Taiwan’s bid to become a global MedTech hub hinges on its ability to understand customer needs and address regulatory challenges.

A century ago, Becton, Dickinson and Co. (BD) was a low-value-consumable producer mostly known for its syringes. Today, the American multinational is best described as a medical technology (MedTech) company that provides forward-looking solutions to healthcare ecosystems.

In many ways, BD embodies a 21st-century shift within the industry. As AI and advanced technologies propel the introduction of new health solutions, the need for more all-encompassing innovation – and reimbursement of said innovation – becomes crucial.

“Digital transformation requires a shift in mindset,” says Terry Lin, general manager of BD Taiwan and Hong Kong. “When we introduce new solutions, we need to help drive mindset changes that will help healthcare professionals streamline the digital workflow.”

As an example, Lin points to hospital pharmacy solutions. Traditionally, inpatient pharmacies have a centralized system where doctors prescribe medication and pharmacists review and dispense it by delivery to each nurse station on a cart, a time-consuming process.

In response, BD introduced a decentralized process in which dispensing is automated and nurses can pick up the medicine directly from cabinets close to the patients. In Taiwan, the company explained to worried pharmacists that instead of rendering them obsolete, the new system allowed them more time to focus on using their expertise for consultations and reviews.

“In the traditional system, it could take several hours for a patient to get their medication,” says Lin. “With decentralization, they can receive it within 30 minutes to an hour.”

Such solutions work to address the core priorities of healthcare systems: improving patient outcomes, increasing reputation and profitability, and driving down costs. Lin says lab automation for microbiology tests is another area that addresses these priorities. When doctors request microbiology tests, it’s often for patients with high fevers or suspected sepsis, a critical condition. Microbiology automation provides results faster than conventional methods, eliminating the need to manually conduct sample preparation, analysis, and data reporting.

“If a patient typically stays in the ICU for five days, getting faster microbiology results allows doctors to prescribe more accurate antibiotics,” Lin says. “As a result, the patient could be transferred from the ICU to a regular bed faster, improving the patient’s condition in addition to bed turnover efficiency.”

The speed of MedTech developments has multiplied with technological advancements, an aging global population, and the increasing demand for personalized healthcare solutions. R&D investments in the medical devices industry have grown consistently, with global spending reaching approximately US$39 billion in 2022, up from around US$25 billion in 2012.

Companies are increasingly prioritizing areas such as remote monitoring, wearable devices, and robotic-assisted surgery, with major players allocating a significant portion of their revenue – typically around 6-12% – toward R&D efforts.

Those who look to increase competitiveness invest even more. For example, American MedTech company Edwards Lifesciences, which specializes in artificial heart valves and hemodynamic monitoring, routinely invests between 17% and 18% of its sales back into R&D.

“Through innovation processes such as Biodesign, we help ensure these investments are directed toward the largest, unmet needs of patients,” says Erik Ramp, senior director and general manager of Edwards Lifesciences Taiwan. Whether Taiwan will be among the first markets to benefit from such investments, however, will depend on how it evaluates and prioritizes new technology. 

Taiwan as a hub?

MedTech holds significant potential for lucrative products that also improve population health. It’s no surprise, then, that Taiwan is striving to establish itself as a leading hub in this rapidly evolving sector.

Central to Taiwan’s ambition is President Lai Ching-te’s recently launched “Healthy Taiwan” initiative, which emphasizes building a robust and accessible healthcare system while encouraging advancements in MedTech. Precision health has also been identified as a priority sector in the government’s Six Core Strategic Industries policy and is further bolstered by initiatives like the Asia Silicon Valley Development Plan and the Taiwan AI Action Plan.

Apart from boosting Taiwan’s economy, building a MedTech hub could help bump Taiwan up on the priority list among international companies. “In multinational organizations, Taiwan isn’t always seen as the top priority when introducing new technology,” says Ramp. “As leaders in Taiwan healthcare, we need to continue to raise awareness of the strengths in our healthcare system. By raising the profile of Taiwan, we help expedite patient access to all this great innovation.”  

