Taipei Times: The American Institute helped put together the Taiwanese delegation that went to BIO 2001 in San Diego late last month. What role does the American Institute in Taiwan play in promoting Taiwan as a biotech partner for US firms?
Terry Cooke: Actually, the previous year, at BIO 2000 in Boston [Massachusetts] we took 47 Taiwan companies, and that was part of our international buyer program. And in San Diego this year, we took 86 companies. It was a partnership effort with the Development Center for Biotechnology (生科發展中心) but we were the principal organizers and recruiters for that 86-company delegation.
PHOTO:: CHEN CHENG-CHANG, TAIPEI TIMES
Our involvement with biotech is really a one-year effort at this point and it's something of a strategic effort in that if you measure the commercial activity between the US and Taiwan purely in terms of customs dollars today, biotechnology would not represent a proportional number of dollars to the energy and time that we have put into it. But the reason for that is, it is a strategic effort.
Biotechnology is developing fast. The applications are not only in agricultural areas, which are handled by our agricultural office at AIT, but also in pharmaceutical, environmental and industrial processes. The potential applications are so broad and because it is essentially an `industry creation' and because it does build on some established strengths that Taiwan has -- for all those reasons, we think it is worth the strategic effort.
TT: What's the main push for that year-long effort on the part of biotech? Is there interest on the Taiwan side or the US side?
Cooke: We've detected interest from both sides. The interest doesn't always match up completely, and perhaps that's one of the roles AIT can play, to try to align the two sides to make the commercial dialogue more productive. But there's clearly been interest on the US side and there's a tremendous amount of interest on the Taiwan side.
An example of strong interest is the fact that BIO, the Biotechnology Industry Organization based in Washington, DC, which is the principal industry organization representing the US industry, decided this April to hold its first ever Asia-Pacific regional conference, which was held in Hawaii. And that's a very clear signal that the time is right from the point of view of the US industry to look at the capabilities that the Asia-Pacific region has to offer.
I might also mention that, as part of our year-long program of activity, that our office, along with the Development Center for Biotechnology, organized a delegation to that regional conference and Taiwan's delegation was the largest there and was prominently covered.
TT: Could you pick out anything in particular that US companies are looking for in Taiwan as a possible biotech partner?
Cooke: As background to that question, I should first point out that the US-Taiwan industry relationship in general in biotechnology is largely driven by the dynamics of the industry itself and I think there are three key points to note.
One is the rapid pace of technology change, which requires any company that wants to be a player to be highly efficient and it also requires the governments that are supporting to be global in outlook and highly efficient. Another important factor is just the high burn rate of capital in biotechnology. It far exceeds anything in the Internet or the information technology field.
What that means is that any company or government in the field needs to be highly focused on where it is going to direct its investment dollars. You can burn through a lot of dollars very quickly with no result if you are not highly focused.
The third point is the global nature of the business. That means that any player requires international partners. No one country can do it alone in biotech. Now, with that as background, US companies appear interested in a number of specific partnership-type arrangements with Taiwan firms. The US industry is quite well established and growing fast. But exactly for that reason, it increasingly needs to find competent partners around the world.
Taiwan can help offer access to the Asian gene pool and the biodiversity that is related to this part of the world, and that has significance in research in diagnostics and in therapeutics. It has local innovation and research capability.
So, to answer you what US companies are looking for in Taiwan as a possible biotech partner, I'll say Taiwan can serve as a regional partner for clinical trials, for technology development and for applications of technology and for regional marketing. There's always a need for capital and Taiwan can help offer capital. And then there is the track record Taiwan has being connected and being a player in global markets that they've earned through information technology and has relevance to the nature of the biotech business.
TT: How does Taiwan's standing in information technology, computers and semiconductors lend itself to the biotech industry?
Cooke: I think the ways it is relevant is that Taiwan has both experience and global credibility as a leading player in a fully globalized industry. And, the biotechnology industry operates at a technology pace equal to if not faster than IT, with capital requirements equal to if not greater than IT, and with a globalized nature of doing business equal to if not greater than IT. So there is a credibility factor that Taiwan has in a loose sense from that experience.
However, when you start looking at the nature of the business, it's a fundamentally different type of business. IT is mostly unregulated; biotechnology is a regulated business. The return on investment from assembly operations is high in IT, but in the life sciences, the return on investment is almost completely from the knowledge-based aspect of the business.
So there are very important senses in which the models are completely different. But when the question is asked: `could Taiwan, if it aligns its capabilities properly, operate at the speed, burn rate, and globalized nature of the biotech business?' The answer clearly is yes -- if it can align its capabilities properly to meet that particular technology model.
TT: What more do you think the government could do, or needs to do, to help build Taiwan's biotech industry?
Cooke: Just from what we hear from the industry, just continuing to exhibit leadership in the field is a very important thing the government can do and that could involve, in the process, reducing the redundancy and competition between different government agencies that are involved in the field.
Secondly, just to return to the point I made before, focus, focus, focus.
Third, increasing efficiency both in the capital markets and in administrative procedures. This latter is an area where Taiwan is lagging far behind the likes of Singapore in terms of a streamlined administrative procedures to underpin US-Taiwan joint ventures.
A fourth area would be the educating of knowledge workers.
Fifth, rewarding innovation. This last point is critical and it's frankly, a problem area in today's pharmaceutical market in Taiwan, which is closely linked to the biotechnology business. Far from being rewarded, innovation-intensive brand-name pharmaceuticals are currently being discriminated against in the health care reimbursement system.
TT: What do you think Taiwan firms could do to become more attractive partners for US biotech industry players?
Cooke: The underlying challenge is to realize that one shouldn't try to go it alone and to learn to partner effectively. And what that means is focusing niche capabilities on a market validated opportunity in partnership with other experienced firms.
Secondly, to improve corporate governance and bring it up to the norms of the global industry. Third, to help educate local investors so that the investment climate is a sophisticated, globally attuned one, rather than a short-term boom or bust type of mentality.
Finally, to take a focused and strategic approach rather than a short-term, opportunistic approach.
TT: AIT is helping set up a September meeting between US and Taiwanese companies. Could you elaborate on that?
Cooke: What we're doing really represents a culmination or our yearlong strategic effort. We've organized, in conjunction with the US-ROC annual Business Conference in Boston in mid-September, a high level delegation to go to the United States with a three-part program.
The first event in the program, Sept. 10 and 11 in Philadelphia, is essentially a brainstorming session between the Taiwan and US side comprising both industry, government and people with specialized expertise, to try to define with greater clarity and precision how Taiwan can align its capabilities to maximize commercial partnership possibilities with the US..
Following that two-day event in Philadelphia, the delegation will then be making a tour of the mid-Atlantic area, which is the second cluster of biotechnology capabilities on the East Coast of the United States, on their way to Boston, which is of course the premier cluster of biotechnology capability.
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