Signed in June 2010, the Economic Cooperation Framework Agreement (ECFA) between Taiwan and China was set to reduce tariffs and commercial barriers between the two countries. Obviously, such a deal means a lot to Taiwanese companies; arguably much more than it does to Chinese businesses. But just because the agreement was signed in 2010 doesn’t mean that it is fully established, particularly when it comes to the healthcare sector.
Christopher Tsai, whose blood banking and genetic testing company Bionet has successfully penetrated China, isn’t particularly bullish. When asked whether China is an easy market for a neighbor with a shared heritage, Tsai offers mixed feelings: “Is it easier for Taiwanese companies to do business in China than it might be for companies with less cultural, geographical, and political proximity? Absolutely. But that doesn’t mean we have a free ticket. Penetrating China is still very, very difficult.”
Is it easier for Taiwanese companies to do business in China than it might be for companies with less cultural, geographical, and political proximity? Absolutely. But that doesn’t mean we have a free ticket.”
For instance, three years after ECFA was put in place, pharmaceutical and med tech manufacturers in Taiwan still need a separate license to sell their products in China, which is not the case for Chinese healthcare products entering Taiwan. As the chairman of the medical diagnostics company General Biologics Corp, T.C. Lin, reports, “Today, it is not easy to get licenses in China for our products, particularly with the furor surrounding recent Big Pharma scandals in the country. The Taiwan government is pushing for mutual recognition, and producers on this side of the strait are eagerly anticipating a change.” For those that rely heavily on the mainland, a China-based manufacturing plant is often the best bet for now.
And yet, Taiwan has high hopes that this and other barriers will come down one by one as ECFA gains steam. One particular focus area for cooperation is clinical research. The Taiwan Food and Drug Administration (TFDA), which—crucially—is by all accounts an excellent regulator, is working in concert with the China Food & Drug Administration (CFDA) to pave the way for what Taigen chair Ming-Chu Hsu calls a “faster,” “lower cost” paradigm for reaching the Greater China market with innovation.
Taigen, a drug development company that is at the New Drug Application (NDA) stage with its diabetes-focused product Nemonoxacin, is expected to release Taiwan’s first innovative drug capable of meeting the CFDA’s Category 1.1 New Drug requirements. The company is participating in a clinical trial pilot program with a handful of other late-stage peers. Industry stakeholders hope the program will lead to broad harmonization of protocols and mutual data recognition. The “ultimate goal,” says Parexel’s Albert Liou, is that “any new drug will be simultaneously approved in Taiwan and China.”
The typical model may look something like this: companies will conduct Phase I and Phase II trials in Taiwan, where today the IP protection is more stringent, the clinical trial authorization process is faster (two to three months in Taiwan, versus 12 to 24 months in China), the patient protection system is mature, and there a number of great hospitals and researchers. “Ideally,” says Liou, “Chinese authorities will accept this data, and Phase III trials will take place in Taiwan and China, with an eye toward simultaneous NDA filings.”
The current state of the Taiwanese drug development pipeline
Some remain skeptical. Fang-Yue Lin, the superintendent of Taipei Veterans General Hospital (TVGH), a major clinical research center in Taiwan, remarks, “It would require a lot of ‘advantage sharing’ for China to accept clinical trial results obtained in Taiwan—and in my personal opinion, it will be very difficult to persuade the Chinese on this point.” Industry leaders point to the fact that similar agreements with Hong Kong have looked great on paper but meant less in practice.
Liou is more optimistic. “I think the model will work, and eventually, it will work quite smoothly,” he says. He doesn’t believe that Hong Kong is a fair comparison. After all, both men agree on one thing: as Lin puts it, Taiwan has a “very robust” indigenous pharmaceutical industry, with “many new drugs” under development—“something that differentiates this country from its neighbors.” Liou observes that the government has a vested interest in seeing this industry succeed, and will work hard to find a way to penetrate Taiwan’s biggest potential market.
Taiwan remains one of the best R&D locations in the Asia Pacific region, despite its relatively small market size.”
Moreover, although currently only local companies are involved in the clinical pilot program with the mainland, it is feasible that once the kinks are worked out, benefits will extend to multinationals too. Lin, whose hospital has a research cooperation agreement with GSK, has a confident partner on his hands. GSK’s local general manager, Thomas Willemsen, says, “Taiwan remains one of the best R&D locations in the Asia Pacific region, despite its relatively small market size. And in addition to being a good research platform, Taiwan is also the perfect epidemiological environment for proof of concept or early phase trials for products destined for the Chinese market.” Indeed, Dr Yu-Ray Chen, Chairman of the Steering Committee, states that Chang Gung Memorial Hospital (CGMH) can attest to this development, “At our new clinical R&D center, we are currently conducting over 20 clinical trials for both international and local companies, covering medical treatments.”
ECFA, as the name implies, is just that—a framework. It’s up to the stakeholders to bring real cases through.
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