Developing World Healthcare Blog
The Taipei Field Trip
We wrote about Taiwan’s life sciences industry a year ago (July 2016). At that time, we concluded that “Taiwan’s life sciences industry is poised to punch above its weight globally over the next few years”.
Several weeks ago, we traveled to Taipei to attend the BioTaiwan Conference and visit companies. Think of BioTaiwan as a much smaller version of the BIO International Convention held in the US. BioTaiwan’s registration fees and hotel rooms are reasonable. It’s the airfare that dents the wallet. This post will discuss some of the highlights of the trip.
Yes, the Entrance to HQ is Through the Loading Dock
We met with the management of one of Taiwan’s leading contact lens manufacturers. As you can guess from the heading, the offices are fairly spartan. I knew that the taxi left me in front of the correct building. There wasn’t a lobby entrance, just an elevator at a loading dock on the side of the building. So I entered a bank branch, and inquired (in elementary Mandarin). After a couple of minutes, someone kindly led me around the building BACK to the elevator at the loading dock. The meeting was very informative. The business has consistent growth, good margins, and pays a generous dividend. If you want the name of the company, you’ll have to ask.
No, WHERE Are You From?
The conference included several tracks of topical panels and company presentations. They were in English (with translation to Chinese available). Initially, I would tell people that I was from “the US”. The consistent response was, “Yes, but WHERE?” and then the discussions would become interesting when I answered “Cambridge”:
“Great, I went to MIT.”
“Oh, I worked in Boston for xx years before moving back to Taiwan.”
And the best one (after reading my business card):
“I was in your building several weeks ago to visit a client.”
Location, location, location.
What’s the Definition of Biopharmaceuticals?
The Taipei World Trade Center – Nangang Exhibition Hall hosts the conference’s exhibition. The venue is large (1,300+ booths), which creates a problem. The conference’s sponsor needs to fill the hall, so the definition of “biopharmaceuticals” broadens. The exhibition includes not only biopharmaceutical and medical device companies and related services providers (CROs, equipment providers, government agencies, etc.), but also manufacturers of cosmetics, health foods, and other tangentially related businesses. Several executives commented on this dynamic, noting that Taiwan’s industry is relatively small. In comparison, the BIO International Convention features 1,800 exhibitors from 74 countries (with some food and agriculture exhibitors).
Several companies are focusing on the biosimilar market, which we think will be challenging. The field is becoming crowded with numerous multinational companies well ahead of their Taiwanese counterparts. There could be market opportunities in China and Asia, but the developed world will be much tougher to crack. The industry’s low level of M&A activity was a point of discussion among some venture capital and private equity investors. The main obstacles cited are an unwillingness to cede control (not surprising) and many business owners’ preference to use free cash flow for dividends instead of acquisitions.
Fortunately, the number of companies developing innovative products (and innovative products in development) continues to increase. A real-time example is TaiMed Biologics’ ibalizumab for multidrug resistant (MDR) Human Immunodeficiency Virus-1 (MDR HIV-1). The USFDA has granted Breakthrough Therapy and Orphan Drug Designations along with Priority Review (PDUFA date of January 3, 2018). We noted last year that Taiwan’s life sciences sector was poised to punch above its weight, and that remains the case.