How to Encourage Biopharma Investment

When the Taiwan government last year unveiled its 5+2 Innovative Industries plan with biomedicine as one of the cornerstones, the multinational pharmaceutical industry noted that development with keen interest and optimism.

Taiwan can point to numerous assets that could make it a serious contender to become a regional or even global hub for biopharma. It possesses a well-established national health insurance system, professionally run hospitals, and highly capable physicians and other healthcare personnel. As a result, the quality of the data emerging from the growing number of clinical trials conducted in Taiwan is considered to be among the best in the region.

In addition, the government’s proclaimed commitment to making biotech one of its priority industries of the future has led to steady improvement in the available infrastructure for the sector: university programs, incubators and accelerators for fostering startups, and various research facilities, including a National Biotechnology Research Park scheduled to open later this year in Taipei’s Nangang District.

Taiwan’s sound legal system and intellectual property rights protection constitute another positive attribute. The IPR regime for pharmaceuticals was potentially strengthened by passage of Patent Linkage legislation in December 2017), provided that the implementation rules fully cover large-molecule drugs (biologics).

But all of that may be to little avail unless Taiwan provides a favorable business environment that encourages the multinational pharmaceutical industry to take an active role in this market. One way to accomplish that is to provide ample funding in the National Health Insurance (NHI) system’s global budget to meet the need to cover expenditures on new drugs. If that budget is insufficient, the entry of many breakthrough innovative drugs into the market will inevitably be prevented or delayed, denying patients access to the latest treatments.

Pharmaceutical companies’ confidence in the viability of the Taiwan market is also being challenged by a proposed precipitous price cut under the government’s price adjustment mechanism. The amount of price reduction could reach an all-time high in 2018/2019 of NT$20 billion (US$656 million), equal to 12% of total annual NHI spending on drugs.

At a conference on “Positioning Taiwan as an Asia-Pacific Biomedical R&D Hub” co-sponsored by AmCham Taipei this April, speakers from government agencies stressed the need for support from the leading multinational pharmaceutical companies if Taiwan is to succeed in that aspiration. But panelists from the private sector responded that the home offices of major drug companies will be more inclined to approve substantial new investment projects in Taiwan when their products enjoy smooth market access with reasonable pricing by international standards.

In current discussions with the relevant ministries, representatives of AmCham Taipei’s Pharmaceutical Committee are making three main requests:

  • Continue to increase the new-drug budget to ensure that Taiwanese patients can benefit from early access to the latest innovative medicines.
  • Create a fairer price adjustment mechanism – one that covers all drugs under patent protection in Taiwan.
  • Implement the Patent Linkage system by January 1, 2019 and include both small and large molecule drugs, so as to adopt the highest international standards in IP protection.

By taking those steps to create a healthier business climate for the pharmaceutical industry, Taiwan will be in a strategically far better position to gain international support for its drive to become a biomedical hub under the 5+2 program.