The government has been focused on the biotechnology industry since 1984, when it set up a biotechnology and pharmaceutical industry development promotion task force. In 2007, it passed the Act for the Development of Biotech and New Pharmaceuticals Industry (生技新藥產業發展條例), and following the outbreak of the COVID-19 pandemic last year, the biotech industry has garnered even more attention.
FAILED PROGRAMS
However, a look at the “two trillion, twin star” program in 2002, the “six key emerging industries” program in 2009, the “5+2 industrial innovation” program in 2016 and last year’s “six core strategic industries” program shows that there has been progress in the industry, but not as much as expected.
The industry has not driven economic development in the same way that the semiconductor industry did, and insufficient international integration has failed to produce world-class companies or unicorns and it cannot compare with South Korea’s beauty and biotech OEM industries.
The value of Taiwan’s biotech industry is less than NT$600 billion (US$21.39 million), and it has only created about 100,000 job opportunities. There are several reasons for the limited results over the past four decades.
First, Taiwan’s social welfare environment and regulations are not conducive to the industry’s development, as healthcare is based on a non-profit policy. This is different from the semiconductor and other industries, which are mainly for-profit.
Second, many biotech firms had insufficient revenue and profit, but chose to list as “category 3 stocks” (now classified as tech stocks). They used publicity and speculation to attract funds from capital markets, while the government provided incentives in the form of rent and tax subsidies.
The result is that some biotech firms took shortcuts and speculated in stock. Moreover, a lack of capital and research and development talent made wide-scale human testing difficult, while insufficient international integration made building a complete supply chain a challenge.
Third, a lack of understanding of foreign pharmaceutical companies, difficulties obtaining information, incomplete understanding of regulations in other countries, differences in interpretation of provisions and disputes over agency or cooperation contracts often resulted in losses for local pharmaceutical and biotech companies that intend to enter the international market. Worse still, the authorities overseeing stock exchanges did not verify unclear information from other countries and imposed severe penalties, making matters worse.
VITAL ISSUES
The biotech industry faces many challenges. How can regulations be relaxed for the industry to facilitate cooperation with the high-tech industry, academics, development institutions and the medical sector? How will it raise capital, cultivate talent, create a complete supply chain and become a functional industry developing high-end biotech medicine and health and medical equipment? How will it tap into the distinct characteristics of individual markets to venture into the international market? How will it do these things with the support of the government and fair treatment from regulators, thus creating a new benchmark industry?
These are important issues that must be addressed by the industrial, government, academic, research and healthcare sectors.
Lee Shen-yi is a national policy adviser and vice chairman of the Contemporary Taiwan Development Foundation.
Translated by Perry Svensson
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