Taiwan: Pharma at The Tipping Point
The Taiwanese pharmaceutical industry has reached a crucial tipping point: After many years of building up an impressive resource base, from world-class research institutes, universities, and scientists to pharmaceutical entrepreneurs and internationally competitive companies, the industry is finally ready to take advantage of the wave of enthusiasm and interest surrounding pharma and biotech that is sweeping the nation. In March 2009, Taiwan’s current president, Ying-jeou Ma, announced that healthcare and biotech would be two of six sectors selected by the government to bolster and diversify the Taiwanese economy. As the Taiwanese pharmaceutical sector develops and strengthens, the world holds its breath, waiting to see what is possible from this small island nation.
The Taiwanese pharmaceutical industry is facing a crucial tipping point today: after many years of building up an impressive resource base, from world-class research institutes, universities and scientists to pharmaceutical entrepreneurs and internationally competitive companies, the industry is finally ready to take advantage of the wave of enthusiasm and interest surrounding pharma and biotech that is sweeping the nation. In March 2009, Taiwan’s current president, Ying-jeou Ma, announced that healthcare and biotech would be two of six sectors selected by the government to bolster and diversify the Taiwanese economy. As the Taiwanese pharmaceutical sector develops and strengthens, the world holds its breath, waiting to see what is possible from this small island nation.
Several factors have led to this exciting momentum in Taiwan. The first of these is the government’s drive to develop what it calls the country’s ‘biotech’ sector. Perhaps a little confusingly, the term ‘biotech’ is used by the Taiwanese government not only to describe biotechnology, but also traditional pharma and medical devices. This year the government announced its ‘Diamond Action Plan for Biotech Takeoff’Taiwan has been trying to get involved in the biotechnology industry for decades and we have been trying to figure out the missing links. We think that translational medicine is one thing we should work more on. We have also been trying to form an FDA-like organization, which we now finally have. It is responsible for effective regulatory review and regional harmonization because so many companies here are looking to do business on the other side of the strait. We also need to have biotech clusters. We plan to have one in Nangang and we already have one in the south of Taiwan. These will work together with a superincubator center, which provides intellectual property help to the industry. Finally, the last piece is the megafund or bio venture capital fund. The government will contribute 40% and the remaining 60% will come from the private sector. The total size of the total fund will be $60 billion NT (U$ 18.7 billion).’As DCB is playing the second leg in bridging basic research and commercialization, we need more international collaborations, good business teams, people who understand basic research, as well as the market and potential healthcare implications.’We need to build a capacity and capability to link basic research to industry. Many basic discoveries are not getting translated into commercial opportunities, so Taiwan needs to have a component there to identify the important early stage discoveries and move them into industry. In order to do this, the country needs to have a good investment team to identify key projects, and good legislation in place to encourage the translation into industry. The government’s ‘Diamond Action Plan for Biotech Takeoff’ was designed for such a purpose. It shows that we have a good understanding of the problem, and are trying to move in the right direction.’Taiwan is very focused on discovery, and big pharma has more experience in development: most big pharma companies have shifted their focus from early stage to development in recent years. Moving from discovery to development costs from U$ 300 million to U$ 1 billion: 60% of which is spent on marketing. Taiwan cannot afford to focus on late stage development in this moment of its industrial development: we lack the requisite experience and skill. Hence, collaboration is very important.’Taiwan has a unique political situation that means it cannot join a lot of international organisations, which makes it very difficult to communicate with other countries. The way that the TFDA has approached this problem is through bilateral cooperation: in April 2010 we signed a memorandum of understanding with the TGA in Australia for example. We also have exchanged letters with US, Switzerland and EU for information exchange of medical devices. Further to Exchange of Letter, we established the Technical Cooperation Program with 12 Europe notified bodies to share GMP inspection reports as acceptable evidence for submitting Quality System Documentation applications to the TFDA.’Chifu can introduce a lot of products from Taiwan to China. A lot of Indian companies are afraid of going to China. Chifu can help them, and is already doing this. But the company is also helping Chinese companies to come to Taiwan. Chinese companies see Taiwan as an interesting market. They can also use it as a test market: Taiwanese people are perhaps more open and willing to spend more than Chinese patients.’Celgene is only now embarking on a China strategy but the market there still has many questions. Not everything is in place yet, and guidelines and policies are not so clear. So we have to have a business model to copy in those areas where Chinese is spoken. I would like to copy Taiwan’s experience to China, especially in medical development. Many Taiwanese doctors have western education and experiences compared to Chinese doctors. We have many good ideas here. This is a very good opportunity for Celgene’s drug development.’Once the bio-venture capital fund, one of the strategies in the Diamond Action Plan, starts operating, I expect that there will be a lot of start-up companies forming with several potential blockbusters in their product