With no new cases reported for more than 100 days, Taiwan appears to have successfully contained the spread of COVID-19 and has drawn attention to its medical achievements. Experts said at BIO Asia-Taiwan conference this week that with continuous government and investor support, the East Asian nation could move further up to join other leading biotech players.
On Thursday, Taiwan President Tsai Ing-wen reiterated her vow to make biotech a strategic development area for the nation. She said Taiwan’s biotech industry saw its revenue grow 8.7% and attracted a total of NT$55.1 billion (US$1.9 billion) in investments last year, and she believes biotech will be the next trillion-dollar industry for Taiwan.
“We are looking at the industry’s needs for the next 10 years to plan strategically the next wave of policies that encourage pharmaceutical innovation,” she said.
Taiwan’s Biotech and New Pharmaceutical Development Act, which is due to expire in 2021, is scheduled to be extended by the Tsai administration for another 10 years and to cover more areas. The act offers a reduction in corporate income tax payable of up to 35% and allows publicly funded researchers to help private companies with R&D. It now also covers digital health and biotech products of national strategic value, in addition to new drugs, medical devices and emerging biotech products.
Taiwan has been praised for its rapid response to the COVID-19 outbreak. Besides approving Gilead Sciences Inc.’s remdesivir in May, the nation is also working on its own biotech solutions. The National Health Research Institutes and local vaccine maker Adimmune Corp. are developing vaccine candidates, Taoyuan City-based Chang Gung University is working with Australia’s Monash University to study antiparasitic drug ivermectin’s potential, and biotech firm Senhwa Biosciences Inc. is looking at its CK2 inhibitor, silmitasertib, as a potential treatment for the coronavirus.
“The current situation with COVID, where the world's attention is now being placed on this sector, displays Taiwan in a very propitious and advantageous position to move up to the next level if it continues this policy direction with an emphasis on biotechnology and life sciences, and on innovation as opposed to simply imitation,” said Joseph Damond, executive vice president of international affairs at the Biotechnology Innovation Organization (BIO).
He said Taiwan can “continue to move up the value chain” and “join the first rank of leaders” in the biotech sector. Together with Singapore, the nation is also “very much ahead” of other Asia Pacific countries in terms of R&D capability.
Among seven Asia Pacific economies, which include South Korea, Indonesia, Malaysia, Thailand and Vietnam, 60% of the clinical research in the region from 2000 to 2017 was performed in either Taiwan or Singapore, data from BIO showed. Furthermore, 68% of complex early phase research also took place in those two countries.
Taiwan stands out as a hub for clinical trials. Data from Taiwania Capital Management Corp. showed that close to 300 trials were conducted in Taiwan in 2017, out of which 214 were multinational, multicenter trials.
5+2 innovation plan
Veteran investor Michael Huang, managing partner of life science investments at Taiwania, said he believes the nation stands a chance of excelling in biotech because of its comprehensive bio-industrial ecosystem, government policies and incentives, and dynamic private investment.
Taiwan is home to around 400 biotech and med-tech companies, which are scattered in six science industrial parks across its territory. The Nankang Biotech Park and Neihu Technology Park in the capital city of Taipei house 178 companies that work on new drugs and medical devices. A little further from Taipei, Hsinchu Science Park and Hsinchu Biomedical Park accommodate 97 companies that develop equipment, in vitro diagnostics, biologics and medical devices.
“We want to really create a hub here in Taiwan,” Huang said. “The key will be input and support from government. He added that open investment incentives also bring more private money into the sector.
The Taiwanese government has rolled out the 5+2 innovative industries plan, which includes biomedicine, with goals of building a biomedical corridor, upgrading industry infrastructure and ecosystems, connecting Taiwan’s biomed sector with the world, and pursuing the industries of the future.
On the capital front, the government provides R&D guidance and subsidies, such as the small business innovation research program, the global R&D innovation partner program, a fast track for clinical trials program, and the A+ industrial innovation R&D program.
As for tax incentives, Huang said there are deductions for private investment in biotech industries, deductions for R&D investment and spending, private participation in public infrastructure projects, and a competitive corporate tax rate of 20%.
The active government support has encouraged more investors like Huang to pour capital in the biotech industry.
Private investment in Taiwan’s biotech sector reached $1.8 billion in 2018 and has been increasing steadily at a CAGR of 6.26% since 2010. The pharmaceutical segment received $733 million, of which new drug companies took up 22%. The med-tech and applied biotech segments received $583 million and $523 million, respectively.
In April, Danish pharma Leo Pharma A/S offered Taipei-based Oneness Biotech Co. Ltd. an up-front payment of $40 million and milestone payments up to $530 million to license Oneness’ experimental eczema and asthma drug, FB-825. Leo CEO Kim Kjoeller called it a “promising novel drug candidate” after seeing the drug’s first-in-human trial data. The deal value marked a record high for an out-licensing deal from a Taiwanese biotech company.
Venture capital firms are also showing interest in taking Taiwan’s biotechnologies abroad.
“Technology originating in Taiwan can be partnered and developed in Japan to ultimately be marketed in the U.S.,” said Frederick Shane, managing partner of Tokyo-based Axil Capital Partners LLP. “Otherwise, a Japanese product could possibly be manufactured in Taiwan to maximize efficiency and seek approval in the U.S.”
But Taiwan also has its challenges, such as accessing patient samples, said Seth Taylor, chief financial officer of Smartlabs Inc.
That said, he sees potential for Taiwan to be a gateway to bigger markets. In April, Smartlabs established offices in the nation to invest in Taiwanese startups, and advise and help connect them with businesses worldwide.
“Taiwan is unique, and I think it provides a great opportunity to sort of build out the biotech sector there as an emerging step to larger markets in China and other Asian economies like Korea and Japan,” Taylor said.