Taiwan is positioning itself as a leading hub for advanced medical research and product development, but challenges persist due to low investments in public health and digital solutions.
Taiwan is proving itself as a hub for advanced medical research and product development. A wide range of fields, including drug development, gene therapy, digital healthcare (DHC) solutions, drug delivery systems, and long-term outpatient wellness, are being studied, developed, and improved upon here.
The presence of many international companies that have chosen to invest in R&D facilities in Taiwan is a testament to its broad appeal to members of industry and academia. Partnerships have been established with research institutions and companies in Asia, Europe, and the U.S.
Swiss multinational Novartis is one of many international companies that have recognized the benefits of basing research in Taiwan. While developing therapies for Alzheimer’s, diabetes, and cancer here, the pharmaceutical company also launched an analysis center in Taiwan focusing on respiratory diseases.
A domestic success story is Taipei-based Lumosa Therapeutics, which produced the world’s first seven-day long-acting analgesic injection for moderate to severe post-operative pain. Taichung-based PharmaEssentia increased a protein drug’s efficacy by prolonging its circulation in the bloodstream. And Mycenax Biotech, headquartered in Hsinchu, produced a product named TuNEX (Opinercept) to treat inflammatory symptoms from rheumatoid arthritis.
Alongside drug development, Taiwanese companies have made significant advancements in gene therapy, including in the treatment of HIV. One of the leading companies in this field is TaiMed Biologics. The company’s gene therapy for HIV has proven highly effective in clinical trials. The treatment involves using a genetically modified virus to deliver a gene that produces an antibody that can neutralize the virus. The therapy has the potential to revolutionize the treatment of HIV, and TaiMed Biologics is currently seeking approval for the therapy in several countries.
Two cornerstones of medical innovation are biotech and biopharma. Biotech is the process of using a biological organism or component to make a product or process, whereas biopharma refers to biological methods or the manufacturing of medicines using living organisms or their components, rather than chemical synthesis. Both can be used to treat various diseases, from cancer to multiple sclerosis. But with the growth of both fields and the inevitable crossovers in tech and applications, the line between these fields can become blurred.
Currently more than 100 Taiwanese biotech and biopharma firms with a combined value of over US$25 billion are listed on international stock exchanges. Many of these are emerging biopharma (EBP) companies with less than US$500 million in annual sales and less than US$200 million per year in R&D spending.
“Emerging biopharma companies, on average, actively develop two products per company, highlighting the significant investment in the reliance on a small number of research programs with a strong focus on individual therapy areas,” says Yan Che, general manager of IQVIA Taiwan, an American multinational health information technology and clinical research company. “Collectively, emerging biopharma companies represent a significant proportion of the R&D pipeline, and the share continues to rise,” she adds.
Building the infrastructure
A solid reason for Taiwan’s advancement in innovative healthcare is the comprehensive biotech cluster, robust IT infrastructure, broad coverage through the National Health Insurance (NHI), and reliable and transparent regulations for clinical trials. These regulations fall under various regulatory agencies focused on biotech, including the Ministry of Health and Welfare (MOHW) and its Taiwan Food and Drug Administration (TFDA).
“The history of regulatory evolution in Taiwan is a good example to demonstrate the support for the biotechnology sector,” says Yan. She notes that the transferring of cell and gene therapy regulations from MOHW’s Bureau of Medical Affairs to the TFDA in 2010 established a pathway of considering cell and gene therapy as a medicinal product rather than managing it as a new medical practice. “Monitored by the TFDA, the regulatory pathway for cell and gene therapy in Taiwan can be further streamlined and stay consistent with other regulated markets like the U.S. and Europe,” she says.
Building an environment for innovative healthcare starts with education. Many Taiwanese students of biotech and biopharma choose to pursue advanced degrees abroad, allowing them to gain exposure to the latest developments in those fields and bring this knowledge back to Taiwan – a trend that has helped create a pool of talented researchers, engineers, and other professionals who are well-equipped and highly motivated to drive innovation in both industries.
But some of Taiwan’s universities are also home to world-class research facilities and laboratories, providing students with hands-on experience in biotech and biopharma research opportunities. Additionally, research organizations, hospitals, and universities work closely together to develop new therapies and treatments.