pipelines. DCB would like to work closely with the bio-venture capital management teams in terms of conducting due diligence studies and translational research for those start-up companies.’In any program you need to have some compromise. Even fifteen years after implementing the NHI we still have a lot of issues. For example, it is very difficult to increase the premium rate. There is one commission that decides the premium rate and another commission that decides the budget. So who is accountable? The Taiwanese healthcare system is one of the best in the world, but last year we had a $60 billion NT (U$ 1.88 billion) deficit. My predecessors were never able to adjust the premium rate ‘ it is a very sensitive political issue. Because of Taiwan’s aging population, new drugs and technological advances, a premium increase is inevitable, yet raising the rate is political suicide. Taiwan only spends 6% of its GDP on healthcare, yet we have very modern hospitals and a low premium rate, so it is inevitable that the country builds up a deficit.’it is believed that change is crucial as the pharmaceutical industry has suffered considerably under current NHI policies. We are urging the government to amend the law, and shape a more reasonable environment. From the patient’s perspective, this will improve the medication quality and increase the number of advanced drugs available to society.’I am of the opinion that it is going to get worse before it gets better,’I believe that there will be more price cuts to come in the next few years because the deficit is definitely an issue and it has not yet been decided whether increasing patient premiums is a politically viable move.’It’s encouraging to see clinical trials will also help accelerate product registration and gain a higher reimbursement price.’logical evolution’Taiwan was able to establish something extraordinary if you compare with not just Asian standards, but even worldwide standards. You can see that the country is truly committed to providing healthcare not just to en elite, but to the entire population. ‘Lilly is in an interesting position right now: around 90% of our sales are for our patent products. Our strategy, discipline around negotiations, and portfolio has enabled high growth over the last four years. ‘It used to be the belief that if you knew how to run the US business then you could run the global business. I don’t believe that to be true any more, because if anything the US represents the tail of the reform situation. Then it became the belief that if you ran the EU business then you could run the global business: however today the EU is in decline and there is a trend of research investment being pulled out of the EU to different parts of the world. Now we’re shifting to a paradigm, which states that if you can run the business in Asia, you can run the global business. The combination of Asian experience with the fierce eastern method of negotiation and politics is a requisite experience for any president or general manager. ‘Taiwan produces a lot of good professional talent: many Taiwanese people have strong international educational credentials, especially from the United States. A lot of people choose to study overseas, and many of these people return to Taiwan once their studies are completed. ‘enabled me to work with my colleagues in the US and Australia in a much more rationalised manner. We don’t have any difficulty communicating about new business models or business ideas or business language .’being born in Taiwan helped me to fit into the local scene. I can work here without any barriers, unlike American born Taiwanese or Chinese people. Sometimes these people have difficulty integrating back into the Eastern culture. ‘We moved very aggressively: as part of Abbott we had around a 67% market share. When Hospira moved out under its own roof the company became more aggressive in this segment and fought for the accounts of our competitors. Hospira Taiwan’s sales revenues have grown to the point that the company here now competes with big pharma.’really needed someone to accelerate the transformation of GSK in Taiwan. Of course, my experience in Asia was also a deciding factor I guess: I’ve been in China for five years, and in Taiwan for five years, I speak Chinese and I have been working in the pharmaceutical industry for twelve years.’We know that we should work better to help people with diabetes have better glycemic control. Once we meet with problems we can work together, and because we are small company, we don’t have a lot of bureaucracy. My door is always open.’Most expat general managers would be very unhappy to pursue a long-term market strategy that was not focused on short-term performance. I want to stay here for longer, and pass on this sense of responsibility to my staff.’ScinoPharm’s business model is that before the train comes into the station we are ready to jump. Initially this business model was incredibly foreign to local investors. The first difficult concept for them was the role of GMP. They knew that GMP was important, but they did not fully understand that if an API manufacturing plant does not pass a GMP inspection from the US, then its APIs cannot be used for any customer who wants to sell their formulations in the US.’Investors didn’t realise how powerful a skill it was to have that capability, and to be able to enter a market wherever you have taken care of the patent issue, and conversely how a particular patent situation can eliminate your chance of competing.’For most local companies, their first market view is South East Asia or China, and yet there is a smaller group today trying to aspire above this and penetrate regulated markets. In those cases there is still a lot for these companies to do to fully understand the patent situation and GMP requirements. Both of those things require investment. Right from the beginning ScinoPharm’s business model was that the world was our market: there is no reason why being registered in Taiwan means you can only look at Asian markets. Our major market has always been the top tier, the most regulated markets: The US and Western Europe.