Taiwan’s expertise in electronics and precision engineering has laid a robust foundation for its expansion into the MedTech sector. Its medical device industry was valued at approximately US$6.4 billion in 2021, a 22% increase from the previous year.

“Taiwan possesses a high-quality healthcare system and advantages in ICT, which allow doctors and engineers to engage in interdisciplinary dialogues and collaborations to address clinical challenges by offering solutions,” says Chang Tsz-yin, deputy general director of the Industry, Science and Technology International Strategy Center at the government-funded Industrial Technology Research Institute (ITRI).

ITRI collaborates with universities to attract talent by co-hiring professors and facilitating academic partnerships. The institute also collaborates with doctors and hospitals, such as National Taiwan University Hospital and Thailand’s Mahidol University, through signed agreements to enhance overall strategic partnerships.

“Taiwanese doctors, with their solid knowledge base, have a high acceptance of innovative solutions, and are therefore starting to collaborate with engineers,” says Chang. “Some doctors are also branching out into ICT studies, becoming medical engineering experts and entering the R&D field.”

But Taiwan’s real advantage lies in its speed of innovation and its strong network of medical experts, says Tsai I-lin, co-founder of Astron MedTech. The startup, which focuses on minimally invasive and robotic-assisted orthopedic, won the MedTech Software category at the 2022 SelectUSA Summit, outcompeting 100 finalists from across the globe.

In many ways, Astron MedTech’s success exemplifies how Taiwan’s unique strengths, when combined with global expertise, can drive meaningful advancements in medical technology.

Tsai and co-founder Ben Huang were pursuing the GIP-TRIAD, a joint master’s program between National Taiwan University (NTU), the University of Tsukuba in Japan, and Université de Bordeaux, when they first started thinking about starting a business together. While taking courses that would aid their ambitions, the duo met Gary Wang, a professor in NTU’s Entrepreneurship Program. Wang is also the founder of Taiwan Accelerator Plus (TAcc+), a government-backed initiative aimed at accelerating the growth of Taiwan’s startup ecosystem.

Tsai and Huang shared their vision for developing systems for orthopedic surgery – an underexplored area within robotic-assisted surgery – with Wang, who greeted the idea with enthusiasm. The two credit Wang’s more than 30 years of experience in Silicon Valley and his entrepreneurial expertise as invaluable in shaping their approach and advancing their startup’s development.

“He was passionate about lecturing how startups work, the ecosystem, and the knowledge we needed to succeed,” says Tsai. “He emphasized that this information was common knowledge in the Bay Area, and for Taiwan to compete, we had to be equally knowledgeable.”

Wang connected the two recent graduates with Dr. Wang Chen-chie, an orthopedic surgeon at Taipei Tzu Chi Hospital and president of the Taiwan Orthopedic Foot & Ankle Society. Dr. Wang soon joined as a co-founder of Astron MedTech. With their team expanding, the startup decided to join TAcc+, which played a crucial role in helping them secure a spot at the SelectUSA Summit, where they delivered their award-winning pitch.

“The accelerator provided us with invaluable guidance from Gary and other mentors in the medical field,” says Tsai. “At first, it was hard to navigate the process of finding a contract manufacturer, understanding regulatory pathways for medical device approval, learning about reimbursement systems in Taiwan and the U.S., and figuring out distribution, marketing, and intellectual property. The accelerator provided us with the platform, courses, and mentors to learn from and ask questions.”

Astron MedTech had set its eyes on the U.S. market partly for its robust network of angel investors. “Taiwan’s investor community is generally hesitant when it comes to first-time founders,” notes Tsai. “Angel investors who are familiar with the MedTech industry and dare to take a chance on young founders play an important role in the space. They understand the sector, see the potential in startups, and are more likely to offer support.”

Other Taiwanese healthcare startups have reported similar experiences. One of these is iXensor, founded by a team that first met at Stanford University in 2011, which attributes much of its success to the inspiration and experience gained in the United States. Exposure to the U.S. market and its entrepreneurial ecosystem provided the team with insights that have been instrumental in its growth back in Taiwan.

“Although our solutions greatly increase the convenience of testing and accessibility to health checkups, we needed to get seed funding in Silicon Valley first before we also became attractive for investors in Taiwan,” Dr. Carson Chen, iXensor’s CEO, told TOPICS.