While cultivating top talent is critical, little can be achieved commercially without solid financial backing. One of the most important sources of funding for biotech companies in Taiwan has proven to be the Taiwan Biotech Investment Scheme, which provides financing for early-stage biotech companies. The scheme offers up to NT$50 million in loans to qualified companies without repayment for the first three years. This funding can be used for research, development, and commercialization activities.
Taiwan’s government also established the Biotechnology and Pharmaceutical Industries Promotion Office in 1996 to support enterprises (more than 100 cases annually) with research grants and tax benefits. Another important initiative was passage in July 2007 of the Act for the Development of Biotech and New Pharmaceutical Industries, which authorized the expansion or establishment of three biotech parks: the Nangang Biotechnology Park, Hsinchu Biomedical Science Park, and a biotech corridor in the Southern Taiwan Science Park.
The government also made significant changes to the tax code, providing tax breaks and offsets to encourage investment in the sector. The concessions targeted specifically at biotech companies included funding through the National Development Fund, special rules favoring startup investments, and 35% tax breaks on investments made in R&D and employee training.
Yet Taiwan’s healthcare spending leaves room for improvement, says William Tsai, head of public affairs, communication, and market access for the Taiwan branch of Sanofi, the French healthcare company. He points out that Taiwan’s investment in healthcare as a percentage of GDP is low at 6%, compared to neighboring South Korea (8%) and Japan (11%). This low spending has hindered the rollout of certain new drugs and treatments and led to an underfunding of preventive health.
“Most challenges in healthcare systems are attributed to financial constraints,” says Tsai. “Healthcare expenditure should be an investment, not a cost.” As such, the pharmaceutical industry has called on the government to increase healthcare spending as a share of GDP from 6% to over 8% by 2028.
IQVIA’s Yan regards the overall health of the biotech R&D engine with optimism while noting that biotech faces significant challenges in the aftermath of the pandemic. “In the last quarter of 2021, the valuations of the biotech sector plunged – the IPOs of biotech companies also slowed significantly compared to the levels in 2020 and 2021,” she says.
Covid-19 invariably thrust the importance of genetic research to the front and center of the world’s consciousness. During the pandemic, Taiwan’s laboratories and genetics know-how played a significant part in vaccine research and development. For example, Taipei-based Medigen Vaccine Biologics, which specializes in the development of vaccines for infectious diseases, rolled out Taiwan’s first domestically produced Covid-19 vaccine in late 2021. In a public show of support, President Tsai Ing-wen received her two Medigen injections on camera.
The pandemic also accelerated the development of digital healthcare solutions and systems. And considering the rapid development of biotech and the number of new drugs and treatments being rolled out, a functional, fast-acting digital healthcare system is paramount for everything to work efficiently.
“Digital healthcare solutions transform chronic disease management through multidisciplinary care teams, connected devices, tracking, a digital platform, and analytics,” says Sanofi’s Tsai. The use of these solutions also enables healthcare providers to decrease the burden of care and improve decision-making, empowering patients and leading to healthier habits. “Payers can reduce healthcare costs by avoiding complications and improving health outcomes,” he notes.
Considering the number of ministries and businesses that need to collaborate for the medical field to make progress and function effectively, it is evident that the undertaking is massive and intricate.
“The field of digital healthcare involves professional practice from not only healthcare practitioners but also technology, business, and legal experts,” says Tsai. “For this reason, cross-ministry collaboration to form regulations and policies is key to advancing digital healthcare innovation. We believe a cross-ministry task force would help Taiwan accelerate the practicing of digital healthcare and its implementation.”
Sanofi selected Taiwan as one of seven key markets to develop digital healthcare as a new franchise. However, Francois Barbé, the company’s head of digital healthcare, Hong Kong and Taiwan, notes that while other major markets such as Germany and the U.S. are implementing new frameworks, policies, and regulations to recognize digital healthcare as an industry, Taiwan has yet to do so. He recommends that the Taiwan government and healthcare stakeholders implement a reimbursement framework with sustainable funding to allow a digital healthcare ecosystem to grow.
“We need cross-ministerial cooperation to coordinate and manage expectations and risks,” he says. “We also need dialogue with all members of the healthcare system to build infrastructure and make digital healthcare a sustainable reality in Taiwan. The government shouldn’t have to work alone in this effort.”