Taiwan Pharmaceuticals and Healthcare Report Q2 2009

Summary

In BMI's Business Environment Rankings for Q209, Taiwan maintained its position of seventh out of the 15 key markets assessed in Asia Pacific, although its future placement is unlikely to improve significantly. Key drawbacks of the pharmaceutical market include the strict regulatory and pricing environment, which now includes the health technology assessment (HTA) system, despite its substantial (over 23mn) as well as rapidly ageing population. In fact, statistics released in March 2009 by the Ministry of the Interior (MOI) show that the number of the elderly accounted for 10.4% of the total population in 2008, while the ageing index increased from 40.9 in 2004 to 61.5 at the end of 2008. While the numbers illustrate a considerable potential for the commercialisation of various chronic and long-term treatments, the stringent reimbursement system and the emphasis on the usage of generics will continue to place downward pressure on the overall pharmaceutical values.

In the light of the above, the Taiwanese pharmaceutical market at consumer prices is expected to post a very modest compound annual growth rate (CAGR) of 3.99% in local currency terms. From an estimated US$4.55bn in 2008, the market valuation is forecast to reach US$5.47bn in 2013, which compares to over US$15bn for South Korea, for example, and its population of around 49mn. Among other factors acting as a brake on the faster development of the market is the lack of sound private financing, In the meantime, the new health insurance project '1.5 generation health insurance', launched on February 16 2009 despite widespread opposition, lasted only two days due to the fallout from the financial crisis.

Nevertheless, given that healthcare and medicines as seen as essential commodities, healthcare providers emerged as the key beneficiaries of Taiwan's bold US$2.5bn voucher scheme that was rolled out in early 2009. Coupons have reportedly been used for pharmaceuticals and other medical treatments across a number of healthcare facilities, although questions over the success and viability of the wider voucher scheme have been raised by many. Needless to say, the spending splurge (as well as lost tax revenue due to cuts and refunds) will come at a cost, in terms of a widened deficit, which we expect to rise to a still manageable 3.0% of GDP in 2009. In the meantime, Taiwan is facing a strong likelihood of the economy contracting in 2009. BMI's Country Risk team is forecasting a 6.5% decrease in GDP, which is one the most extreme contractions for a developed state.

On a positive note for the industry, in January 2009, US biotechnology company Amarillo Biosciences reported that its application to conduct a Phase II study of its low-dose hepatitis C drug in Taiwan was approved by the Department of Health. Around the same time, TaiGen Biotechnology, one of the leading Taiwanese development-stage pharmaceutical companies, successfully raised US$37mn from its existing shareholders and new investors through the private placement of stock. The additional capital will help TaiGen expand its product line - with a focus on oncology, chronic inflammation and viral infection - and expedite its growth.

Contents

• Executive Summary
• Taiwan Pharmaceuticals And Healthcare Industry SWOT
• Taiwan Political SWOT
• Taiwan Economic SWOT
• Taiwan Business Environment SWOT
• Pharmaceutical Business Environment Ratings
• Limits of Potential Returns
• Risks to Realisation Of Returns
• Taiwan - Market Summary
• Regulatory Regime
• Recent Regulatory Developments
• Intellectual Property Regime
• Intellectual Property Developments
• Compulsory Licensing
• Pricing Regime
• Price Cuts
• Reimbursement Regime
• Recent Reimbursement Developments
• Free Trade Agreements
• Industry Trends and Developments
• Epidemiology
• Recent Public Health Developments
• Healthcare System
• Healthcare Financing
• Recent Healthcare System Developments
• Domestic Pharmaceutical Sector
• Foreign Company Activity
• Traditional Chinese Medicine
• Biotechnology Sector
• Recent Biotechnology Developments
• Medical Tourism
• Vaccines
• Recent Developments In The Vaccines Market
• Medical Devices
• Recent Developments In The Medical Devices Market
• Industry Forecast Scenario
• Overall Market Forecast
• Key Growth Factors - Industry
• Key Growth Factors - Macroeconomic
• Recession Unavoidable
• Prescription Market Forecast
• Patented Market Forecast
• Generics Market Forecasts
• OTC Market Forecast
• Pharmaceutical Trade Forecasts
• Medical Device Market Forecast
• Other Healthcare Data Forecasts
• Key Risks To BMI's Forecast Scenario
• Competitive Landscape
• Company Profiles
• Multinationals
• Pfizer
• Sanofi-Aventis
• GlaxoSmithKline
• Novartis
• Merck & Co
• Bayer Schering Pharma
• Indigenous Manufacturers
• Yung Shin Pharmaceutical (YSP)
• ScinoPharm Taiwan
• Synmosa Biopharma
• Life Star Pharmaceutical
• EMO Biomedicine Corporation
• Empax Pharma
• Purzer Pharmaceutical
• Taiwan Biotech Co
• Country Snapshot: Taiwan Demographic Data
• Section 1: Population
• Section 2: Labour Market And Spending Power
• BMI Forecast Modelling
• How We Generate Our Pharmaceutical Industry Forecasts
• Pharmaceutical Business Environment Ratings Methodology
• Ratings Overview
• Weighting
• Sources
• List of Tables
  • Table: Asia Pacific Pharmaceutical Business Environment Ratings For Q209
  • Table: Examples Of Controlled Drugs In Taiwan
  • Table: Medicine Categories In Taiwan
  • Table: Drug Reimbursement Principles
  • Table: Medical Care Institution Contracting And Management Of Taiwan's National Healthcare Insurance Fund (NHIF) For 2007
  • Table: Statistics of Taiwan's National Healthcare Insurance Fund (NHIF) for 2007
  • Table: Premium Contribution For Taiwan's Bureau Of National Health Insurance (% share)
  • Table: Taiwan - Drug Expenditure Indicators, Historical Data And Forecasts
  • Table: Taiwan - Health Expenditure Indicators, Historical Data And Forecasts
  • Table: Taiwan - Economic Activity
  • Table: Taiwan - Prescription Market Indicators, Historical Data And Forecasts (TWDmn unless otherwise stated)
  • Table: Taiwan - Patented Drug Market Indicators, Historical Data And Forecasts
  • Table: Taiwan - Generics Market Indicators, Historical Data And Forecasts
  • Table: Taiwan - OTC Market Indicators, Historical Data And Forecasts (TWDmn unless otherwise stated)
  • Table: Taiwan - Pharmaceutical Trade Indicators, Historical Data And Forecasts (US$mn)
  • Table: Taiwan - Medical Device Market Indicators, Historical Data And Forecasts (US$mn unless otherwise stated)
  • Table: Taiwan - Other Healthcare Indicators, Historical Data And Forecasts
  • Table: Leading Pharmaceutical Companies By Revenue (US$mn) In Taiwan
  • Table: Taiwan's Pharmaceutical Market In Q406
  • Table: Demographic Indicators, 2000-2030
  • Table: Employment Indicators, 2000-2005
  • Table: Consumer Expenditure, 2000-2005 (US$)
  • Table: Average Annual Manufacturing Wages, 2005-2012
  • Table: Pharmaceutical Business Environment Indicators
  • Table: Weighting Of Components