Taiwan Pharmaceuticals & Healthcare Report Q3 2016 - New Market Report

Cross-strait relations will be an important factor influencing the prospects of Taiwan's pharmaceutical industry. The country's medicine exports to China have grown substantially and now account for 14% of the total value, ahead of its exports to Japan and South Korea. Growth prospects in China are also more promising as the domestic market continues to be hampered by price controls. While President Tsai Ing-wen's focus on the pharmaceutical industry can prove positive, there will also be uncertainties involved as she has yet to articulate her China policy.

Headline Expenditure Projections

Pharmaceuticals: TWD174bn (USD5.5bn) in 2015 to TWD181bn (USD5.6bn) in 2016; + 3.9% in local currency and 1.6% in US dollar terms.

Healthcare: TWD1,046bn (USD32bn) in 2015 to TWD1,090bn (USD33bn) by 2016; + 4.2% in local currency terms and +1.9% in US dollar terms.

Risk/Reward Index

Taiwan ranks fourth out of the 19 key markets with a score at 63.6 for Q316, edging ahead of Hong Kong in the Asia Pacific region in terms of attractiveness. Key to the country's high score is its high market expenditure at TWD174bn (USD5.5bn) in 2015, which scores 14.0 out of 20.0, above the regional average of 10.5. However, this is dragged down by the sector's growth (scoring 4.8 out of 12.0, below the regional average of 6.5) as authorities look towards cost containment measures including medicine price cuts to control rising healthcare spending.

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Latest Updates

In April 2016, the China Food and Drug Administration (CFDA) and the Institute for Biotechnology and Medicine Industry in Taiwan signed an agreement over the use of clinical trial data. In particular, Taiwanese authorities will accept trial data from four China-based hospitals while the CFDA will accept data for new drug application filings from four Taiwan hospitals.

In May 2015, National Health Insurance Administration Director General Lee Po-Chang noted that the authorities will continue to expand the diagnosis-related group payment system. To achieve a consensus on the issue, the government will be facilitating communication with the medical community on the issue.

In June 2016, local news sources noted that the government is currently reviewing regulations governing investment environment for the biotechnology industry. Expected to be announced within six months, the plan is expected to include incentives to encourage drugmakers to conduct research in Taiwan.

BMI Economic View

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