Clinical Trials? All Smiles
A surprising fact about Taiwan is that it has become something of a hub in Asia for late-phase clinical trials. The NIH reports that in 2009, Taiwan conducted 1,574 clinical trials, more than China (1,427), India (1,143), Korea (1,510) and Japan (1,337). Alex Chang of Novartis Taiwan explains why so many MNCs are ready to conduct trials here: ‘Regulation has become very friendly: clinical trial approval takes a maximum of three months to get. This is still longer than South Korea, but much better than China. The government is ready, infrastructure is ready, 99% of hospitals are ready, CROs are ready and patients are ready.’we need to encourage these companies to look to Taiwan as a locale for conducting more early-phase trials. This is where Taiwan’s real strengths lie.’Although the clinical research environment has a good level of quality, Taiwan is still small in terms of size. Out of the 100 hospitals that are involved in clinical studies, only the top 20 are prominent enough to attract global clinical trials. The other 80 hospitals in the country are just beginning to become aware of or involved in clinical research, and so are less experienced.’a key factor in attracting clinical trials to Taiwan is that quality data can be collected in the market, coupled with other benefits such as fast recruitment and overall efficiency.’For drug companies,’the most important aspect of any clinical study comes down to one sentence: time is money.’These relationships are not built through sales and marketing departments, but rather through a hospital’s track record. When we enrol the patients at very good speeds, then the company has a good experience with us. The next time we collaborate, we are able to streamline our procedures because of our working experience, which makes the experience of working with CMUH get better every time. We let our performance speak for itself.’CMU, as China implies, was funded initially for traditional Chinese medicine (TCM). It has become a medical university with balanced advances on both TCM and Western medicine. With emerging emphasis on alternative and complementary medicine in Western countries and development of novel drugs from natural products, CMU is in a unique position in the new era of pharmaceutical R&D.’In the recent years, Mackay has not only spent a lot on research and development (about 3% of the total revenues, or U$ 10 million), but it also established the first hospital-based incubator center in Taiwan. By fostering collaboration with the industry, Mackay encourages the innovation results to be shared mutually in rapid ways. By providing with a mature clinical trial environment, Mackay helps the big scale pharmaceutical industry to develop new drugs and also helps small scale and new innovative enterprises to conduct clinical trials rapidly and safely.’level of innovation that allows us today to stand up as a center of excellence for clinical trials’If innovation comes from Taiwan and is protected by patents, then it can be sold worldwide and China would become our closest and biggest market.’if we can leverage China, this will allow us to expand into a larger market and bring more opportunities for biotechnology, pharmaceuticals, medical devices and healthcare in general.’Many biotech companies are founded on the idea of a novel and niche technology, but after burning through their initial capital they can often simply disappear. Pharma Power Biotec aimed to avoid this situation, and create a sustainable business model that would ensure the company’s continued growth. Therefore, we focused on creating a revenue-driving business segment, using our drug delivery system to produce diabetic medicine. In this way, our company is able to gain revenues, whilst simultaneously developing our Radion PDT (photodynamic therapy) product for the treatment of early stage oral cancer. By using this business model, we can work on treating this disease whilst continuing to improve our company.’Because our products come from nature, we have incorporated our products into dietary supplements in order to build the company’s revenues whilst we wait for drug approval ,’Many East Asian governments including Taiwan have tried to make TCM compatible with FDA regulations. This only serves to slow down the release of medicine and is not good for the industry. In order to make TCM a successful but regulated industry, the countries where it is strongest need to create their own regulations, and lead the world in creating a structure where eastern methods can flourish and thrive.’In 2002, I was invited by a group of scientists to build up a new company, the purpose of which would be to screen new candidates for cancer therapies: new leads and new drugs,’We presented our findings to BioTokyo that year. We were surprised to find out that the reaction to our research in Japan was very different from what we had experienced in Taiwan ‘ biotechnologists in other countries were simply not excited by herbal medicinal extracts. I realized that without a compound, there was no point in continuing.’My strategy has always been to find a way as early as possible to make a profit from this discovery, whilst still pursuing high scientific goals. This facility design enables Golden Biotech to produce a semi-purified extract to be turned into