of prognosis and diagnosis,
especially for developing Chinese medicine.
(4) Threat: This industry deals with human health and life and
therefore is highly controlled by a lot of laws, for
example, requirements of intellectual property, GCP, and
cGMP, etc. Due to the global character of biotech
industry and under the regulation of World Trade
Organization and World Health Organization, developing
life science industry in Taiwan has to face intense global
competition. Besides the competition from developed
countries, and the threats from the developing countries,
such as Korea, Singapore, and China, cannot be ignored.

IV. STRATEGIC POSITIONING OF TAIWAN IN THE
GLOBAL BIOTECHNOLOGY VALUE CHAIN

After interviewing some related people and reviewing
these company profiles, we summarize strategic positioning
of Taiwan in the global biotechnology value chain (Table 16).
There are three implications: First, peripheral industry of
medical devices is still a niche for Taiwan. These
publicly-listed biotechnology-related firms who do not need
to compete with USA companies are Taiwan’s advantage.
Second, core industry of developing new drugs is still a
question mark for Taiwan. (1) Vita, TaiCen and AbGenomics
who commit in basic R&D can compete with global R&D
companies. (2) ADImmune and UBI Asia are two vaccine
manufactures. (3) TTY and Phyto who develop drug delivery
system are two publicly-listed biotechnology-related firms.
TTY seems to have potential, but Phyto is a question mark.
Third, CMO and CRO are emerging stars in Taiwan. CMO
such as Scinopharma Taiwan and CRO such as Genovate are
good examples. This part will be emerging markets in Taiwan.
To sum up, we conclude Taiwan’s positioning in the global
value chain from industry cluster view in Fig. 2, as in [5].

TABLE 16: STRATEGIC POSITIONING OF TAIWAN IN THE GLOBAL BIOTECHNOLOGY VALUE CHAIN
Basic Research Applied
Research
Integration &
Development
Production &
Manufacturing
Testing &
Validation
Marketing &
Sales
Services
(1) Peripheral Industry
(1-1) Apex Biotechnology +
(1-2) Microlife +
(1-3) Pisiang Machinery +
(1-4) Enfield Medical +
(1-5) Apex Medical +
(2) Core Industry
(2-1) Vita Genomics + + +
(2-2) TaiGen Biotechnology + + +
(2-3) AbGenomics + + +
(2-4) ADImmune + +
(2-5) UBI Asia + +
(2-6) TTY Biopharma + + + +
(2-7) PhytoHealth + + + +
(3) Beyond Core and Peripheral Industry
(3-1) Genovate Biotech + + +
(3-2) Scinopharma Taiwan + +
Source: Interview and Summary by This Study





(2-1) (2-1) (2-1) (1-1)
(2-2) (2-2) (2-2) (1-2)
(2-3) (2-3) (2-3) (1-3)
(2-4) (2-4) (1-4)
(2-5) (2-5) (1-5)
(2-6) (2-6) (2-6) (2-6)
(2-7) (2-7) (2-7) (2-7)
(3-1) (3-1) (3-1)
(3-2) (3-2)
Source: Summary by This Study
Figure 2: Taiwan’s Positioning in the Global Value Chain – from Industry Cluster View

Basic
Research
Applied
Research
Integration &
Development
Production &
Manufacturing
Testing &
Validation
Marketing
& Sales
Services
ACKNOWLEDGEMENT

I wish to thank H. Chiu and W. Huang for valuable comments of this
paper.

NOTES

(1) Biotechnology Industry Statistics, http://www.bio.org/er/statistics.asp
,
Biotech Industry Organization, Biotechnology Industry Organization.
(2) IMS World Review 2001, IMS HEALTH Global Services.
(3) US Medical Technology Industry Statistics, 2001, Advanced Medical
Technology Association (AdvaMed).
(4) Frost & Sullivan, Sep. 2002.
(5) The Lewin Group Report, March 2000, Advanced Medical Technology
Association (AdvaMed).
(6) Annual biotechnology industry reports, Ernst & Young LLP, June 2002.
(7) The PhRMA Industry Profile 2002, Chapter 2: Research &
Development — The Key to Innovation, pp12. , The Pharmaceutical
Research and Manufacturers of America.
(8) A Survey of Private Sector Drug Research and Development, Drugs for
Neglected Disease working group, MSF/DND Working Group,
pp171-175, http://www.neglecteddiseases.org
.
(9) Ernst & Young LLP and BioWorld.
(10) Alex. Brown, 1997. Life Sciences/ Biotechnology Industry Overview,
May 1997; Med Ad News, July 1998.
(11) EuropaBio 1997.
(12) Consulting Resources Corporation, 2002.
(13) Biotechnology and Pharmaceuticals Industry Statistics, Industrial
Technology Intelligence Services,
http://www.biopharm.org.tw/2t2s/situation.html
, BIOPHARM, MOEA
Taiwan.
(14) The Securities & Futures Institute, Integrated Securities Information
Database, and Web site: http://www.sfi.org.tw/newsfi/library/
.
(15) Company Registration Database, MOEA, Taiwan.

REFERENCES

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