But Tsai is quick to add that while Taiwan may not be as welcoming to first-time entrepreneurs as the United States, its compact size fosters rapid development. In the States, shipping products for sterilization often requires sending them to another state or working with distant vendors.

In contrast, “in Taiwan, manufacturing capability is well established and the supply chain is strongly connected. It might only take a couple of hours, or at most a day, to ship your product to another manufacturing facility or vendor for further experiments or testing,” he says. This proximity streamlines the development process and allows for quicker iteration and refinement of products.

In the pursuit of attracting MedTech development, Taiwan’s extensive medical database also provides a unique selling proposition. “Getting the initial clinical data is very powerful and meaningful for startups and other MedTech companies,” says Tsai.

BD’s Lin says that around 80% of Taiwan’s treatments are tied to data from the NHI system, which contain a wealth of insights. While companies can access data, access is typically regulated and may require permission from the National Health Insurance Administration. “There are more opportunities to look at how to utilize this data to drive digitalization,” he says.

Bumps on the road

Despite impressive growth and many pull factors, Taiwan’s MedTech sector continues to grapple with critical challenges. Lin notes that while Taiwan excels in hardware development, software has become somewhat of a bottleneck.

“To develop effective software, you need to understand customer needs – whether that’s pharmacists or those involved in labor automation,” he says. “Customer complaints often focus on the software side of things. Well-known Taiwanese companies have successfully transitioned from IT to medical devices, but feedback has shown that while their hardware is excellent, their software hasn’t met the same standard.”

To gain the insights needed to build software that truly meets the demands of the industry, it’s critical for Taiwanese companies and government officials to work closely with hospitals and healthcare providers, he says.

Contributing to this mission, ITRI has launched a “2035 technology strategy and blueprint,” mobilizing technical supervisors, cross-disciplinary experts, and industry trend analysts to draft a comprehensive development strategy.

“With the aging population and its impact on productivity and elderly care, ITRI is advancing research in innovative healthcare services that are high-quality, affordable, and reduce healthcare costs,” says Chang. “The goal is to extend healthy life expectancy and reduce the burden on families by creating a dignified and fulfilling aging experience for seniors, driving the development of the silver economy.”

Better understanding the needs of healthcare providers could also have a ripple effect on the approval process for innovative medical devices. In Taiwan, this process is often slow and complex, with manufacturers required to submit extensive documentation and undergo lengthy evaluation periods, resulting in market entry delays of several months or even years.

Moreover, Taiwan’s regulatory framework occasionally diverges from globally recognized standards, such as those of the U.S. Food and Drug Administration (FDA). This misalignment forces manufacturers to undergo additional testing and produce extra documentation, complicating efforts to achieve simultaneous global launches.

Aligning Taiwan’s regulatory standards more closely with international guidelines could streamline compliance and facilitate simultaneous approvals across multiple markets. In the United States, mechanisms such as the FDA’s Breakthrough Devices Program expedite the development and review of medical devices that provide more effective treatment or diagnosis of life-threatening diseases. Implementing such fast-track approval processes for breakthrough devices and technologies, particularly those addressing unmet medical needs, would accelerate the availability of innovative treatments.

If left unaddressed, these challenges will be exacerbated by AI integration. “Unlike traditional devices, AI is something you can’t touch,” says BD’s Lin. “In traditional healthcare settings, pricing and reimbursement are easier to establish because the products are tangible. They undergo health technology assessments (HTAs), which allow for clear comparisons between older and newer devices.”

But when it comes to AI, the process is not as straightforward. Unlike physical products, AI doesn’t permit the same “apples-to-apples” comparison that HTAs typically rely on. Determining how to price AI innovations and whether they should qualify for premium pricing under current reimbursement policies will prove to be increasingly challenging in the future.

“Hospitals want to adopt AI technologies to improve patient care and the overall customer experience,” says Lin. “AI is expected to play a critical role in enhancing healthcare, yet the reimbursement models might not adequately account for its value.” This shift is inevitable and must be addressed as AI becomes increasingly integral to healthcare advancements, he adds.