a health food and also a purified compound for the clinical trial. Every product has its own market. We have put all our energy into this product, and it is beneficial to cancer patients.’The price of pharmaceuticals had been cut by the government year on year and this has been constantly shifting the landscape for distributors and pharma companies in Taiwan. Here at Morris Enterprise, we have a very good relationship with the decision makers in a lot of hospitals. Due to compliance with the SOPs and our familiarity with all the procedures, we make the registration and bidding process run a lot more smoothly than our competitors.’we work with a lot of hospitals already, and the same management groups in hospitals also deal with nutraceuticals and cosmoceuticals. We still work with the same group of people and capitalize on this expertise.’Distribution is a tricky job: if you are unsuccessful in marketing a particular product the licensor is disappointed in the work you do ‘ if you are successful, then the company starts to think that they should enter the market themselves! As a result, OEP also needs to develop its own products, and these will come through our expertise and capabilities in new formulation.’the manufacturing arm of the company.’that do not have manufacturing facilities of their own. We manufacture for them as well as promote the products in our own territory. The current example is that we are working with DURECT in the US, who will market the drugs in their country but will rely on us for high-quality manufacturing.’The new plant gives OEP the capability to create a synergistic effect as we begin to harmonize our company product portfolios throughout the South East Asian regions where we are present. This gives us an advantage when we want to license in new products, as we can show our partner the capabilities that OEP has.’In my mind,’the story of AstraZeneca was particularly striking: it shows you can start a very small company and grow it to play a major role in a thirty-year time frame. Taiwan is capable of creating such a company, and it is our responsibility to try and make this happen.’We have two groups of people at PharmaEssentia,’old men like myself, and then the young and well educated people that work in the labs. They read papers and do research by themselves very well.’These molecules are very big in terms of revenue on the market right now, namely alpha-interferon, beta-interferon, EPO, rh-GH and GCSF. Every one is a billion dollar molecule itself.’in 30 to 50 years from now, PharmaEssentia could be huge.’Although there were a number of drugs that could be used for treating different kinds of cancer, none of them could not be used for treating the liver. Until now, liver cancer treatment remains an unmet medical need. My aim at the time was to help those people if possible.’We didn’t just look at 20-30 patients to see the proof of concept in Phase II studies. We preferred to have comparative studies to test the efficacy of a drug, so our Phase II design at the time included up to 340 patients. The results were promising. Tumor recurrence improved by 26% at the end of one year and the time to recurrence was extended by 78% between the control and study groups. What is even more encouraging was the therapeutic benefits of PI-88 had been persisted up to 3-year follow up. ‘This combination was presented to China, and the Chinese government has now decided to open up the blood bank market. It is a huge market. Medigen is now one of the key players in China along with Roche and Novartis.’We want to make Medigen the leading liver-focused pharma company in the world. As long as we can beat liver cancer, we stand a chance of becoming one of the world-class players, because liver cancer is the most important cancer in China as well.’Sometimes being a distributor feels like being a babysitter,’You help a child to grow and then when it has grown up the parents get it back, and you have to find another baby to take care of. We know there will be a day when we have grown the child very well, and the parents will take it back, but we are very happy to see these children grow well and successfully. That’s the reality, the fate of the distributor. All we can do is try to build a reputation for being a good babysitter.’The self-pay market is growing in Taiwan, and we have made sure not to miss this opportunity. We have seen that the industry is moving in that direction, because whilst the government continues to cap budgets and stick to reference prices, technology continues to grow and develop. A point will be reached where people want good products and are willing to pay the difference. This is why we wanted to incorporate these products into our product line.
Giddi Pharma: Putting the Special into Speciality Medicine
“Sometimes being a distributor feels like being a babysitter,” says Louis Chiang, president of Giddi Pharma. “You help a child to grow and then when it has grown up the parents get it back, and you have to find another baby to take care of. We know there will be a day when we have grown the child very well, and the parents will take it back, but we are very happy to see these children grow well and successfully. That’s the reality, the fate of the distributor. All we can do is try to build a reputation for being a good babysitter.”
