What to do? A strong innovative pipeline is a great asset. After that, it's "launch and see," says Christian Macher, general
manager of AstraZeneca: "The only way you can survive here is if you have a lot of innovation, because then you don't have
to compete with generics. You get a lower price for your drug, but no one else can promote the product. Then you just have
to see how you make it through the changes in the healthcare system with your mature products."
Christian Macher, Country President, AstraZeneca
Life is also easier for generics companies, many of whom are locals. IMS data shows that although the generic penetration
rate in Taiwan is relatively low—around 22.9 percent—and has been decreasing at a compound annual growth rate (CAGR) of negative
4.6 percent between 2008 and 2012, the majority of generics producers grew their businesses in 2012, despite facing the same
price cuts as innovators did in 2011. Many innovators are losing key patents, and as Lin noted, Taiwan is less and less a
market where mature products can enjoy a long life cycle.
Its healthcare system strapped for cash, Taiwan has introduced a number of incentives for generics companies, including rewards
for upgrading to PIC/S GMP. The benefits extend to multinational generics players as well: "Since 2010, the BNHI has announced
new initiatives to encourage generic suppliers, both domestic and foreign," reports Hospira Country Manager Mark Yang. "Today,
if generic companies can demonstrate global-standard manufacturing quality—i.e., PIC/S GMP compliance—then they will be awarded
premium pricing in Taiwan.
Overall market growth statistics 2007-2017
"This is not just talk. The BNHI means business, and has followed through on its promise: one of our own molecules now enjoys
premium pricing, after its manufacturing site was granted PIQ/S GMP certification. Our team is currently preparing the ground
for further molecule launches that can take advantage of these benefits."
Yang also hedges his bets with a strong focus on medical devices, and some business in the oft-neglected self-pay segment:
"As a supplier in this marketplace, you have to manage your reimbursement business very carefully. However, if at the same
time you can introduce the right products on the self-pay side, you will find that you have a good combination: you will mitigate
the risks of the reimbursement market, where you will face price cuts and heavy competition. If you have the portfolio to
play in the self-pay segment in Taiwan, you should."
Freia Wei, Senior Consultant, Unipharma
This is a call that is well heard by local distributor Uni-Pharma. Terry Lin and Freia Wei, General Manager and Senior Consultant,
report, "Uni-Pharma was founded shortly after the creation of the national health insurance (NHI) system—but actually, the
majority of our products are not reimbursed. Until recently, it was the state's policy to cut reimbursement prices every two
years! We decided to develop the self-pay market, and our business has concentrated on this segment since 2005. Less that
ten percent of our products are reimbursed today.
Terri Lin, General Manager, Unipharma
"We also began to focus more on medical devices, because we find that the entrance barriers are considerably lower. Med tech
currently accounts for nearly 90 percent of our revenues."
Mark Yang, Country Manager, Hospira
Now, the company is looking to leverage its market knowledge to diversify beyond distribution to the introduction of its own
branded line of diagnostics. With license in hand for a cancer-detection device, Uni-Pharma has formed a partnership to manufacture
and market products for the regional marketplace and beyond: "We saw that there was a constraint on the pharmaceutical industry,
so we moved from pharma products to medical devices and diagnostics. But we also want to build a foundation for the long-term.
The distribution business can be difficult to sustain: after all, the principal can always revoke the product rights if they