Giddi Pharma is a Taiwanese distributor whose main principals are specialty pharma companies such as Genzyme, for whom Giddi distributes 13 products in the Taiwanese market. Like many Taiwanese distributors, Giddi is looking to diversify its service offering in order to grow its business in a comparatively small market. Spotting the trend for an increasing number of drugs to be marketed towards self-pay markets due to the increased purchasing power of the Taiwanese population, and their desire to have access to the most innovative drugs on the market,
Giddi has focused its attentions here: “The self-pay market is growing in Taiwan, and we have made surem not to miss this opportunity. We have seen that the industry is moving in that direction, because while the government continues to cap budgets and stick to reference prices, technology continues to grow and develop. A point will be reached where people want good products and are willing to pay the difference. This is why we wanted to incorporate these products into our product line.”
Medigen: Taiwan’s Drug Development Pioneer
Created by Stanley Chang, a surgeon with many years of clinical experience in research, service, and medical education, Medigen Biotech Corp., (Medigen) had a simple mandate from day one: to provide pharmaceutical solutions for patients whose medical needs were not currently being fully addressed. In the best tradition of specialty pharma, Dr. Chang saw a huge problem in Taiwan and other Asian countries with liver cancer, and decided that Medigen would work to find solutions to this problem.
As he explains, “Although there were a number of drugs that could be used for treating different kinds of cancer, none of them could be used for treating the liver. Until now, liver cancer treatment remains an unmet medical need. My aim at the time was to help those people if possible.” By partnering with an Australian biotech company, Medigen gained access to PI-88 clinical development, a drug designed to combat liver cancer. The company joined PI-88 development at the preclinical stage, and adopted a very innovative method for its Phase II development on liver cancer: “We didn’t just look at 20 or 30 patients to see the proof of concept in Phase II studies. We preferred to have comparative studies to test the efficacy of a drug, so our Phase II design at the time included up to 340 patients.
The results were promising. Tumor recurrence improved by 26% percent at the end of one year and the time to recurrence was extended by 78 percent between the control and study groups. What is even more encouraging was that the therapeutic benefits of PI-88 had been persisted up to a three-year followup.” It was these impressive results that Medigen submitted for a Special Protocol Assessment (SPA) for global Phase III study to the US FDA at the end of August 2010.
Medigen chose to enter the NAT (Nucleic Acid Testing) market in China in order to bring in the revenues needed to develop PI-88. This sector is a very promising one, experiencing double-digit growth for the last five years. By bringing the original technology from the US, Medigen has added value to its offering by integrating the highest levels of Taiwanese precision engineering. This project has been very successful in China, as Dr. Chang reveals. “This combination was presented to China, and the Chinese government has now decided to open up the blood bank market. It is a huge market. Medigen is now one of the key players in China along with Roche and Novartis.”
Despite the unprecedented growth and success of the NAT market in China, Dr. Chang is keen to stress that t its core, Medigen wants to be a specialty pharma company, helping those around the world that need help the most: “We want to make Medigen the leading liver-focused pharma company in the world. As long as we can beat liver cancer, we stand a chance of becoming one of the world-class players, because liver cancer is the most important cancer in China as well.”
PharmEssentia: The Thirty Year Dream
“In my mind,” says Ko-Chung Lin, founder, president, and CEO of PharmaEssentia, “the story of AstraZeneca was particularly striking: it shows you can start a very small company and grow it to play a major role in a 30-year time frame. Taiwan is capable of creating such a company, and it is our responsibility to try and make this happen.” He explains that the groundwork for the foundation of his company was laid in 1997, when Taiwanese government officials visited him and his team in the Boston area, and encouraged them to come back to Taiwan and found PharmaEssentia. The company grew from there.
“We have two groups of people at PharmaEssentia,” Lin explains: “Old men like myself, and then the young and well-educated people that work in the labs. They read papers and do research by themselves very well.” Despite Lin’s self-effacing explanation, it is his vision and his selection of founding partners that has driven PharmaEssentia’s development. Inspired by their experiences in the US with cutting-edge biotech companies such as Amgen and Biogen, their business model is well constructed and their science drives right to the heart of global demand. Through a combination of chemistry and biology, revenue- and value-driving products, and with five molecules in the pipeline, Lin is hopeful that PharmaEssentia is destined for a profitable future: “These molecules are very big in terms of revenue on the market right now, namely alpha-interferon, betainterferon, EPO, rh-GH, and GCSF. Every one is a billion dollar molecule itself.”
Lin is convincing when he says, “Thirty to 50 years from now, PharmaEssentia could be huge.”